Morgan Stanley Institutional Fund N-CSRS Certified semi-annual shareholder report (management investment company)

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, 2017

Item 1 - Report to Shareholders

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Active International Allocation Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	34
Privacy Notice	36
Director and Officer Information	39

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Active International Allocation Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Active International Allocation Portfolio Class I	$	1,000.00	$	1,139.50	$	1,020.43	$	4.67	$	4.41		0.88	%
Active International Allocation Portfolio Class A		1,000.00		1,138.00		1,018.70		6.52		6.16		1.23
Active International Allocation Portfolio Class L		1,000.00		1,135.40		1,016.22		9.16		8.65		1.73
Active International Allocation Portfolio Class C		1,000.00		1,134.30		1,014.98		10.48		9.89		1.98

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Active International Allocation Portfolio

	Shares		Value (000)
Common Stocks (85.1%)
Australia (1.6%)
AGL Energy Ltd.		3,277	$	64
Amcor Ltd.		8,621		107
AMP Ltd.		17,655		70
APA Group		5,706		40
Aristocrat Leisure Ltd.		2,915		51
ASX Ltd.		970		40
Aurizon Holdings Ltd.		9,802		40
AusNet Services		8,664		12
Australia & New Zealand Banking Group Ltd.		4,119		91
Bank of Queensland Ltd.		479		4
Bendigo & Adelaide Bank Ltd.		483		4
Brambles Ltd.		9,267		69
Caltex Australia Ltd.		1,079		26
Challenger Ltd.		2,816		29
CIMIC Group Ltd.		1,005		30
Coca-Cola Amatil Ltd.		5,995		43
Cochlear Ltd.		378		45
Commonwealth Bank of Australia		1,829		116
Computershare Ltd.		2,394		26
Crown Resorts Ltd.		4,413		42
CSL Ltd.		3,994		424
Dexus REIT		4,513		33
Domino's Pizza Enterprises Ltd. (a)		426		17
Flight Centre Travel Group Ltd. (a)		395		12
Goodman Group REIT		11,032		67
GPT Group REIT		8,295		31
Harvey Norman Holdings Ltd. (a)		5,459		16
Healthscope Ltd.		11,677		20
Incitec Pivot Ltd.		14,677		38
Insurance Australia Group Ltd.		15,712		82
James Hardie Industries PLC CDI		2,971		47
Lend Lease Group REIT		3,278		42
Macquarie Group Ltd.		2,234		152
Medibank Pvt Ltd.		16,038		34
Mirvac Group REIT		17,494		29
National Australia Bank Ltd.		3,199		73
Oil Search Ltd.		5,475		29
Orica Ltd.		2,516		40
Origin Energy Ltd. (b)		7,049		37
Platinum Asset Management Ltd. (a)		1,493		5
Qantas Airways Ltd.		2,491		11
QBE Insurance Group Ltd.		8,695		79
Ramsay Health Care Ltd.		749		42
REA Group Ltd.		256		13
Santos Ltd. (b)		6,408		15
Scentre Group REIT		41,367		129
Seek Ltd.		1,560		20
Sonic Healthcare Ltd.		3,890		72
South32 Ltd. (a)		36,886		76
Stockland REIT		34,975		118
Suncorp Group Ltd.		8,742		100

	Shares		Value (000)
Sydney Airport		5,220	$	28
Tabcorp Holdings Ltd.		7,634		26
Tatts Group Ltd.		11,642		37
Telstra Corp., Ltd.		23,489		78
TPG Telecom Ltd. (a)		1,580		7
Transurban Group		7,638		70
Treasury Wine Estates Ltd.		3,572		36
Vicinity Centres REIT		15,652		31
Wesfarmers Ltd.		6,171		190
Westfield Corp. REIT		14,570		90
Westpac Banking Corp.		3,327		78
Woodside Petroleum Ltd.		3,084		71
Woolworths Ltd.		7,705		151
				3,745
Austria (0.1%)
Andritz AG		1,291		78
Erste Group Bank AG (b)		4,824		185
Raiffeisen Bank International AG (b)		1,805		45
				308
Belgium (1.1%)
Ageas		1,051		42
Anheuser-Busch InBev N.V.		14,587		1,611
Groupe Bruxelles Lambert SA		2,680		258
KBC Group N.V.		3,359		255
Proximus		277		10
Telenet Group Holding N.V. (b)		1,131		71
UCB SA		2,808		193
Umicore SA		1,133		79
				2,519
Brazil (0.4%)
Banco Bradesco SA (Preference)		16,200		138
BRF SA		11,400		135
Cia Energetica de Minas Gerais (Preference)		1		—	@
Itau Unibanco Holding SA (Preference)		12,910		143
Lojas Renner SA		17,800		147
Petroleo Brasileiro SA (b)		32,500		129
Petroleo Brasileiro SA (Preference) (b)		33,448		125
Raia Drogasil SA		7,400		157
				974
China (2.4%)
Alibaba Group Holding Ltd. ADR (a)(b)		15,700		2,212
Baidu, Inc. ADR (b)		3,800		680
JD.com, Inc. ADR (b)		6,500		255
Tencent Holdings Ltd. (c)		67,200		2,403
				5,550
Colombia (0.5%)
Bancolombia SA (Preference)		30,036		334
Cementos Argos SA		30,422		118
Ecopetrol SA		328,120		149
Grupo Argos SA		19,260		131
Grupo Aval Acciones y Valores SA (Preference)		232,000		96

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Colombia (cont'd)
Grupo de Inversiones Suramericana SA		22,272	$	289
Interconexion Electrica SA ESP		25,506		112
				1,229
Czech Republic (1.1%)
CEZ AS		52,540		914
Komercni Banka AS		24,747		991
Moneta Money Bank AS (d)		131,874		442
O2 Czech Republic AS		20,158		239
				2,586
Denmark (2.0%)
AP Moller - Maersk A/S Series A		97		185
AP Moller - Maersk A/S Series B		431		867
Carlsberg A/S Series B		159		17
Danske Bank A/S		11,418		439
DSV A/S		12,372		760
ISS A/S		3,153		124
Novo Nordisk A/S Series B		44,123		1,890
Novozymes A/S Series B		3,185		139
TDC A/S		7,513		44
Vestas Wind Systems A/S		1,348		124
				4,589
Egypt (0.7%)
Commercial International Bank Egypt SAE		306,818		1,353
Global Telecom Holding SAE (b)		774,919		293
				1,646
Finland (1.2%)
Elisa Oyj		3,005		116
Kone Oyj, Class B		5,582		284
Metso Oyj		2,675		93
Neste Oyj		3,145		124
Nokia Oyj		110,241		674
Nokian Renkaat Oyj		573		24
Orion Oyj, Class B		2,195		140
Sampo Oyj, Class A		7,025		360
Stora Enso Oyj, Class R		17,162		222
UPM-Kymmene Oyj		14,785		421
Wartsila Oyj		4,482		265
				2,723
France (8.7%)
Accor SA		4,602		216
Aeroports de Paris (ADP)		999		161
Air Liquide SA		4,497		556
Airbus SE		6,995		575
Atos SE		1,887		265
AXA SA		28,494		779
BNP Paribas SA		16,155		1,164
Capgemini SE		4,960		513
Carrefour SA		7,927		201
Casino Guichard Perrachon SA		932		55
Christian Dior SE (a)		548		157

	Shares		Value (000)
Cie de Saint-Gobain		9,069	$	485
Cie Generale des Etablissements Michelin		3,015		401
CNP Assurances		1,932		43
Credit Agricole SA		15,218		245
Danone SA		10,200		767
Dassault Systemes SE		3,533		317
Eiffage SA		298		27
Electricite de France SA		7,256		79
Engie SA		40,095		605
Essilor International SA		2,232		284
Eurazeo SA		341		26
Eutelsat Communications SA		1,721		44
Fonciere Des Regions REIT		804		75
Gecina SA REIT		697		109
Groupe Eurotunnel SE		5,557		59
Hermes International		142		70
ICADE REIT		802		67
Iliad SA		639		151
Imerys SA		654		57
Kering		687		234
Klepierre REIT		3,077		126
L'Oreal SA		2,311		481
Lagardere SCA		1,270		40
Legrand SA		3,229		226
LVMH Moet Hennessy Louis Vuitton SE		2,234		557
Natixis SA		6,801		46
Orange SA		21,557		342
Pernod Ricard SA (a)		2,373		318
Peugeot SA		5,886		117
Publicis Groupe SA		2,045		153
Remy Cointreau SA		269		31
Renault SA		2,472		224
Safran SA		9,103		834
Sanofi		20,368		1,948
SES SA		4,287		100
SFR Group SA (b)		1,285		43
Societe BIC SA		413		49
Societe Generale SA		12,016		646
Sodexo SA		855		111
STMicroelectronics N.V. (a)		15,377		221
Suez		8,388		155
Thales SA		4,515		486
Total SA		34,884		1,725
Unibail-Rodamco SE REIT (a)		1,520		383
Valeo SA		7,504		506
Veolia Environnement SA		10,809		228
Vinci SA		11,211		957
Vivendi SA		4,595		102
				19,942
Germany (9.6%)
Adidas AG		3,347		641
Allianz SE (Registered)		8,904		1,753

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Germany (cont'd)
Axel Springer SE		377	$	23
BASF SE		14,918		1,382
Bayer AG (Registered)		20,450		2,644
Bayerische Motoren Werke AG		4,266		396
Bayerische Motoren Werke AG (Preference)		579		48
Beiersdorf AG		1,535		161
Brenntag AG		1,510		87
Commerzbank AG (b)		16,137		192
Continental AG		2,374		512
Covestro AG (d)		996		72
Daimler AG (Registered)		12,470		903
Deutsche Bank AG (Registered)		21,127		375
Deutsche Boerse AG		4,013		424
Deutsche Post AG (Registered)		14,407		540
Deutsche Telekom AG (Registered)		61,460		1,103
Deutsche Wohnen AG		6,540		250
E.ON SE		36,069		340
Evonik Industries AG		800		26
Fraport AG Frankfurt Airport Services Worldwide		453		40
Fresenius Medical Care AG & Co., KGaA		6,022		579
Fresenius SE & Co., KGaA		496		43
GEA Group AG		6,574		269
Hannover Rueck SE (Registered)		799		96
HeidelbergCement AG		3,654		353
Henkel AG & Co., KGaA		593		72
Henkel AG & Co., KGaA (Preference)		3,408		469
Hochtief AG		204		37
Hugo Boss AG		357		25
Infineon Technologies AG		33,843		714
K&S AG (Registered)		225		6
Kabel Deutschland Holding AG		577		76
Lanxess AG		422		32
Linde AG		1,525		289
MAN SE		193		21
Merck KGaA		3,052		369
Metro AG		5,638		190
Muenchener Rueckversicherungs AG (Registered)		2,162		436
Porsche Automobil Holding SE (Preference)		1,949		109
ProSiebenSat.1 Media SE (Registered)		4,208		176
QIAGEN N.V. (b)		6,763		225
RTL Group SA (b)		1,147		87
RWE AG (b)		12,263		244
SAP SE		25,580		2,672
Siemens AG (Registered)		10,929		1,502
Symrise AG		205		14
Telefonica Deutschland Holding AG		4,483		22
ThyssenKrupp AG		5,838		166
Uniper SE		3,610		68
United Internet AG (Registered)		6,643		365
Vonovia SE		8,829		351
Zalando SE (b)(d)		420		19
				22,008

	Shares		Value (000)
Hong Kong (2.0%)
AIA Group Ltd.		122,800	$	897
Bank of East Asia Ltd. (The)		14,205		61
BOC Hong Kong Holdings Ltd.		40,500		194
Cheung Kong Property Holdings Ltd.		29,000		227
CK Hutchison Holdings Ltd.		29,000		364
CK Infrastructure Holdings Ltd.		7,000		59
CLP Holdings Ltd.		19,000		201
First Pacific Co., Ltd.		8,000		6
Galaxy Entertainment Group Ltd.		25,000		152
Hang Lung Group Ltd.		3,000		12
Hang Lung Properties Ltd.		26,000		65
Hang Seng Bank Ltd.		8,200		172
Henderson Land Development Co., Ltd.		15,400		86
HK Electric Investments & HK Electric Investments Ltd. (a)(d)		29,500		27
HKT Trust & HKT Ltd.		29,000		38
Hong Kong & China Gas Co., Ltd.		89,430		168
Hong Kong Exchanges & Clearing Ltd.		12,828		332
Hongkong Land Holdings Ltd.		8,400		62
Hysan Development Co., Ltd.		7,000		33
Jardine Matheson Holdings Ltd.		700		45
Kerry Properties Ltd.		2,000		7
Li & Fung Ltd. (a)		66,000		24
Link REIT		23,500		179
MGM China Holdings Ltd. (a)		3,200		7
MTR Corp., Ltd.		16,325		92
New World Development Co., Ltd.		65,163		83
NWS Holdings Ltd.		14,000		28
PCCW Ltd.		50,764		29
Power Assets Holdings Ltd.		14,500		128
Sands China Ltd.		26,000		119
Sino Land Co., Ltd.		35,708		59
SJM Holdings Ltd.		6,000		6
Sun Hung Kai Properties Ltd.		17,000		250
Swire Pacific Ltd., Class A		6,500		63
Swire Properties Ltd.		13,400		44
Techtronic Industries Co., Ltd.		15,000		69
WH Group Ltd. (d)		46,000		46
Wharf Holdings Ltd. (The)		16,000		133
Wheelock & Co., Ltd.		10,000		75
Wynn Macau Ltd.		4,800		11
Yue Yuen Industrial Holdings Ltd.		8,500		35
				4,688
India (0.5%)
Ashok Leyland Ltd.		96,514		140
Bharat Financial Inclusion Ltd. (b)		10,370		116
Bharat Petroleum Corp., Ltd.		11,282		112
HDFC Bank Ltd. ADR		1,500		131
IndusInd Bank Ltd.		5,859		134
Marico Ltd.		26,354		128
Maruti Suzuki India Ltd.		1,229		137
Shree Cement Ltd.		419		110

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
India (cont'd)
Zee Entertainment Enterprises Ltd.		15,713	$	119
				1,127
Indonesia (2.5%)
Adaro Energy Tbk PT		764,700		91
Astra International Tbk PT		1,008,100		675
Bank Central Asia Tbk PT		620,500		845
Bank Mandiri Persero Tbk PT		473,500		453
Bank Negara Indonesia Persero Tbk PT		416,800		206
Bank Rakyat Indonesia Persero Tbk PT		558,400		639
Charoen Pokphand Indonesia Tbk PT		406,700		97
Gudang Garam Tbk PT		26,500		156
Hanjaya Mandala Sampoerna Tbk PT		491,700		142
Indocement Tunggal Prakarsa Tbk PT		89,000		123
Indofood Sukses Makmur Tbk PT		247,000		159
Kalbe Farma Tbk PT		1,161,400		142
Lippo Karawaci Tbk PT		1,281,000		64
Matahari Department Store Tbk PT		138,300		147
Perusahaan Gas Negara Persero Tbk		585,800		99
Semen Indonesia Persero Tbk PT		168,500		127
Summarecon Agung Tbk PT		642,700		62
Surya Citra Media Tbk PT		367,000		71
Telekomunikasi Indonesia Persero Tbk PT		2,542,800		862
Unilever Indonesia Tbk PT		80,300		294
United Tractors Tbk PT		90,400		186
				5,640
Ireland (0.7%)
Bank of Ireland (b)		421,333		111
CRH PLC		27,786		983
Kerry Group PLC, Class A		2,429		209
Ryanair Holdings PLC ADR (b)		2,877		309
				1,612
Israel (0.0%)
Mobileye N.V. (b)		1,640		103
Italy (1.0%)
Assicurazioni Generali SpA		22,451		369
CNH Industrial N.V.		8,288		94
Eni SpA		20,068		302
Fiat Chrysler Automobiles N.V. (b)		16,815		177
Intesa Sanpaolo SpA		127,982		403
Leonardo SpA		3,196		53
Mediobanca SpA		9,183		91
Prysmian SpA		9,708		286
Tenaris SA		10,797		168
UniCredit SpA (b)		22,477		420
				2,363
Japan (18.5%)
ABC-Mart, Inc.		300		18
Acom Co., Ltd. (b)		8,000		36
Aeon Co., Ltd.		11,600		176
AEON Financial Service Co., Ltd.		1,900		40
Aeon Mall Co., Ltd.		600		12

	Shares		Value (000)
Aisin Seiki Co., Ltd.		100	$	5
Ajinomoto Co., Inc.		9,000		194
Alfresa Holdings Corp.		200		4
Amada Holdings Co., Ltd.		3,600		42
ANA Holdings, Inc.		50,000		174
Aozora Bank Ltd.		1,000		4
Asahi Glass Co., Ltd.		1,660		70
Asahi Group Holdings Ltd.		5,900		222
Asahi Kasei Corp.		13,000		140
Asics Corp.		2,100		39
Astellas Pharma, Inc.		34,200		418
Bandai Namco Holdings, Inc.		4,100		140
Bank of Kyoto Ltd. (The)		7,000		66
Benesse Holdings, Inc.		454		17
Bridgestone Corp.		9,700		417
Brother Industries Ltd.		4,800		111
Canon, Inc.		11,104		377
Casio Computer Co., Ltd.		2,400		37
Central Japan Railway Co.		2,192		357
Chiba Bank Ltd. (The)		12,000		87
Chubu Electric Power Co., Inc.		4,100		54
Chugai Pharmaceutical Co., Ltd.		3,000		112
Chugoku Bank Ltd. (The)		1,600		24
Concordia Financial Group Ltd.		42,100		212
Credit Saison Co., Ltd.		4,100		80
Dai Nippon Printing Co., Ltd.		3,100		34
Dai-ichi Life Holdings, Inc.		17,900		322
Daicel Corp.		300		4
Daiichi Sankyo Co., Ltd.		11,500		271
Daikin Industries Ltd.		4,200		428
Daito Trust Construction Co., Ltd.		1,156		180
Daiwa House Industry Co., Ltd.		8,100		276
Daiwa Securities Group, Inc.		32,000		189
Denso Corp.		9,050		382
Dentsu, Inc.		3,000		143
Don Quijote Holdings Co., Ltd.		2,700		102
East Japan Railway Co.		5,300		506
Eisai Co., Ltd.		4,400		243
Electric Power Development Co., Ltd.		100		2
FANUC Corp.		3,650		703
Fast Retailing Co., Ltd.		900		299
Fuji Electric Co., Ltd.		5,000		26
FUJIFILM Holdings Corp.		9,800		352
Fujitsu Ltd.		31,200		230
Fukuoka Financial Group, Inc.		15,000		71
Hachijuni Bank Ltd. (The)		3,900		25
Hakuhodo DY Holdings, Inc.		4,400		58
Hamamatsu Photonics KK		3,300		101
Hankyu Hanshin Holdings, Inc.		1,300		47
Hikari Tsushin, Inc.		100		10
Hino Motors Ltd.		3,600		40
Hirose Electric Co., Ltd.		300		43
Hisamitsu Pharmaceutical Co., Inc.		400		19

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Hitachi Construction Machinery Co., Ltd.		3,300	$	82
Hitachi Ltd.		105,000		644
Hitachi Metals Ltd.		200		3
Honda Motor Co., Ltd.		18,713		510
Hoshino Resorts, Inc. REIT		4		21
Hoshizaki Corp.		200		18
Hoya Corp.		8,800		456
Hulic Co., Ltd.		300		3
IHI Corp. (b)		22,530		77
Inpex Corp.		11,900		114
Isetan Mitsukoshi Holdings Ltd.		8,600		86
Isuzu Motors Ltd.		8,100		100
Ito En Ltd.		2,100		77
ITOCHU Corp.		21,951		326
J Front Retailing Co., Ltd.		2,600		40
Japan Airlines Co., Ltd.		1,400		43
Japan Exchange Group, Inc.		12,200		221
Japan Hotel REIT Investment Corp. REIT		52		37
Japan Post Bank Co., Ltd.		5,200		66
Japan Post Holdings Co., Ltd.		3,000		37
Japan Prime Realty Investment Corp. REIT		7		24
Japan Real Estate Investment Corp. REIT		16		80
Japan Retail Fund Investment Corp. REIT		30		55
Japan Tobacco, Inc.		18,000		632
JFE Holdings, Inc.		7,100		123
JGC Corp.		11,146		181
JSR Corp.		908		16
JTEKT Corp.		500		7
JXTG Holdings, Inc.		45,846		200
Kajima Corp.		34,000		287
Kakaku.com, Inc.		2,300		33
Kansai Electric Power Co., Inc. (The)		5,800		80
Kansai Paint Co., Ltd.		3,200		74
Kao Corp.		9,800		581
Kawasaki Heavy Industries Ltd.		23,500		69
KDDI Corp.		13,600		360
Keihan Holdings Co., Ltd.		1,000		6
Keikyu Corp.		3,000		36
Keio Corp.		3,000		25
Keyence Corp.		1,800		790
Kinden Corp.		3,900		63
Kintetsu Group Holdings Co., Ltd.		11,750		45
Kirin Holdings Co., Ltd.		12,800		260
Kobe Steel Ltd. (b)		900		9
Koito Manufacturing Co., Ltd.		100		5
Komatsu Ltd.		15,100		383
Konica Minolta, Inc.		8,430		70
Kose Corp.		1,100		120
Kubota Corp.		600		10
Kuraray Co., Ltd.		6,956		126
Kurita Water Industries Ltd.		2,200		60
Kyocera Corp.		5,700		330

	Shares		Value (000)
Kyowa Exeo Corp.		2,500	$	42
Kyowa Hakko Kirin Co., Ltd.		4,100		76
Kyushu Electric Power Co., Inc.		2,600		32
Lawson, Inc.		1,800		126
LIXIL Group Corp.		4,062		101
M3, Inc.		100		3
Mabuchi Motor Co., Ltd.		1,000		50
Makita Corp.		2,800		103
Marubeni Corp.		26,250		169
Marui Group Co., Ltd.		2,100		31
Maruichi Steel Tube Ltd.		100		3
Mazda Motor Corp.		7,100		99
Mebuki Financial Group, Inc.		23,400		87
Medipal Holdings Corp.		200		4
MEIJI Holdings Co., Ltd.		1,500		121
Minebea Mitsumi, Inc.		3,000		48
Miraca Holdings, Inc.		1,800		81
Mitsubishi Chemical Holdings Corp.		19,700		163
Mitsubishi Corp.		24,300		509
Mitsubishi Electric Corp.		38,552		554
Mitsubishi Estate Co., Ltd.		20,800		387
Mitsubishi Heavy Industries Ltd.		56,550		231
Mitsubishi Materials Corp.		1,700		51
Mitsubishi Motors Corp. (a)		8,500		56
Mitsubishi Tanabe Pharma Corp.		1,500		35
Mitsubishi UFJ Financial Group, Inc. (See Note G)		92,506		621
Mitsui & Co., Ltd.		18,300		261
Mitsui Fudosan Co., Ltd.		16,000		381
Mitsui OSK Lines Ltd.		3,000		9
Mizuho Financial Group, Inc.		396,000		723
MS&AD Insurance Group Holdings, Inc.		3,960		133
Murata Manufacturing Co., Ltd.		2,900		440
Nabtesco Corp.		1,200		35
Nagoya Railroad Co., Ltd.		1,000		5
NEC Corp.		17,900		47
Nexon Co., Ltd. (b)		3,500		69
NGK Insulators Ltd.		2,860		57
NGK Spark Plug Co., Ltd.		3,759		80
NH Foods Ltd.		2,000		61
Nidec Corp.		4,800		491
Nikon Corp.		6,900		110
Nintendo Co., Ltd.		1,208		405
Nippon Building Fund, Inc. REIT		18		92
Nippon Express Co., Ltd.		5,300		33
Nippon Paint Holdings Co., Ltd. (a)		2,000		76
Nippon Prologis, Inc. REIT		12		26
Nippon Steel & Sumitomo Metal Corp.		6,900		156
Nippon Telegraph & Telephone Corp.		13,900		656
Nippon Television Holdings, Inc.		3,900		65
Nippon Yusen KK (b)		10,015		19
Nissan Motor Co., Ltd.		32,305		321
Nissin Foods Holdings Co., Ltd.		100		6
Nitori Holdings Co., Ltd.		1,400		187

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Nitto Denko Corp.		2,100	$	173
Nomura Holdings, Inc.		67,250		403
Nomura Real Estate Master Fund, Inc. REIT		28		38
Nomura Research Institute Ltd.		100		4
NSK Ltd.		5,553		69
NTT Data Corp.		6,500		72
NTT DoCoMo, Inc.		14,000		330
Obayashi Corp.		15,971		188
Obic Co., Ltd.		1,300		80
Odakyu Electric Railway Co., Ltd.		9,000		181
Oji Holdings Corp.		1,000		5
Olympus Corp.		200		7
Omron Corp.		4,404		191
Ono Pharmaceutical Co., Ltd.		5,900		129
Oriental Land Co., Ltd.		3,700		250
ORIX Corp.		24,660		381
Osaka Gas Co., Ltd.		45,600		186
Otsuka Holdings Co., Ltd.		6,400		273
Panasonic Corp.		19,100		259
Rakuten, Inc.		14,700		173
Recruit Holdings Co., Ltd.		20,100		345
Resona Holdings, Inc.		21,400		118
Ricoh Co., Ltd.		400		4
Rohm Co., Ltd.		1,005		77
Santen Pharmaceutical Co., Ltd.		6,200		84
SBI Holdings, Inc.		4,100		55
Secom Co., Ltd.		4,085		310
Sega Sammy Holdings, Inc.		2,300		31
Seibu Holdings, Inc.		4,200		78
Seiko Epson Corp.		2,400		53
Sekisui Chemical Co., Ltd.		5,472		98
Sekisui House Ltd.		18,146		319
Seven & I Holdings Co., Ltd.		11,400		469
Seven Bank Ltd.		800		3
Shimamura Co., Ltd.		100		12
Shimano, Inc.		1,750		277
Shimizu Corp.		13,000		138
Shin-Etsu Chemical Co., Ltd.		4,593		416
Shionogi & Co., Ltd.		6,500		362
Shiseido Co., Ltd.		6,600		234
Shizuoka Bank Ltd. (The)		12,000		108
SMC Corp.		905		275
SoftBank Group Corp.		11,200		906
Sojitz Corp.		50,300		123
Sompo Holdings, Inc.		2,900		112
Sony Corp.		11,693		446
Subaru Corp.		5,500		185
Sumitomo Chemical Co., Ltd.		4,600		26
Sumitomo Corp.		18,000		234
Sumitomo Electric Industries Ltd.		12,600		194
Sumitomo Heavy Industries Ltd.		2,000		13
Sumitomo Metal Mining Co., Ltd.		5,300		71

	Shares		Value (000)
Sumitomo Mitsui Financial Group, Inc.		19,700	$	767
Sumitomo Mitsui Trust Holdings, Inc.		5,916		211
Sumitomo Realty & Development Co., Ltd.		6,500		200
Suruga Bank Ltd.		3,500		85
Suzuken Co., Ltd.		1,400		46
Suzuki Motor Corp.		3,100		147
Sysmex Corp.		1,600		95
T&D Holdings, Inc.		4,900		74
Taiheiyo Cement Corp.		18,000		65
Taisei Corp.		39,000		356
Takashimaya Co., Ltd.		3,000		29
Takeda Pharmaceutical Co., Ltd.		11,000		558
TDK Corp.		1,652		109
Teijin Ltd.		221		4
Terumo Corp.		6,100		240
THK Co., Ltd.		3,100		88
Tobu Railway Co., Ltd.		34,900		190
Toho Co., Ltd.		3,500		108
Tohoku Electric Power Co., Inc.		3,900		54
Tokio Marine Holdings, Inc.		8,920		369
Tokyo Electron Ltd.		1,400		189
Tokyo Gas Co., Ltd.		44,600		232
Tokyu Corp.		12,400		94
Tokyu Fudosan Holdings Corp.		3,600		21
Toppan Printing Co., Ltd.		3,600		39
Toray Industries, Inc.		20,300		170
TOTO Ltd.		2,100		80
Toyo Suisan Kaisha Ltd.		2,200		84
Toyota Industries Corp.		750		39
Toyota Motor Corp.		25,255		1,323
Toyota Tsusho Corp.		200		6
Trend Micro, Inc.		900		46
Unicharm Corp.		7,600		191
United Urban Investment Corp. REIT		22		31
USS Co., Ltd.		4,300		85
West Japan Railway Co.		442		31
Yahoo! Japan Corp.		28,600		124
Yakult Honsha Co., Ltd.		1,900		129
Yamada Denki Co., Ltd. (a)		22,000		109
Yamaha Corp.		2,400		83
Yamaha Motor Co., Ltd.		3,000		77
Yamato Holdings Co., Ltd.		5,535		112
Yaskawa Electric Corp.		2,800		59
				42,336
Korea, Republic of (0.1%)
NAVER Corp.		267		196
Malta (0.0%)
BGP Holdings PLC (b)(e)(f)		72,261		1
Netherlands (3.4%)
ABN AMRO Group N.V. CVA (d)		250		7
Aegon N.V.		29,744		152
Altice N.V., Class A (b)		3,200		74

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Netherlands (cont'd)
Altice N.V., Class B (b)		1,070	$	25
ASML Holding N.V.		9,811		1,278
Gemalto N.V.		2,555		153
Heineken Holding N.V.		132		12
Heineken N.V.		3,371		328
ING Groep N.V.		62,309		1,075
Koninklijke Ahold Delhaize N.V.		13,210		252
Koninklijke DSM N.V.		2,602		189
Koninklijke KPN N.V.		67,724		217
Koninklijke Philips N.V.		23,791		845
Randstad Holding N.V.		8,542		499
RELX N.V.		26,469		544
Unilever N.V. CVA		28,028		1,547
Wolters Kluwer N.V.		11,696		495
				7,692
Norway (0.2%)
DNB ASA		15,071		257
Marine Harvest ASA (b)		12,579		215
				472
Peru (0.6%)
Cia de Minas Buenaventura SA ADR		15,000		172
Credicorp Ltd.		5,300		951
Southern Copper Corp.		6,700		232
				1,355
Philippines (1.9%)
Aboitiz Equity Ventures, Inc.		163,160		246
Aboitiz Power Corp.		110,900		86
Ayala Corp.		20,800		350
Ayala Land, Inc.		620,900		489
Bank of the Philippine Islands		66,200		137
BDO Unibank, Inc.		165,212		406
DMCI Holdings, Inc.		352,600		99
Energy Development Corp.		826,900		99
Globe Telecom, Inc.		2,930		119
GT Capital Holdings, Inc.		6,760		162
International Container Terminal Services, Inc.		44,790		87
JG Summit Holdings, Inc.		236,940		380
Jollibee Foods Corp.		35,680		144
Metro Pacific Investments Corp.		1,280,900		162
PLDT, Inc.		8,005		285
SM Investments Corp.		20,210		322
SM Prime Holdings, Inc.		670,300		438
Universal Robina Corp.		70,800		229
				4,240
Portugal (0.2%)
EDP - Energias de Portugal SA		33,841		110
Galp Energia SGPS SA		15,107		229
				339
Spain (3.4%)
Abertis Infraestructuras SA		4,176		77
ACS Actividades de Construccion y Servicios SA		7,748		299

	Shares		Value (000)
Aena SA (d)		1,486	$	290
Amadeus IT Group SA, Class A		14,746		882
Banco Bilbao Vizcaya Argentaria SA		132,117		1,096
Banco de Sabadell SA		87,306		177
Banco Santander SA		227,951		1,508
Bankia SA		1,010		5
Bankinter SA (a)		10,989		101
CaixaBank SA		83,829		400
Distribuidora Internacional de Alimentacion SA (a)		15,242		95
Endesa SA (a)		16,926		390
Ferrovial SA		14,112		313
Grifols SA		8,248		230
Industria de Diseno Textil SA		24,017		922
Mapfre SA		4,939		17
Red Electrica Corp., SA (a)		20,742		433
Repsol SA		14,739		226
Telefonica SA		19,427		201
Zardoya Otis SA		6,046		63
				7,725
Sweden (2.8%)
Boliden AB		317		9
Electrolux AB, Class B		40,350		1,322
Elekta AB, Class B		5,951		56
Essity AB, Class B (b)		13,601		372
Getinge AB, Class B		5,486		107
Hennes & Mauritz AB, Class B		10,858		271
Hexagon AB, Class B		8,941		425
Husqvarna AB, Class B		28,002		278
Investor AB, Class B		11,261		543
Lundin Petroleum AB (b)		3,215		62
Nordea Bank AB		46,960		598
Saab AB		1,565		77
Skandinaviska Enskilda Banken AB, Class A		28,790		348
Skanska AB, Class B		8,209		195
Svenska Cellulosa AB SCA, Class B		13,601		103
Svenska Handelsbanken AB, Class A		20,233		290
Swedbank AB, Class A		12,679		309
Swedish Match AB		5,056		178
Tele2 AB, Class B		431		4
Telefonaktiebolaget LM Ericsson, Class B		67,972		486
Telia Co AB		32,120		148
Volvo AB, Class B		18,554		316
				6,497
Switzerland (6.4%)
Actelion Ltd. (Registered) (b)		2,205		616
Adecco Group AG (Registered)		7,083		538
Baloise Holding AG (Registered)		913		141
Cie Financiere Richemont SA (Registered)		5,319		438
Geberit AG (Registered)		1,086		506
Givaudan SA (Registered)		122		244
Idorsia Ltd. (b)		2,205		42
Julius Baer Group Ltd. (b)		3,275		172
LafargeHolcim Ltd. (Registered) (b)		3,101		178

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Switzerland (cont'd)
LafargeHolcim Ltd. (Registered) (b)		9,623	$	551
Lonza Group AG (Registered) (b)		1,365		295
Nestle SA (Registered)		53,745		4,677
Novartis AG (Registered)		42,763		3,559
Partners Group Holding AG		198		123
Schindler Holding AG		481		102
SGS SA (Registered)		18		44
Sonova Holding AG (Registered) (a)		661		107
Swiss Life Holding AG (Registered) (b)		1,023		345
UBS Group AG (Registered) (b)		72,670		1,231
Vifor Pharma AG		80		9
Zurich Insurance Group AG		2,398		698
				14,616
Taiwan (1.0%)
Taiwan Semiconductor Manufacturing Co., Ltd.		341,000		2,337
Thailand (1.1%)
Advanced Info Service PCL (Foreign)		26,900		141
Airports of Thailand PCL (Foreign)		123,000		171
Bangkok Dusit Medical Services PCL (Foreign)		120,300		68
Bangkok Expressway & Metro PCL (Foreign)		212,600		47
Bumrungrad Hospital PCL (Foreign)		10,100		51
Central Pattana PCL (Foreign)		42,800		87
Charoen Pokphand Foods PCL (Foreign)		76,100		56
CP ALL PCL (Foreign)		131,200		242
Delta Electronics Thailand PCL (Foreign)		21,100		54
Home Product Center PCL (Foreign)		161,400		46
Indorama Ventures PCL (Foreign)		45,100		50
IRPC PCL (Foreign)		369,500		58
Kasikornbank PCL (Foreign)		45,500		266
Krung Thai Bank PCL (Foreign)		132,300		73
Minor International PCL (Foreign)		58,600		69
PTT Exploration & Production PCL (Foreign)		44,700		113
PTT Global Chemical PCL (Foreign)		59,400		120
PTT PCL (Foreign)		26,400		287
Siam Cement PCL (The) (Foreign)		11,500		171
Siam Commercial Bank PCL (The) (Foreign)		46,700		214
Thai Oil PCL (Foreign)		30,800		72
True Corp. PCL (Foreign) (b)		261,300		48
				2,504
United Kingdom (9.4%)
3i Group PLC		7,590		89
Admiral Group PLC		1,588		41
Anglo American PLC (b)		20,020		267
Antofagasta PLC (a)		2,540		26
Associated British Foods PLC		676		26
AstraZeneca PLC		19,311		1,292
Aviva PLC		57,083		391
Babcock International Group PLC		4,169		48
BAE Systems PLC		130,645		1,078
Barratt Developments PLC		19,177		141
British American Tobacco PLC		23,509		1,603

	Shares		Value (000)
Bunzl PLC		5,004	$	149
Burberry Group PLC		4,157		90
Carnival PLC		2,846		188
Centrica PLC		69,318		181
Coca-Cola HBC AG (b)		503		15
Compass Group PLC		29,519		623
CYBG PLC CDI (b)		7,987		29
DCC PLC		505		46
Diageo PLC		27,352		808
Fresnillo PLC		1,397		27
GKN PLC		28,664		122
GlaxoSmithKline PLC		74,410		1,585
Glencore PLC (b)		189,340		708
Hargreaves Lansdown PLC		1,234		21
IMI PLC		2,247		35
Imperial Brands PLC		12,782		574
Indivior PLC		10,100		41
Inmarsat PLC		793		8
InterContinental Hotels Group PLC		3,899		217
Intertek Group PLC		1,914		105
Investec PLC		5,043		38
ITV PLC		5,540		13
J Sainsbury PLC		18,966		62
Johnson Matthey PLC		2,526		94
Legal & General Group PLC		55,584		187
Lonmin PLC (b)		23		—	@
Melrose Industries PLC		311		1
Merlin Entertainments PLC (d)		1,309		8
Mondi PLC		676		18
National Grid PLC		17,208		213
Next PLC		2,193		110
Old Mutual PLC		42,304		107
Pearson PLC		11,921		107
Persimmon PLC		5,527		161
Prudential PLC		28,844		662
Reckitt Benckiser Group PLC		8,470		859
RELX PLC		20,956		453
Rolls-Royce Holdings PLC (b)		22,206		258
Royal Dutch Shell PLC, Class A		58,320		1,546
Royal Dutch Shell PLC, Class B		42,858		1,151
RSA Insurance Group PLC		6,288		50
Sage Group PLC (The)		26,348		236
Schroders PLC		1,066		43
Segro PLC REIT		5,885		37
Severn Trent PLC		1,201		34
Shire PLC		14,916		823
Sky PLC		24,778		321
Smith & Nephew PLC		35,901		620
SSE PLC		4,912		93
Standard Life PLC		14,018		73
Tate & Lyle PLC		870		8
Taylor Wimpey PLC		62,655		144
TechnipFMC PLC (b)		3,806		103

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
United Kingdom (cont'd)
Travis Perkins PLC		460	$	9
TUI AG		7,047		103
Unilever PLC		22,013		1,191
United Utilities Group PLC		3,447		39
Whitbread PLC		3,377		174
WM Morrison Supermarkets PLC		4,346		14
Wolseley PLC		3,404		209
WPP PLC		29,173		613
				21,559
Total Common Stocks (Cost $153,047)				195,221
	No. of Rights
Right (0.0%)
Spain (0.0%)
ACS Actividades de Construccion y Servicios SA (b) (Cost $6)		7,748		6
	Shares
Short-Term Investments (14.2%)
Securities held as Collateral on Loaned Securities (0.7%)
Investment Company (0.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		1,282,939		1,283
	Face Amount (000)
Repurchase Agreements (0.2%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $156; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $159)	$	156		156
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $142; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $145)		142		142
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $102; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $104)		102		102
				400
Total Securities held as Collateral on Loaned Securities (Cost $1,683)				1,683

	Shares		Value (000)
Investment Company (13.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $30,920)		30,920,229	$	30,920
Total Short-Term Investments (Cost $32,603)				32,603
Total Investments (99.3%) (Cost $185,656) Including $4,497 of Securities Loaned (g)(h)				227,830
Other Assets in Excess of Liabilities (0.7%)				1,519
Net Assets (100.0%)			$	229,349

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  All or a portion of this security was on loan at June 30, 2017.

(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.

(e)  Security has been deemed illiquid at June 30, 2017.

(f)  At June 30, 2017, the Fund held a fair valued security valued at approximately $1,000, representing less than 0.05% 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 Company's Directors.

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

(h)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $47,736,000 and the aggregate gross unrealized depreciation is approximately $5,562,000, resulting in net unrealized appreciation of approximately $42,174,000.

@  Value is less than $500.

ADR  American Depositary Receipt.

CDI  CHESS Depositary Interest.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

Foreign Currency Forward Exchange Contracts:

The Fund had the following foreign currency forward exchange contracts open at June 30, 2017:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
Citibank NA	JPY	283,009	$	2,545	8/10/17	$	25
Goldman Sachs International	$	7,706	INR	501,353	8/10/17		15
JPMorgan Chase Bank NA	$	2,393	BRL	7,681	8/10/17		(92	)
JPMorgan Chase Bank NA	$	4,160	MXN	75,956	8/10/17		2
JPMorgan Chase Bank NA	$	4,240	PLN	16,186	8/10/17		127
State Street Bank and Trust Co.	$	4,627	EUR	4,147	8/10/17		118
						$	195

Futures Contracts:

The Fund had the following futures contracts open at June 30, 2017:

	Number of Contracts		Value (000)		Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
Bovespa Index (Brazil)		120	$	2,304	Aug-17	$	33
Dax Index (Germany)		4		1,407	Sep-17		(51	)
FTSE MIB Index (Italy)		9		1,053	Sep-17		(25	)
IBEX 35 Index (Spain)		18		2,139	Jul-17		(83	)
MEX BOLSA Index (Mexico)		182		5,047	Sep-17		83
MSCI Emerging Market E Mini (United States)		154		7,764	Sep-17		(25	)
SGX NIFTY 50 (India)		423		8,053	Jul-17		(27	)
WIG20 Index (Poland)		431		5,320	Sep-17		12
						$	(83	)

BRL  —  Brazilian Real

EUR  —  Euro

INR  —  Indian Rupee

JPY  —  Japanese Yen

MXN  —  Mexican Peso

PLN  —  Polish Zloty

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		69.2	%
Short-Term Investment		13.7
Banks		9.9
Pharmaceuticals		7.2
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

**  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 $33,087,000 with net unrealized depreciation of approximately $83,000. Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $195,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $152,432)	$	195,006
Investment in Security of Affiliated Issuer, at Value (Cost $33,224)		32,824
Total Investments in Securities, at Value (Cost $185,656)		227,830
Foreign Currency, at Value (Cost $569)		547
Receivable for Variation Margin on Futures Contracts		2,513
Tax Reclaim Receivable		344
Dividends Receivable		343
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		287
Receivable for Fund Shares Sold		79
Receivable from Affiliate		18
Receivable for Investments Sold		10
Other Assets		83
Total Assets		232,054
Liabilities:
Collateral on Securities Loaned, at Value		1,683
Payable for Fund Shares Redeemed		371
Payable for Advisory Fees		336
Unrealized Depreciation on Foreign Currency Forward Exchange Contract		92
Payable for Sub Transfer Agency Fees — Class I		25
Payable for Sub Transfer Agency Fees — Class A		38
Payable for Sub Transfer Agency Fees — Class L		7
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Professional Fees		46
Payable for Directors' Fees and Expenses		22
Payable for Shareholder Services Fees — Class A		13
Payable for Distribution and Shareholder Services Fees — Class L		4
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		15
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		2
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		50
Total Liabilities		2,705
Net Assets	$	229,349
Net Assets Consist Of:
Paid-in-Capital	$	243,694
Accumulated Undistributed Net Investment Income		2,579
Accumulated Net Realized Loss		(59,200	)
Unrealized Appreciation (Depreciation) on:
Investments		42,574
Investments in Affiliates		(400	)
Futures Contracts		(83	)
Foreign Currency Forward Exchange Contracts		195
Foreign Currency Translations		(10	)
Net Assets	$	229,349

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	160,824
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,927,679
Net Asset Value, Offering and Redemption Price Per Share	$	13.48
CLASS A:
Net Assets	$	62,201
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,518,699
Net Asset Value, Redemption Price Per Share	$	13.77
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.76
Maximum Offering Price Per Share	$	14.53
CLASS L:
Net Assets	$	6,314
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		461,837
Net Asset Value, Offering and Redemption Price Per Share	$	13.67
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		717
Net Asset Value, Offering and Redemption Price Per Share	$	13.77
(1) Including: Securities on Loan, at Value:	$	4,497

@  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, 2017 (unaudited)

Active International Allocation Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $450 of Foreign Taxes Withheld)	$	3,919
Dividends from Securities of Affiliated Issuers (Note G)		91
Income from Securities Loaned — Net		21
Interest from Securities of Unaffiliated Issuers		10
Total Investment Income		4,041
Expenses:
Advisory Fees (Note B)		761
Shareholder Services Fees — Class A (Note D)		74
Distribution and Shareholder Services Fees — Class L (Note D)		23
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		46
Sub Transfer Agency Fees — Class A		43
Sub Transfer Agency Fees — Class L		7
Sub Transfer Agency Fees — Class C		—	@
Administration Fees (Note C)		94
Professional Fees		55
Custodian Fees (Note F)		35
Pricing Fees		28
Shareholder Reporting Fees		27
Registration Fees		20
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		5
Other Expenses		9
Total Expenses		1,240
Reimbursement of Class Specific Expenses — Class I (Note B)		(38	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(14	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(26	)
Net Expenses		1,156
Net Investment Income		2,885
Realized Gain (Loss):
Investments Sold		5,194
Foreign Currency Forward Exchange Contracts		231
Foreign Currency Transactions		(94	)
Futures Contracts		3,931
Net Realized Gain		9,262
Change in Unrealized Appreciation (Depreciation):
Investments		18,680
Investments in Affiliates		52
Foreign Currency Forward Exchange Contracts		81
Foreign Currency Translations		101
Futures Contracts		(232	)
Net Change in Unrealized Appreciation (Depreciation)		18,682
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		27,944
Net Increase in Net Assets Resulting from Operations	$	30,829

@  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, 2017

Active International Allocation Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	2,885		$	5,019
Net Realized Gain (Loss)		9,262			(19,850	)
Net Change in Unrealized Appreciation (Depreciation)		18,682			11,831
Net Increase (Decrease) in Net Assets Resulting from Operations		30,829			(3,000	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(4,058	)
Class A:
Net Investment Income		—			(1,111	)
Class L:
Net Investment Income		—			(80	)
Total Distributions		—			(5,249	)
Capital Share Transactions:(1)
Class I:
Subscribed		4,657			7,873
Distributions Reinvested		—			4,046
Redeemed		(35,784	)		(34,018	)
Class A:
Subscribed		3,609			4,280
Distributions Reinvested		—			1,094
Redeemed		(6,024	)		(10,963	)
Class L:
Distributions Reinvested		—			79
Redeemed		(524	)		(1,279	)
Class C:
Subscribed		—			40
Redeemed		—			(60	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(34,066	)		(28,908	)
Redemption Fees		1			—	@
Total Decrease in Net Assets		(3,236	)		(37,157	)
Net Assets:
Beginning of Period		232,585			269,742
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $2,579 and $(306), respectively)	$	229,349		$	232,585
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		373			673
Shares Issued on Distributions Reinvested		—			344
Shares Redeemed		(2,784	)		(2,891	)
Net Decrease in Class I Shares Outstanding		(2,411	)		(1,874	)
Class A:
Shares Subscribed		277			356
Shares Issued on Distributions Reinvested		—			91
Shares Redeemed		(465	)		(913	)
Net Decrease in Class A Shares Outstanding		(188	)		(466	)
Class L:
Shares Issued on Distributions Reinvested		—			7
Shares Redeemed		(41	)		(108	)
Net Decrease in Class L Shares Outstanding		(41	)		(101	)
Class C:
Shares Subscribed		—			3
Shares Redeemed		—			(5	)
Net Decrease in Class C Shares Outstanding		—			(2	)

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Active International Allocation Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.83		$	12.20		$	12.52		$	13.75		$	11.65		$	10.07
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.16			0.26			0.22			0.34			0.22			0.23
Net Realized and Unrealized Gain (Loss)		1.49			(0.34	)		(0.42	)		(1.22	)		2.25			1.51
Total from Investment Operations		1.65			(0.08	)		(0.20	)		(0.88	)		2.47			1.74
Distributions from and/or in Excess of:
Net Investment Income		—			(0.29	)		(0.12	)		(0.35	)		(0.37	)		(0.16	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	13.48		$	11.83		$	12.20		$	12.52		$	13.75		$	11.65
Total Return (4)		13.95	%(6)		(0.67	)%		(1.63	)%		(6.37	)%		21.38	%		17.30	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	160,824		$	169,589		$	197,733		$	219,467		$	260,614		$	251,657
Ratio of Expenses to Average Net Assets (8)		0.88	%(5)(7)		0.76	%(5)		0.89	%(5)		0.88	%(5)		0.83	%(5)		0.89	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			0.88	%(5)		N/A
Ratio of Net Investment Income to Average Net Assets (8)		2.56	%(5)(7)		2.18	%(5)		1.66	%(5)		2.53	%(5)		1.71	%(5)		2.12	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(7)		0.01	%		0.01	%		0.02	%		0.02	%		0.01	%
Portfolio Turnover Rate		14	%(6)		40	%		30	%		32	%		36	%		27	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.94	%(7)		0.94	%		0.92	%		0.99	%		0.99	%		0.98	%
Net Investment Income to Average Net Assets		2.50	%(7)		2.00	%		1.63	%		2.42	%		1.55	%		2.03	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets would have been 0.13% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.13% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Active International Allocation Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.10		$	12.47		$	12.79		$	14.03		$	11.89		$	10.27
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.15			0.21			0.17			0.30			0.11			0.20
Net Realized and Unrealized Gain (Loss)		1.52			(0.34	)		(0.42	)		(1.24	)		2.36			1.55
Total from Investment Operations		1.67			(0.13	)		(0.25	)		(0.94	)		2.47			1.75
Distributions from and/or in Excess of:
Net Investment Income		—			(0.24	)		(0.07	)		(0.30	)		(0.33	)		(0.13	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	13.77		$	12.10		$	12.47		$	12.79		$	14.03		$	11.89
Total Return (4)		13.80	%(7)		(1.05	)%		(1.95	)%		(6.70	)%		20.94	%		17.05	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	62,201		$	56,934		$	64,482		$	71,938		$	90,599		$	8,608
Ratio of Expenses to Average Net Assets (9)		1.23	%(5)(8)		1.14	%(5)		1.24	%(5)		1.23	%(5)		1.09	%(5)(6)		1.14	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.21	%(5)(6)		N/A
Ratio of Net Investment Income to Average Net Assets (9)		2.26	%(5)(8)		1.79	%(5)		1.31	%(5)		2.18	%(5)		0.84	%(5)		1.80	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(8)		0.01	%		0.01	%		0.02	%		0.02	%		0.01	%
Portfolio Turnover Rate		14	%(7)		40	%		30	%		32	%		36	%		27	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.30	%(8)		1.32	%		1.28	%		1.31	%(5)		1.25	%(5)		1.23	%
Net Investment Income to Average Net Assets		2.19	%(8)		1.61	%		1.27	%		2.10	%(5)		0.68	%(5)		1.71	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been 0.10% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.10% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Active International Allocation Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from June 14, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	12.04		$	12.41		$	12.74		$	13.97		$	11.84		$	10.09
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.11			0.14			0.11			0.23			0.12			(0.02	)
Net Realized and Unrealized Gain (Loss)		1.52			(0.35	)		(0.42	)		(1.23	)	��	2.27			1.91
Total from Investment Operations		1.63			(0.21	)		(0.31	)		(1.00	)		2.39			1.89
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.02	)		(0.23	)		(0.26	)		(0.14	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	13.67		$	12.04		$	12.41		$	12.74		$	13.97		$	11.84
Total Return (5)		13.54	%(8)		(1.68	)%		(2.44	)%		(7.17	)%		20.34	%		18.80	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6,314		$	6,053		$	7,495		$	8,606		$	10,345		$	10,246
Ratio of Expenses to Average Net Assets (10)		1.73	%(6)(9)		1.74	%(6)		1.74	%(6)		1.73	%(6)		1.61	%(6)(7)		1.63	%(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.66	%(6)(7)		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		1.74	%(6)(9)		1.20	%(6)		0.82	%(6)		1.68	%(6)		0.94	%(6)		(0.33	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(9)		0.01	%		0.01	%		0.02	%		0.02	%		0.02	%(9)
Portfolio Turnover Rate		14	%(8)		40	%		30	%		32	%		36	%		27	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.91	%(9)		1.93	%		1.87	%		1.87	%		1.76	%		1.79	%(9)
Net Investment Income (Loss) to Average Net Assets		1.56	%(9)		1.01	%		0.69	%		1.54	%		0.79	%		(0.49	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Active International Allocation Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	12.15		$	12.38		$	13.94
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.10			0.14			(0.00	)(4)
Net Realized and Unrealized Gain (Loss)		1.52			(0.37	)		(1.53	)
Total from Investment Operations		1.62			(0.23	)		(1.53	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.03	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	13.77		$	12.15		$	12.38
Total Return (5)		13.43	%(7)		(1.94	)%		(10.96	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10		$	9		$	32
Ratio of Expenses to Average Net Assets (9)		1.98	%(6)(8)		1.99	%(6)		1.99	%(6)(8)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		1.53	%(6)(8)		1.19	%(6)		(0.04	)%(6)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(8)		0.01	%		0.01	%(8)
Portfolio Turnover Rate		14	%(7)		40	%		30	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		22.56	%(8)		8.58	%		4.26	%(8)
Net Investment Loss to Average Net Assets		(19.05	)%(8)		(5.40	)%		(2.31	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

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

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (4) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (5) when market quotations are not readily available, including circumstances under which the Adviser or the Sub-Adviser, a wholly-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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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	$	3,361	$	—	$	—	$	3,361
Air Freight & Logistics		652		—		—		652
Airlines		537		—		—		537
Auto Components		2,687		—		—		2,687
Automobiles		5,604		—		—		5,604
Banks		21,883		553		—		22,436
Beverages		3,778		—		—		3,778
Biotechnology		2,135		—		—		2,135
Building Products		1,670		—		—		1,670
Capital Markets		3,913		—		—		3,913
Chemicals		4,638		120		—		4,758
Commercial Services & Supplies		673		—		—		673
Communications Equipment		1,160		—		—		1,160
Construction & Engineering		3,113		—		—		3,113
Construction Materials		2,843		171		—		3,014
Consumer Finance		272		—		—		272
Containers & Packaging		107		—		—		107
Diversified Consumer Services		17		—		—		17
Diversified Financial Services		2,276		—		—		2,276
Diversified Telecommunication Services		4,314		48		—		4,362
Electric Utilities		2,778		—		—		2,778
Electrical Equipment		1,758		—		—		1,758
Electronic Equipment, Instruments & Components		3,186		—		—		3,186
Energy Equipment & Services		271		—		—		271
Equity Real Estate Investment Trusts (REITs)		1,908		—		—		1,908

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	$	2,138	$	242	$	—	$	2,380
Food Products		7,163		56		—		7,219
Gas Utilities		725		—		—		725
Health Care Equipment & Supplies		2,017		—		—		2,017
Health Care Providers & Services		891		119		—		1,010
Health Care Technology		3		—		—		3
Hotels, Restaurants & Leisure		2,514		69		—		2,583
Household Durables		3,384		—		—		3,384
Household Products		2,257		—		—		2,257
Independent Power and Renewable Electricity Producers		255		—		—		255
Industrial Conglomerates		3,961		—		—		3,961
Information Technology Services		2,072		—		—		2,072
Insurance		8,981		—		—		8,981
Internet & Direct Marketing Retail		447		—		—		447
Internet Software & Services		6,013		—		—		6,013
Leisure Products		531		—		—		531
Life Sciences Tools & Services		520		—		—		520
Machinery		4,170		—		—		4,170
Marine		1,080		—		—		1,080
Media		2,602		—		—		2,602
Metals & Mining		2,099		—		—		2,099
Multi-Line Retail		708		—		—		708
Multi-Utilities		2,030		—		—		2,030
Oil, Gas & Consumable Fuels		6,649		530		—		7,179
Paper & Forest Products		769		—		—		769
Personal Products		4,443		—		—		4,443
Pharmaceuticals		16,392		—		—		16,392
Professional Services		3,043		—		—		3,043
Real Estate Management & Development		4,355		87		1		4,443
Road & Rail		2,442		—		—		2,442
Semiconductors & Semiconductor Equipment		4,816		—		—		4,816
Software		4,001		—		—		4,001
Specialty Retail		1,913		46		—		1,959
Tech Hardware, Storage & Peripherals		1,014		—		—		1,014
Textiles, Apparel & Luxury Goods		2,310		—		—		2,310
Thrifts & Mortgage Finance		29		—		—		29
Tobacco		3,285		—		—		3,285
Trading Companies & Distributors		2,082		—		—		2,082
Transportation Infrastructure		812		218		—		1,030

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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)
Water Utilities	$	73		$	—		$	—	$	73
Wireless Telecommunication Services		2,297			141			—		2,438
Total Common Stocks		192,820			2,400			1		195,221
Right		6			—			—		6
Short-Term Investments
Investment Company		32,203			—			—		32,203
Repurchase Agreements		—			400			—		400
Total Short-Term Investments		32,203			400			—		32,603
Foreign Currency Forward Exchange Contracts		—			287			—		287
Futures Contracts		128			—			—		128
Total Assets		225,157			3,087			1		228,245
Liabilities:
Foreign Currency Forward Exchange Contract		—			(92	)		—		(92	)
Futures Contracts		(211	)		—			—		(211	)
Total Liabilities		(211	)		(92	)		—		(303	)
Total	$	224,946		$	2,995		$	1	$	227,942

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, securities with a total value of approximately $171,000 transferred from Level 1 to Level 2.

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

	Common Stocks (000)
Beginning Balance	$	2
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(1	)
Realized gains (losses)		—
Ending Balance	$	1
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(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, 2017.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Real Estate Management & Development
Common Stock	$	1	Market Transaction Method	Transaction Valuation	$	0.02		$	0.02		$	0.02		Increase
				Discount for Lack of Marketability		50.0	%		50.0	%		50.0	%	Decrease

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund's holdings, including derivative instruments, are marked-to-market each day with

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser and/or Sub-Adviser seek to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Fund'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 Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following tables set forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	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	$	287
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		128	(a)
Total			$	415
	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	$	(92	)
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		(211	)(a)
Total			$	(303	)

(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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	231
Equity Risk	Futures Contracts		3,931
	Total	$	4,162
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	81
Equity Risk	Futures Contracts		(232	)
	Total	$	(151	)

At June 30, 2017, the Fund'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	$	287	$	(92	)

(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 Fund 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 Fund 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 Fund 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 Fund 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 Fund'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, 2017.

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	$	25	$	—		$	—	$	25
Goldman Sachs International		15		—			—		15
JPMorgan Chase Bank NA		129		(92	)		—		37
State Street Bank and Trust Co.		118		—			—		118
Total	$	287	$	(92	)	$	—	$	195

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 (000)		Net Amount (not less than $0) (000)
JPMorgan Chase Bank NA	$	92	$	(92	)	$	—	$	0

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	39,250,000
Futures Contracts:
Average monthly original value	$	45,585,000

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	4,497	(d)	$	—	$	(4,497	)(e)(f)	$	0

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

(e) The Fund received cash collateral of approximately $1,683,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $2,992,000 in the form of U.S. Government obligations, which the Fund 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	1,683	$	—	$	—	$	—	$	1,683
Total Borrowings	$	1,683	$	—	$	—	$	—	$	1,683
Gross amount of recognized liabilities for securities lending transactions									$	1,683

7.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 Fund 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, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.63% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $58,000 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 Fund with advisory services subject to the overall supervision of the Adviser and the Company's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

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

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

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

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than

long-term U.S. Government securities and short-term investments, were approximately $27,049,000 and $55,859,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $26,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	48,686	$	46,816	$	63,299	$	84	$	32,203

The Fund 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 Fund's transactions in shares of the Mitsubishi UFJ Financial Group, Inc. during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Realized Gain (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	570	$	—	$	—	$	—	$	7	$	621

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	5,249	$	—	$	2,323	$	—

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, an expired capital loss carryforward 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, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	807	$	7,027	$	(7,834	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	369	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $4,770,000 and long-term capital losses of approximately $24,650,000 that do not have an expiration date.

In addition, at December 31, 2016, the Fund 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*
$	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.

During the year ended December 31, 2016, capital loss carryforwards of approximately $7,834,000 expired for federal income tax purposes .

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 Fund for gains

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 83.9%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods but better than 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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.

36

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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

37

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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.

38

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

39

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIAIASAN
1858577 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Advantage Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Advantage Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Advantage Portfolio Class I	$	1,000.00	$	1,163.70	$	1,020.63	$	4.51	$	4.21		0.84	%
Advantage Portfolio Class A		1,000.00		1,161.60		1,018.94		6.32		5.91		1.18
Advantage Portfolio Class L		1,000.00		1,163.20		1,020.03		5.15		4.81		0.96
Advantage Portfolio Class C		1,000.00		1,157.90		1,015.37		10.17		9.49		1.90
Advantage Portfolio Class IS		1,000.00		1,164.20		1,020.83		4.29		4.01		0.80

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Advantage Portfolio

	Shares		Value (000)
Common Stocks (95.1%)
Aerospace & Defense (7.6%)
TransDigm Group, Inc.		9,464	$	2,545
United Technologies Corp.		39,890		4,871
				7,416
Capital Markets (7.5%)
MSCI, Inc.		25,962		2,674
S&P Global, Inc.		32,369		4,725
				7,399
Chemicals (1.5%)
Sherwin-Williams Co. (The)		4,309		1,512
Diversified Financial Services (4.9%)
Berkshire Hathaway, Inc., Class B (a)		28,189		4,774
Health Care Equipment & Supplies (1.5%)
Danaher Corp.		17,390		1,468
Hotels, Restaurants & Leisure (6.1%)
Dunkin' Brands Group, Inc.		23,640		1,303
Starbucks Corp.		81,115		4,730
				6,033
Information Technology Services (7.5%)
Mastercard, Inc., Class A		37,674		4,575
Visa, Inc., Class A		29,919		2,806
				7,381
Internet & Direct Marketing Retail (13.3%)
Amazon.com, Inc. (a)		8,527		8,254
Priceline Group, Inc. (The) (a)		2,585		4,835
				13,089
Internet Software & Services (16.7%)
Alphabet, Inc., Class C (a)		6,720		6,107
Facebook, Inc., Class A (a)		55,296		8,348
Twitter, Inc. (a)		111,031		1,984
				16,439
Machinery (1.1%)
Fortive Corp.		16,216		1,027
Media (1.0%)
Walt Disney Co. (The)		8,872		943
Multi-Line Retail (1.3%)
Dollar Tree, Inc. (a)		18,732		1,310
Pharmaceuticals (2.8%)
Zoetis, Inc.		43,785		2,731
Professional Services (5.2%)
IHS Markit Ltd. (a)		56,452		2,486
Verisk Analytics, Inc. (a)		31,272		2,639
				5,125
Software (9.4%)
Activision Blizzard, Inc.		42,082		2,423
Salesforce.com, Inc. (a)		39,845		3,450
Workday, Inc., Class A (a)		34,155		3,313
				9,186

	Shares		Value (000)
Specialty Retail (3.1%)
Home Depot, Inc.		9,930	$	1,524
Tiffany & Co.		16,461		1,545
				3,069
Textiles, Apparel & Luxury Goods (4.6%)
LVMH Moet Hennessy Louis Vuitton SE (France)		13,612		3,394
NIKE, Inc., Class B		18,895		1,115
				4,509
Total Common Stocks (Cost $72,588)				93,411
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY November 2017 @ CNY 7.40, Royal Bank of Scotland (Cost $48)		14,469		9
	Shares
Short-Term Investment (4.2%)
Investment Company (4.2%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $4,176)		4,175,756		4,176
Total Investments (99.3%) (Cost $76,812) (b)				97,596
Other Assets in Excess of Liabilities (0.7%)				692
Net Assets (100.0%)			$	98,288

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $21,675,000 and the aggregate gross unrealized depreciation is approximately $891,000 resulting in net unrealized appreciation of approximately $20,784,000.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		26.2	%
Internet Software & Services		16.8
Internet & Direct Marketing Retail		13.4
Software		9.4
Aerospace & Defense		7.6
Capital Markets		7.6
Information Technology Services		7.6
Hotels, Restaurants & Leisure		6.2
Professional Services		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, 2017 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $72,636)	$	93,420
Investment in Security of Affiliated Issuer, at Value (Cost $4,176)		4,176
Total Investments in Securities, at Value (Cost $76,812)		97,596
Receivable for Investments Sold		657
Receivable for Fund Shares Sold		123
Dividends Receivable		19
Tax Reclaim Receivable		3
Receivable from Affiliate		2
Other Assets		79
Total Assets		98,479
Liabilities:
Payable for Advisory Fees		110
Payable for Professional Fees		27
Payable for Fund Shares Redeemed		18
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		7
Payable for Sub Transfer Agency Fees — Class I		7
Payable for Sub Transfer Agency Fees — Class A		2
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Sub Transfer Agency Fees — Class C		1
Payable for Administration Fees		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 Custodian Fees		1
Other Liabilities		6
Total Liabilities		191
Net Assets	$	98,288
Net Assets Consist of:
Paid-in-Capital	$	75,542
Distributions in Excess of Net Investment Income		(162	)
Accumulated Net Realized Gain		2,124
Unrealized Appreciation (Depreciation) on:
Investments		20,784
Foreign Currency Translations		—	@
Net Assets	$	98,288

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	48,237
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,372,895
Net Asset Value, Offering and Redemption Price Per Share	$	20.33
CLASS A:
Net Assets	$	21,651
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,079,610
Net Asset Value, Redemption Price Per Share	$	20.05
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.11
Maximum Offering Price Per Share	$	21.16
CLASS L:
Net Assets	$	4,019
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		197,849
Net Asset Value, Offering and Redemption Price Per Share	$	20.31
CLASS C:
Net Assets	$	8,930
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		449,335
Net Asset Value, Offering and Redemption Price Per Share	$	19.87
CLASS IS:
Net Assets	$	15,451
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		759,226
Net Asset Value, Offering and Redemption Price Per Share	$	20.35

@  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, 2017 (unaudited)

Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $3 of Foreign Taxes Withheld)	$	299
Dividends from Securities of Affiliated Issuers (Note G)		8
Total Investment Income		307
Expenses:
Advisory Fees (Note B)		298
Shareholder Services Fees — Class A (Note D)		26
Distribution and Shareholder Services Fees — Class L (Note D)		15
Distribution and Shareholder Services Fees — Class C (Note D)		37
Professional Fees		48
Administration Fees (Note C)		37
Sub Transfer Agency Fees — Class I		20
Sub Transfer Agency Fees — Class A		11
Sub Transfer Agency Fees — Class L		1
Sub Transfer Agency Fees — Class C		2
Registration Fees		26
Shareholder Reporting Fees		9
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		2
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		2
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		6
Directors' Fees and Expenses		3
Pricing Fees		1
Other Expenses		9
Total Expenses		557
Waiver of Advisory Fees (Note B)		(66	)
Distribution Fees — Class L Shares Waived (Note D)		(14	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(13	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(3	)
Net Expenses		460
Net Investment Loss		(153	)
Realized Gain (Loss):
Investments Sold		1,778
Foreign Currency Transactions		(2	)
Net Realized Gain		1,776
Change in Unrealized Appreciation (Depreciation):
Investments		12,085
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		12,085
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		13,861
Net Increase in Net Assets Resulting from Operations	$	13,708

@  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, 2017

Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	(153	)	$	175
Net Realized Gain		1,776			953
Net Change in Unrealized Appreciation (Depreciation)		12,085			2,261
Net Increase in Net Assets Resulting from Operations		13,708			3,389
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(111	)
Net Realized Gain		—			(841	)
Class A:
Net Realized Gain		—			(348	)
Class L:
Net Investment Income		—			(6	)
Net Realized Gain		—			(96	)
Class C:
Net Realized Gain		—			(94	)
Class IS:
Net Investment Income		—			(38	)
Net Realized Gain		—			(282	)
Total Distributions		—			(1,816	)
Capital Share Transactions:(1)
Class I:
Subscribed		7,497			33,563
Distributions Reinvested		—			950
Redeemed		(8,789	)		(17,346	)
Class A:
Subscribed		2,658			16,149
Distributions Reinvested		—			347
Redeemed		(3,923	)		(8,863	)
Class L:
Exchanged		20			67
Distributions Reinvested		—			99
Redeemed		(280	)		(1,880	)
Class C:
Subscribed		2,119			4,912
Distributions Reinvested		—			94
Redeemed		(600	)		(421	)
Class IS:
Subscribed		—			12,500
Distributions Reinvested		—			320
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(1,298	)		40,491
Total Increase in Net Assets		12,410			42,064
Net Assets:
Beginning of Period		85,878			43,814
End of Period (Including Accumulated Net Investment Loss of $(162) and Distributions in Excess of Net Investment Income of $(9))	$	98,288		$	85,878

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		394			1,975
Shares Issued on Distributions Reinvested		—			55
Shares Redeemed		(466	)		(1,006	)
Net Increase (Decrease) in Class I Shares Outstanding		(72	)		1,024
Class A:
Shares Subscribed		140			957
Shares Issued on Distributions Reinvested		—			20
Shares Redeemed		(211	)		(520	)
Net Increase (Decrease) in Class A Shares Outstanding		(71	)		457
Class L:
Shares Exchanged		1			3
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(14	)		(107	)
Net Decrease in Class L Shares Outstanding		(13	)		(98	)
Class C:
Shares Subscribed		110			288
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(32	)		(25	)
Net Increase in Class C Shares Outstanding		78			269
Class IS:
Shares Subscribed		—			741
Shares Issued on Distributions Reinvested		—			18
Net Increase in Class IS Shares Outstanding		—			759

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Advantage Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.47		$	17.40		$	16.83		$	16.41		$	12.40		$	11.38
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.02	)		0.07			0.01			0.04			0.01			0.14
Net Realized and Unrealized Gain		2.88			0.42			2.11			1.15			4.54			1.72
Total from Investment Operations		2.86			0.49			2.12			1.19			4.55			1.86
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)		(0.02	)		(0.01	)		—			(0.10	)
Net Realized Gain		—			(0.38	)		(1.53	)		(0.76	)		(0.54	)		(0.74	)
Total Distributions		—			(0.42	)		(1.55	)		(0.77	)		(0.54	)		(0.84	)
Net Asset Value, End of Period	$	20.33		$	17.47		$	17.40		$	16.83		$	16.41		$	12.40
Total Return (3)		16.37	%(7)		2.82	%		12.56	%		7.43	%		37.11	%		16.38	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	48,237		$	42,695		$	24,718		$	17,971		$	14,712		$	8,595
Ratio of Expenses to Average Net Assets (9)		0.84	%(4)(8)		0.84	%(4)		0.86	%(4)(5)		1.04	%(4)		1.04	%(4)		1.05	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		(0.18	)%(4)(8)		0.38	%(4)		0.06	%(4)		0.23	%(4)		0.11	%(4)		1.08	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.01	%		0.00	%(6)		0.01	%		0.01	%		0.00	%(6)
Portfolio Turnover Rate		24	%(7)		79	%		51	%		31	%		36	%		50	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.05	%(8)		1.15	%		1.49	%		1.78	%		2.33	%		2.34	%
Net Investment Income (Loss) to Average Net Assets		(0.39	)%(8)		0.07	%		(0.57	)%		(0.51	)%		(1.18	)%		(0.21	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Advantage Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.26		$	17.22		$	16.70		$	16.34		$	12.39		$	11.37
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.05	)		0.01			(0.06	)		(0.03	)		(0.07	)		0.11
Net Realized and Unrealized Gain		2.84			0.41			2.11			1.15			4.56			1.72
Total from Investment Operations		2.79			0.42			2.05			1.12			4.49			1.83
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			—			—			(0.07	)
Net Realized Gain		—			(0.38	)		(1.53	)		(0.76	)		(0.54	)		(0.74	)
Total Distributions		—			(0.38	)		(1.53	)		(0.76	)		(0.54	)		(0.81	)
Net Asset Value, End of Period	$	20.05		$	17.26		$	17.22		$	16.70		$	16.34		$	12.39
Total Return (3)		16.16	%(8)		2.47	%		12.20	%		7.05	%		36.65	%		16.11	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21,651		$	19,850		$	11,939		$	3,738		$	3,134		$	12
Ratio of Expenses to Average Net Assets (10)		1.18	%(4)(9)		1.19	%(4)		1.18	%(4)(6)		1.39	%(4)		1.35	%(4)(5)		1.30	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.51	)%(4)(9)		0.04	%(4)		(0.31	)%(4)		(0.15	)%(4)		(0.44	)%(4)		0.83	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.01	%		0.01	%		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		24	%(8)		79	%		51	%		31	%		36	%		50	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.33	%(9)		1.43	%		1.87	%		2.14	%		2.68	%		2.59	%
Net Investment Loss to Average Net Assets		(0.66	)%(9)		(0.20	)%		(1.00	)%		(0.90	)%		(1.77	)%		(0.46	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Advantage Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.46		$	17.40		$	16.82		$	16.42		$	12.42		$	11.39
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.03	)		0.04			(0.01	)		0.02			(0.01	)		0.13
Net Realized and Unrealized Gain		2.88			0.43			2.12			1.14			4.55			1.74
Total from Investment Operations		2.85			0.47			2.11			1.16			4.54			1.87
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		—			(0.00	)(3)		—			(0.10	)
Net Realized Gain		—			(0.38	)		(1.53	)		(0.76	)		(0.54	)		(0.74	)
Total Distributions		—			(0.41	)		(1.53	)		(0.76	)		(0.54	)		(0.84	)
Net Asset Value, End of Period	$	20.31		$	17.46		$	17.40		$	16.82		$	16.42		$	12.42
Total Return (4)		16.32	%(9)		2.72	%		12.47	%		7.28	%		36.97	%		16.42	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,019		$	3,684		$	5,369		$	6,549		$	3,908		$	722
Ratio of Expenses to Average Net Assets (11)		0.96	%(5)(10)		0.91	%(5)		0.97	%(5)(7)		1.18	%(5)		1.08	%(5)(6)		1.09	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		(0.29	)%(5)(10)		0.26	%(5)		(0.03	)%(5)		0.12	%(5)		(0.06	)%(5)		1.04	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%(8)
Portfolio Turnover Rate		24	%(9)		79	%		51	%		31	%		36	%		50	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.82	%(10)		1.85	%		2.33	%		2.64	%		3.10	%		3.09	%
Net Investment Loss to Average Net Assets		(1.15	)%(10)		(0.68	)%		(1.39	)%		(1.34	)%		(2.08	)%		(0.96	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.99% for Class L shares. Prior to January 23, 2015, the maximum ratio was 1.19% for Class L shares.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	17.16		$	17.25		$	18.08
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.12	)		(0.12	)		(0.14	)
Net Realized and Unrealized Gain		2.83			0.41			0.86
Total from Investment Operations		2.71			0.29			0.72
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.02	)
Net Realized Gain		—			(0.38	)		(1.53	)
Total Distributions		—			(0.38	)		(1.55	)
Net Asset Value, End of Period	$	19.87		$	17.16		$	17.25
Total Return (4)		15.79	%(6)		1.71	%		3.91	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,930		$	6,376		$	1,776
Ratio of Expenses to Average Net Assets (8)		1.90	%(5)(7)		1.94	%(5)		1.94	%(5)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(1.23	)%(5)(7)		(0.72	)%(5)		(1.15	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.01	%(7)
Portfolio Turnover Rate		24	%(6)		79	%		51	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.05	%(7)		2.20	%		2.83	%(7)
Net Investment Loss to Average Net Assets		(1.38	)%(7)		(0.98	)%		(2.04	)%(7)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Advantage Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	17.48		$	17.42		$	16.84		$	16.41		$	14.59
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		(0.01	)		0.08			0.02			0.04			(0.01	)
Net Realized and Unrealized Gain		2.88			0.41			2.11			1.16			2.21
Total from Investment Operations		2.87			0.49			2.13			1.20			2.20
Distributions from and/or in Excess of:
Net Investment Income		—			(0.05	)		(0.02	)		(0.01	)		—
Net Realized Gain		—			(0.38	)		(1.53	)		(0.76	)		(0.38	)
Total Distributions		—			(0.43	)		(1.55	)		(0.77	)		(0.38	)
Net Asset Value, End of Period	$	20.35		$	17.48		$	17.42		$	16.84		$	16.41
Total Return (4)		16.42	%(9)		2.79	%		12.65	%		7.50	%		15.15	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	15,451		$	13,273		$	12		$	12		$	11
Ratio of Expenses to Average Net Assets (11)		0.80	%(5)(10)		0.80	%(5)		0.82	%(5)(7)		1.00	%(5)		1.01	%(5)(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		(0.13	)%(5)(10)		0.46	%(5)		0.10	%(5)		0.26	%(5)		(0.25	)%(5)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.00	%(8)		0.01	%		0.00	%(8)(10)
Portfolio Turnover Rate		24	%(9)		79	%		51	%		31	%		36	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.97	%(10)		1.05	%		14.53	%		18.84	%		7.31	%(10)
Net Investment Income (Loss) to Average Net Assets		(0.30	)%(10)		0.21	%		(13.61	)%		(17.58	)%		(6.55	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expeses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Advantage Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (4) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	7,416	$	—	$	—	$	7,416
Capital Markets		7,399		—		—		7,399
Chemicals		1,512		—		—		1,512
Diversified Financial Services		4,774		—		—		4,774
Health Care Equipment & Supplies		1,468		—		—		1,468
Hotels, Restaurants & Leisure		6,033		—		—		6,033
Information Technology Services		7,381		—		—		7,381
Internet & Direct Marketing Retail		13,089		—		—		13,089
Internet Software & Services		16,439		—		—		16,439
Machinery		1,027		—		—		1,027
Media		943		—		—		943
Multi-Line Retail		1,310		—		—		1,310
Pharmaceuticals		2,731		—		—		2,731
Professional Services		5,125		—		—		5,125
Software		9,186		—		—		9,186
Specialty Retail		3,069		—		—		3,069
Textiles, Apparel & Luxury Goods		4,509		—		—		4,509
Total Common Stocks		93,411		—		—		93,411
Call Option Purchased		—		9		—		9
Short-Term Investment
Investment Company		4,176		—		—		4,176
Total Assets	$	97,587	$	9	$	—	$	97,596

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	9	(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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)		$(44)(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)		$(36)(c)

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

At June 30, 2017, the Fund'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	$	9	(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 Fund 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 Fund 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 Fund 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 Fund exercises its right to terminate a Master Agreement

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund'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, 2017.

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	$	9	$	—	$	—	$	9

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	12,007,000

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed

to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.50% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $66,000 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 Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

The Company 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 Fund 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 Fund'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, 2017, this waiver amounted to approximately $14,000.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian

Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $21,373,000 and $25,772,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $3,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	2,300	$	19,949	$	18,073	$	8	$	4,176

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2017 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	166	$	1,650	$	18	$	3,170

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 dividend redesignation, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(19	)	$	19	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	555

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. Federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	12	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 47.6%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIADVSAN
1859473 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Asia Opportunity Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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
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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Asia Opportunity Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,361.60	$	1,019.49	$	6.27	$	5.36		1.07	%
Asia Opportunity Portfolio Class A		1,000.00		1,359.90		1,017.65		8.43		7.20		1.44
Asia Opportunity Portfolio Class C		1,000.00		1,354.30		1,013.93		12.78		10.94		2.19
Asia Opportunity Portfolio Class IS		1,000.00		1,361.60		1,019.64		6.09		5.21		1.04

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Asia Opportunity Portfolio

	Shares		Value (000)
Common Stocks (84.3%)
China (66.0%)
Alibaba Group Holding Ltd. ADR (a)		4,101	$	578
China Lodging Group Ltd. ADR (a)		5,857		473
China Resources Beer Holdings Co., Ltd. (b)		180,300		455
Ctrip.com International Ltd. ADR (a)(c)		4,610		248
Foshan Haitian Flavouring & Food Co., Ltd., Class A		76,500		460
Hangzhou Hikvision Digital Technology Co., Ltd., Class A		49,553		236
Inner Mongolia Yili Industrial Group Co., Ltd., Class A		33,800		108
JD.com, Inc. ADR (a)		7,989		313
Jiangsu Hengrui Medicine Co., Ltd., Class A		63,052		471
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A		6,400		82
Kweichow Moutai Co., Ltd., Class A		5,000		348
NetEase, Inc. ADR		302		91
New Oriental Education & Technology Group, Inc. ADR (a)		4,678		330
Shenzhou International Group Holdings Ltd. (b)		33,000		217
Sino Biopharmaceutical Ltd. (b)		155,000		137
Suofeiya Home Collection Co., Ltd., Class A		23,700		143
TAL Education Group ADR		7,624		932
Tencent Holdings Ltd. (b)		27,500		983
				6,605
Hong Kong (2.4%)
AIA Group Ltd.		32,900		240
India (4.7%)
HDFC Bank Ltd. ADR		5,365		466
Korea, Republic of (5.4%)
Loen Entertainment, Inc.		2,290		175
NAVER Corp.		315		231
Osstem Implant Co., Ltd. (a)		3,020		138
				544
Taiwan (4.1%)
Silergy Corp.		8,000		154
Taiwan Semiconductor Manufacturing Co., Ltd.		37,000		254
				408
United States (1.7%)
MakeMyTrip Ltd. (a)		5,103		171
Total Common Stocks (Cost $6,227)				8,434
Participation Notes (7.1%)
China (7.1%)
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/10/18 (a)		27,441		351
Suofeiya Home Collection Co., Ltd., Equity Linked Notes, expires 11/20/20 (a)		59,000		357
Total Participation Notes (Cost $598)				708

	Shares		Value (000)
Short-Term Investment (8.0%)
Investment Company (8.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $798)		797,549	$	798
Total Investments (99.4%) (Cost $7,623) Including $248 of Securities Loaned (d)				9,940
Other Assets in Excess of Liabilities (0.6%)				64
Net Assets (100.0%)			$	10,004

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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, 2017.

(d)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $2,388,000 and the aggregate gross unrealized depreciation is approximately $71,000, resulting in net unrealized appreciation of approximately $2,317,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		23.7	%
Internet Software & Services		19.0
Diversified Consumer Services		12.7
Beverages		12.4
Short-Term Investment		8.0
Internet & Direct Marketing Retail		7.4
Pharmaceuticals		6.1
Food Products		5.7
Household Durables		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, 2017 (unaudited)

Asia Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $6,825)	$	9,142
Investment in Security of Affiliated Issuer, at Value (Cost $798)		798
Total Investments in Securities, at Value (Cost $7,623)		9,940
Due from Adviser		28
Dividends Receivable		10
Receivable from Affiliate		—	@
Other Assets		48
Total Assets		10,026
Liabilities:
Payable for Professional Fees		21
Payable for Administration Fees		1
Payable for Shareholder Services Fees — Class A		—	@
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 C		—	@
Total Liabilities		22
Net Assets	$	10,004
Net Assets Consist Of:
Paid-in-Capital	$	7,709
Accumulated Net Investment Loss		(49	)
Accumulated Net Realized Gain		27
Unrealized Appreciation (Depreciation) on:
Investments		2,317
Foreign Currency Translations		(—	@)
Net Assets	$	10,004
CLASS I:
Net Assets	$	8,709
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		660,692
Net Asset Value, Offering and Redemption Price Per Share	$	13.18
CLASS A:
Net Assets	$	1,164
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		88,535
Net Asset Value, Redemption Price Per Share	$	13.15
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.73
Maximum Offering Price Per Share	$	13.88
CLASS C:
Net Assets	$	118
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		8,969
Net Asset Value, Offering and Redemption Price Per Share	$	13.11
CLASS IS:
Net Assets	$	13
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	$	13.18
(1) Including: Securities on Loan, at Value:	$	248

@  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, 2017 (unaudited)

Asia Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)	$	57
Dividends from Security of Affiliated Issuer (Note G)		1
Income from Securities Loaned — Net		1
Total Investment Income		59
Expenses:
Professional Fees		46
Advisory Fees (Note B)		32
Registration Fees		21
Shareholder Reporting Fees		5
Custodian Fees (Note F)		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)		3
Directors' Fees and Expenses		2
Pricing Fees		2
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Other Expenses		8
Total Expenses		128
Expenses Reimbursed by Adviser (Note B)		(50	)
Waiver of Advisory Fees (Note B)		(32	)
Reimbursement of Class Specific Expenses — Class A (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		44
Net Investment Income		15
Realized Gain (Loss):
Investments Sold		86
Foreign Currency Transactions		(6	)
Net Realized Gain		80
Change in Unrealized Appreciation (Depreciation):
Investments		2,303
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		2,303
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		2,383
Net Increase in Net Assets Resulting from Operations	$	2,398

@  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, 2017

Asia Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	15		$	(20	)
Net Realized Gain (Loss)		80			(57	)
Net Change in Unrealized Appreciation (Depreciation)		2,303			5
Net Increase (Decrease) in Net Assets Resulting from Operations		2,398			(72	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(46	)
Paid-in-Capital		—			(75	)
Class A:
Net Investment Income		—			(2	)
Paid-in-Capital		—			(5	)
Class C:
Paid-in-Capital		—			(—	@)
Class IS:
Net Investment Income		—			(—	@)
Paid-in-Capital		—			(—	@)
Total Distributions		—			(128	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,196			—
Distributions Reinvested		—			13
Class A:
Subscribed		362			550
Distributions Reinvested		—			7
Redeemed		—			(27	)
Class C:
Subscribed		88			—
Net Increase in Net Assets Resulting from Capital Share Transactions		1,646			543
Redemption Fees		—	@		—
Total Increase in Net Assets		4,044			343
Net Assets:
Beginning of Period		5,960			5,617
End of Period (Including Accumulated Net Investment Loss and Distributions in Excess of Net Investment Income of $(49) and $(64), respectively)	$	10,004		$	5,960
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		102			—
Shares Issued on Distributions Reinvested		—			1
Net Increase in Class I Shares Outstanding		102			1
Class A:
Shares Subscribed		33			56
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		—			(3	)
Net Increase in Class A Shares Outstanding		33			54
Class C:
Shares Subscribed		8			—

@  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, 2017

Financial Highlights

Asia Opportunity Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 29, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.68		$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.02			(0.03	)		(0.00	)(3)
Net Realized and Unrealized Gain (Loss)		3.48			(0.10	)		0.03
Total from Investment Operations		3.50			(0.13	)		0.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)		—
Paid-in-Capital		—			(0.14	)		—
Total Distributions		—			(0.22	)		—
Redemption Fees		0.00	(3)		—			—
Net Asset Value, End of Period	$	13.18		$	9.68		$	10.03
Total Return (4)		36.16	%(6)		(1.34	)%		0.30	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,709		$	5,405		$	5,587
Ratio of Expenses to Average Net Assets (8)		1.07	%(5)(7)		1.08	%(5)		1.03	%(5)(7)
Ratio of Net Investment Income (Loss) to Average Net Assets (8)		0.42	%(5)(7)		(0.31	)%(5)		(0.71	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.04	%(7)
Portfolio Turnover Rate		35	%(6)		44	%		0	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.15	%(7)		5.28	%		125.50	%(7)
Net Investment Loss to Average Net Assets		(1.66	)%(7)		(4.51	)%		(125.18	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Asia Opportunity Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 29, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.67		$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.01			(0.08	)		(0.00	)(3)
Net Realized and Unrealized Gain (Loss)		3.47			(0.09	)		0.03
Total from Investment Operations		3.48			(0.17	)		0.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.05	)		—
Paid-in-Capital		—			(0.14	)		—
Total Distributions		—			(0.19	)		—
Redemption Fees		0.00	(3)		—			—
Net Asset Value, End of Period	$	13.15		$	9.67		$	10.03
Total Return (4)		35.99	%(6)		(1.67	)%		0.30	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,164		$	535		$	10
Ratio of Expenses to Average Net Assets (8)		1.44	%(5)(7)		1.44	%(5)		1.40	%(5)(7)
Ratio of Net Investment Income (Loss) to Average Net Assets (8)		0.11	%(5)(7)		(0.78	)%(5)		(1.09	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.05	%(7)
Portfolio Turnover Rate		35	%(6)		44	%		0	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.58	%(7)		6.36	%		139.50	%(7)
Net Investment Loss to Average Net Assets		(2.03	)%(7)		(5.70	)%		(139.19	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Asia Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 29, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.68		$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.02	)		(0.14	)		(0.00	)(3)
Net Realized and Unrealized Gain (Loss)		3.45			(0.10	)		0.03
Total from Investment Operations		3.43			(0.24	)		0.03
Distributions from and/or in Excess of:
Net Investment Income		—			—			—
Paid-in-Capital		—			(0.11	)		—
Total Distributions		—			(0.11	)		—
Redemption Fees		0.00	(3)		—			—
Net Asset Value, End of Period	$	13.11		$	9.68		$	10.03
Total Return (4)		35.43	%(6)		(2.44	)%		0.30	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	118		$	10		$	10
Ratio of Expenses to Average Net Assets (8)		2.19	%(5)(7)		2.19	%(5)		2.17	%(5)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(0.28	)%(5)(7)		(1.42	)%(5)		(1.84	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.03	%(7)
Portfolio Turnover Rate		35	%(6)		44	%		0	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		6.73	%(7)		27.34	%		140.25	%(7)
Net Investment Loss to Average Net Assets		(4.82	)%(7)		(26.57	)%		(139.92	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Asia Opportunity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 29, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.68		$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.02			(0.03	)		(0.00	)(3)
Net Realized and Unrealized Gain (Loss)		3.48			(0.10	)		0.03
Total from Investment Operations		3.50			(0.13	)		0.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)		—
Paid-in-Capital		—			(0.14	)		—
Total Distributions		—			(0.22	)		—
Redemption Fees		0.00	(3)		—			—
Net Asset Value, End of Period	$	13.18		$	9.68		$	10.03
Total Return (4)		36.16	%(6)		(1.29	)%		0.30	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	13		$	10		$	10
Ratio of Expenses to Average Net Assets (8)		1.04	%(5)(7)		1.04	%(5)		1.02	%(5)(7)
Ratio of Net Investment Income (Loss) to Average Net Assets (8)		0.37	%(5)(7)		(0.26	)%(5)		(0.69	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.03	%(7)
Portfolio Turnover Rate		35	%(6)		44	%		0	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		17.70	%(7)		25.20	%		139.25	%(7)
Net Investment Loss to Average Net Assets		(16.29	)%(7)		(24.42	)%		(138.92	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Asia Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

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	$	466	$	—	$	—	$	466
Beverages		885		—		—		885
Diversified Consumer Services		1,262		—		—		1,262
Electronic Equipment, Instruments & Components		236		—		—		236
Food Products		568		—		—		568
Health Care Equipment & Supplies		138		—		—		138
Hotels, Restaurants & Leisure		473		—		—		473
Household Durables		143		—		—		143
Insurance		240		—		—		240
Internet & Direct Marketing Retail		732		—		—		732
Internet Software & Services		1,883		—		—		1,883
Media		175		—		—		175
Pharmaceuticals		608		—		—		608
Semiconductors & Semiconductor Equipment		408		—		—		408
Textiles, Apparel & Luxury Goods		217		—		—		217
Total Common Stocks		8,434		—		—		8,434
Participation Notes		—		708		—		708
Short-Term Investment
Investment Company		798		—		—		798
Total Assets	$	9,232	$	708	$	—	$	9,940

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)	$	(1	)(a)

(a) 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 (Option Purchased)	$	1	(b)

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Option Purchased:
Average monthly notional amount	17,000

5.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	248	(c)	$	—	$	(248	)(d)(e)	$	0

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

(d) The Fund received non-cash collateral of approximately $254,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

6.  Structured Investments: The Fund 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

7.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $32,000 of advisory fees were waived and approximately $52,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $3,644,000 and $2,459,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	381	$	2,930	$	2,513	$	1	$	798

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:						2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	48	$	—	$	80	$	—	$	—

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, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	4	$	4	$	(—	@)

@ Amount is less than $500

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

At December 31, 2016, the Fund had available unused short-term capital losses of approximately $52,000 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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	4	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 21.5%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period and the period since the end of December 2015, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIASOPPSAN
1860581 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Breakout Nations Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	7
Statement of Changes in Net Assets	8
Financial Highlights	9
Notes to Financial Statements	13
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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Breakout Nations Portfolio (the "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Emerging Markets Breakout Nations Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Breakout Nations Portfolio Class I	$	1,000.00	$	1,125.10	$	1,019.29	$	5.85	$	5.56		1.11	%
Emerging Markets Breakout Nations Portfolio Class A		1,000.00		1,123.30		1,017.21		8.05		7.65		1.53
Emerging Markets Breakout Nations Portfolio Class C		1,000.00		1,119.30		1,013.44		12.03		11.43		2.29
Emerging Markets Breakout Nations Portfolio Class IS		1,000.00		1,125.10		1,019.44		5.69		5.41		1.08

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Emerging Markets Breakout Nations Portfolio

	Shares		Value (000)
Common Stocks (82.0%)
Argentina (6.4%)
Adecoagro SA (a)		2,702	$	27
Banco Macro SA ADR		930		86
Globant SA (a)		986		43
Grupo Financiero Galicia SA ADR		1,792		76
Pampa Energia SA ADR (a)		1,256		74
YPF SA ADR		2,827		62
				368
Bangladesh (3.7%)
Beximco Pharmaceuticals Ltd.		53,182		75
GrameenPhone Ltd.		7,559		32
Olympic Industries Ltd.		19,098		66
Square Pharmaceuticals Ltd.		10,096		36
				209
Brazil (6.9%)
Banco Bradesco SA (Preference)		9,117		77
BRF SA		4,072		48
Itau Unibanco Holding SA (Preference)		7,870		87
Lojas Renner SA		6,576		54
Petroleo Brasileiro SA (a)		8,542		34
Petroleo Brasileiro SA (Preference) (a)		10,044		38
Raia Drogasil SA		2,542		54
				392
Czech Republic (3.1%)
Komercni Banka AS		4,392		176
Egypt (4.2%)
Commercial International Bank Egypt SAE GDR		31,661		142
Egyptian Financial Group-Hermes Holding Co.		11,860		16
Egyptian Financial Group-Hermes Holding Co. GDR		32,032		84
				242
India (1.8%)
HDFC Bank Ltd. ADR		279		24
ICICI Bank Ltd. ADR		8,639		78
				102
Indonesia (9.8%)
Astra International Tbk PT		153,900		103
Bank Mandiri Persero Tbk PT		97,100		93
Bumi Serpong Damai Tbk PT		346,700		48
Semen Indonesia Persero Tbk PT		100,300		75
Telekomunikasi Indonesia Persero Tbk PT		306,200		104
Unilever Indonesia Tbk PT		23,000		84
XL Axiata Tbk PT (a)		215,400		55
				562
Malaysia (5.2%)
Genting Malaysia Bhd		46,740		60
IHH Healthcare Bhd		49,500		66
Malayan Banking Bhd		29,640		67
Malaysia Airports Holdings Bhd		20,600		41
Sime Darby Bhd		29,360		65
				299

	Shares		Value (000)
Mexico (8.3%)
Alsea SAB de CV		10,557	$	40
Cemex SAB de CV ADR (a)		10,058		95
Fomento Economico Mexicano SAB de CV ADR		993		98
Grupo Financiero Banorte SAB de CV Series O		24,050		152
Grupo Financiero Santander Mexico SAB de CV ADR		5,120		49
Mexichem SAB de CV		15,307		41
				475
Pakistan (4.3%)
Habib Bank Ltd.		24,700		64
Lucky Cement Ltd.		5,000		40
Maple Leaf Cement Factory Ltd.		24,251		26
Oil & Gas Development Co., Ltd.		26,200		35
Pak Elektron Ltd.		27,100		28
United Bank Ltd.		22,700		51
				244
Peru (4.3%)
Credicorp Ltd.		1,376		247
Philippines (5.7%)
Ayala Land, Inc.		55,700		44
Metropolitan Bank & Trust Co.		75,370		131
SM Investments Corp.		9,280		147
				322
Poland (9.3%)
Bank Zachodni WBK SA		1,206		111
CCC SA		1,529		93
Jeronimo Martins SGPS SA		4,538		89
LPP SA		38		73
Powszechna Kasa Oszczednosci Bank Polski SA (a)		15,087		140
Powszechny Zaklad Ubezpieczen SA		2,204		27
				533
Romania (3.2%)
Banca Transilvania SA		155,447		105
BRD-Groupe Societe Generale SA		23,808		80
				185
Thailand (3.0%)
Bangkok Dusit Medical Services PCL (Foreign)		70,100		40
Central Pattana PCL (Foreign)		22,400		46
PTT PCL (Foreign)		5,100		55
Sino-Thai Engineering & Construction PCL (Foreign)		35,300		29
				170
United States (1.5%)
MercadoLibre, Inc.		334		84
Vietnam (1.3%)
Saigon Beer Alcohol Beverage Corp.		1,630		15
Vietjet Aviation JSC		5,660		31
Vietnam Dairy Products JSC		3,610		25
				71
Total Common Stocks (Cost $4,177)				4,681

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Breakout Nations Portfolio

	Shares		Value (000)
Participation Notes (2.7%)
Vietnam (2.7%)
Bank for Foreign Trade of Vietnam JSC, Equity Linked Notes, expires 12/17/18 (a)		24,974	$	42
Vietnam Dairy Products JSC, Equity Linked Notes, expires 11/20/20 (a)		16,380		114
Total Participation Notes (Cost $143)				156
Investment Company (4.6%)
India (4.6%)
iShares MSCI India ETF (Cost $265)		8,204		263
Short-Term Investment (8.4%)
Investment Company (8.4%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $477)		476,555		477
Total Investments (97.7%) (Cost $5,062) (b)(c)				5,577
Other Assets in Excess of Liabilities (2.3%)				132
Net Assets (100.0%)			$	5,709

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Securities are available for collateral in connection with an open futures contract.

(c)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $589,000 and the aggregate gross unrealized depreciation is approximately $74,000, resulting in net unrealized appreciation of approximately $515,000.

ADR  American Depositary Receipt.

ETF  Exchange Traded Fund.

GDR  Global Depositary Receipt.

Futures Contract:

The Fund had the following futures contract open at June 30, 2017:

	Number of Contracts		Value (000)		Expiration Date	Unrealized Depreciation (000)
Long:
SGX NIFTY 50 (India)		23	$	438	Jul-17	$	(2	)

Portfolio Composition

Classification	Percentage of Total Investments
Other*		49.2	%
Banks		37.3
Short-Term Investment		8.5
Food Products		5.0
Total Investments		100.0	%**

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

**  Does not include an open long futures contract with an underlying face amount of approximately $438,000 with unrealized depreciation of approximately $2,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Breakout Nations Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $4,585)	$	5,100
Investment in Security of Affiliated Issuer, at Value (Cost $477)		477
Total Investments in Securities, at Value (Cost $5,062)		5,577
Foreign Currency, at Value (Cost $7)		7
Prepaid Offering Costs		69
Due from Adviser		60
Receivable for Variation Margin on Futures Contracts		56
Receivable for Investments Sold		41
Dividends Receivable		2
Tax Reclaim Receivable		—	@
Receivable from Affiliate		—	@
Other Assets		43
Total Assets		5,855
Liabilities:
Payable for Investments Purchased		122
Payable for Professional Fees		12
Payable for Offering Costs		5
Deferred Capital Gain Country Tax		2
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		5
Total Liabilities		146
Net Assets	$	5,709
Net Assets Consist Of:
Paid-in-Capital	$	5,000
Accumulated Undistributed Net Investment Income		33
Accumulated Net Realized Gain		165
Unrealized Appreciation (Depreciation) on:
Investments (Net of $2 of Deferred Capital Gain Country Tax)		513
Futures Contracts		(2	)
Foreign Currency Translations		(—	@)
Net Assets	$	5,709
CLASS I:
Net Assets	$	5,675
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		497,000
Net Asset Value, Offering and Redemption Price Per Share	$	11.42
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	$	11.39
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.63
Maximum Offering Price Per Share	$	12.02
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	$	11.35
CLASS IS:
Net Assets	$	12
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	$	11.42

@  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, 2017 (unaudited)

Emerging Markets Breakout Nations Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $7 of Foreign Taxes Withheld)	$	59
Dividends from Security of Affiliated Issuer (Note G)		2
Total Investment Income		61
Expenses:
Offering Costs		74
Professional Fees		40
Advisory Fees (Note B)		24
Shareholder Reporting Fees		6
Registration Fees		5
Custodian Fees (Note F)		3
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		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Directors' Fees and Expenses		—	@
Other Expenses		8
Total Expenses		167
Expenses Reimbursed by Adviser (Note B)		(110	)
Waiver of Advisory Fees (Note B)		(24	)
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		30
Net Investment Income		31
Realized Gain (Loss):
Investments Sold (Net of $1 of Capital Gain Country Tax)		110
Foreign Currency Transactions		(9	)
Futures Contracts		77
Net Realized Gain		178
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $2)		437
Foreign Currency Translations		(—	@)
Futures Contracts		(10	)
Net Change in Unrealized Appreciation (Depreciation)		427
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		605
Net Increase in Net Assets Resulting from Operations	$	636

@  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, 2017

Emerging Markets Breakout Nations Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)		Period from December 15, 2016^ to December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	31	$	1
Net Realized Gain (Loss)		178		(12	)
Net Change in Unrealized Appreciation (Depreciation)		427		84
Net Increase in Net Assets Resulting from Operations		636		73
Capital Share Transactions:(1)
Class I:
Subscribed		—		4,970
Class A:
Subscribed		—		10
Class C:
Subscribed		—		10
Class IS:
Subscribed		—		10
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		—		5,000
Total Increase in Net Assets		636		5,073
Net Assets:
Beginning of Period		5,073		—
End of Period (Including Accumulated Undistributed Net Investment Income of $33 and $1)	$	5,709	$	5,073
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		—		497
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, 2017

Financial Highlights

Emerging Markets Breakout Nations Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from December 15, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.15		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.06			0.00	(3)
Net Realized and Unrealized Gain		1.21			0.15
Total from Investment Operations		1.27			0.15
Net Asset Value, End of Period	$	11.42		$	10.15
Total Return (4)		12.51	%(6)		1.50	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,675		$	5,043
Ratio of Expenses to Average Net Assets (8)		1.11	%(5)(7)		1.09	%(5)(7)
Ratio of Net Investment Income to Average Net Assets (8)		1.13	%(5)(7)		0.67	%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(7)		0.04	%(7)
Portfolio Turnover Rate		52	%(6)		16	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		6.06	%(7)		22.93	%(7)
Net Investment Loss to Average Net Assets		(3.82	)%(7)		(21.17	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Breakout Nations Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from December 15, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.14		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.04			0.00	(3)
Net Realized and Unrealized Gain		1.21			0.14
Total from Investment Operations		1.25			0.14
Net Asset Value, End of Period	$	11.39		$	10.14
Total Return (4)		12.33	%(6)		1.40	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (8)		1.53	%(5)(7)		1.51	%(5)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.71	%(5)(7)		0.24	%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(7)		0.04	%(7)
Portfolio Turnover Rate		52	%(6)		16	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		19.71	%(7)		37.02	%(7)
Net Investment Loss to Average Net Assets		(17.47	)%(7)		(35.27	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Breakout Nations Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from December 15, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.14		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.00	)(3)		(0.00	)(3)
Net Realized and Unrealized Gain		1.21			0.14
Total from Investment Operations		1.21			0.14
Net Asset Value, End of Period	$	11.35		$	10.14
Total Return (4)		11.93	%(6)		1.40	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (8)		2.29	%(5)(7)		2.26	%(5)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(0.05	)%(5)(7)		(0.50	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.04	%(7)
Portfolio Turnover Rate		52	%(6)		16	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		20.49	%(7)		37.76	%(7)
Net Investment Loss to Average Net Assets		(18.25	)%(7)		(36.00	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Breakout Nations Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from December 15, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.15		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.06			0.00	(3)
Net Realized and Unrealized Gain		1.21			0.15
Total from Investment Operations		1.27			0.15
Net Asset Value, End of Period	$	11.42		$	10.15
Total Return (4)		12.51	%(6)		1.50	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	10
Ratio of Expenses to Average Net Assets (8)		1.08	%(5)(7)		1.06	%(5)(7)
Ratio of Net Investment Income to Average Net Assets (8)		1.15	%(5)(7)		0.70	%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(7)		0.04	%(7)
Portfolio Turnover Rate		52	%(6)		16	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		19.44	%(7)		36.76	%(7)
Net Investment Loss to Average Net Assets		(17.21	)%(7)		(35.00	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Emerging Markets Breakout Nations Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (4) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (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; and (7) investments in mutual funds, including the Morgan

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

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

The Company 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

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

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	$	31		$	—	$	—	$	31
Automobiles		103			—		—		103
Banks		2,036			—		—		2,036
Beverages		113			—		—		113
Capital Markets		100			—		—		100
Chemicals		41			—		—		41
Construction & Engineering		—			29		—		29
Construction Materials		236			—		—		236
Diversified Telecommunication Services		104			—		—		104
Electric Utilities		74			—		—		74
Electrical Equipment		28			—		—		28
Food & Staples Retailing		143			—		—		143
Food Products		166			—		—		166
Health Care Providers & Services		66			40		—		106
Hotels, Restaurants & Leisure		100			—		—		100
Household Products		84			—		—		84
Industrial Conglomerates		212			—		—		212
Insurance		27			—		—		27
Internet Software & Services		84			—		—		84
Multi-Line Retail		54			—		—		54
Oil, Gas & Consumable Fuels		169			55		—		224
Pharmaceuticals		111			—		—		111
Real Estate Management & Development		92			46		—		138
Software		43			—		—		43
Textiles, Apparel & Luxury Goods		166			—		—		166
Transportation Infrastructure		41			—		—		41
Wireless Telecommunication Services		87			—		—		87
Total Common Stocks		4,511			170		—		4,681
Participation Notes		—			156		—		156
Investment Company		263			—		—		263
Short-Term Investment
Investment Company		477			—		—		477
Total Assets		5,251			326		—		5,577
Liabilities:
Futures Contract		(2	)		—		—		(2	)
Total	$	5,249		$	326	$	—	$	5,575

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

A significant portion of the Fund'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 securities 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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund of margin deposits in the event of bankruptcy of a broker with which the Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Future Contract	Variation Margin on Future Contract	Equity Risk		$(2)(a)

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Equity Risk	Futures Contracts	$	77
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Equity Risk	Futures Contracts	$	(10	)

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Futures Contracts:
Average monthly original value	$	1,030,000

5.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

6.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 one year from the date of the Fund'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, 2017, approximately $24,000 of advisory fees were waived and approximately $113,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund'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 Company's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Agency Agreement, the Company pays BFDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $2,794,000 and $2,439,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the period ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	749	$	951	$	1,223	$	2	$	477

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during the fiscal 2016.

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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

(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, 2016:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	1	$	(1	)	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	3	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $13,000 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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund did not have record owners of 10% or greater.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net

assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Investment Advisory Agreement Approval (unaudited)

The Board considered the following factors at the time of approval of the contracts which occurred prior to commencement of operations.

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services to be provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services to be provided by the Fund'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 Fund. (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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board considered that the Adviser plans to arrange for a public offering of shares of the Fund to raise assets for investment and that the offering had not yet begun and concluded that, since the Fund 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 Fund 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 Fund. The Board considered that the Fund requires the Adviser to develop processes, invest in additional resources and incur additional risks to successfully manage the Fund and concluded that the proposed management fee rate and anticipated total expense ratio would be competitive with its peer group averages.

Economies of Scale

The Board considered the growth prospects of the Fund and the structure of the proposed management fee schedule, which includes a breakpoint. The Board considered that the Fund'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 Fund had not begun operations and had 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 Fund 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 Fund had not begun operations and had 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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Resources of the Adviser and Historical Relationship Between the Fund 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 Fund'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 Fund 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 Fund'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 Fund 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 Fund 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMBONSAN
1858080 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Fixed Income Opportunities Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,078.60	$	1,020.68	$	4.28	$	4.16		0.83	%
Emerging Markets Fixed Income Opportunities Portfolio Class A		1,000.00		1,076.60		1,018.84		6.18		6.01		1.20
Emerging Markets Fixed Income Opportunities Portfolio Class L		1,000.00		1,074.90		1,017.60		7.46		7.25		1.45
Emerging Markets Fixed Income Opportunities Portfolio Class C		1,000.00		1,072.50		1,015.12		10.02		9.74		1.95
Emerging Markets Fixed Income Opportunities Portfolio Class IS		1,000.00		1,079.70		1,020.73		4.23		4.11		0.82

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Fixed Income Securities (95.0%)
Argentina (10.5%)
Corporate Bonds (9.2%)
Banco Macro SA,
17.50%, 5/8/22 (a)	ARS	1,080	$	63
Capex SA,
6.88%, 5/15/24 (a)	$	300		304
IRSA Propiedades Comerciales SA,
8.75%, 3/23/23 (a)		100		113
Province of Santa Fe,
6.90%, 11/1/27 (a)		150		150
Provincia de Buenos Aires,
24.08%, 5/31/22 (a)(b)	ARS	4,540		273
Provincia de Cordoba,
7.13%, 8/1/27 (a)	$	180		180
7.45%, 9/1/24 (a)		170		177
Provincia de Entre Rios Argentina,
8.75%, 2/8/25 (a)		230		237
Provincia de Mendoza Argentina,
24.63%, 6/9/21 (b)	ARS	3,570		219
Provincia del Chaco Argentina,
9.38%, 8/18/24 (a)	$	240		238
YPF SA,
8.88%, 12/19/18		310		333
				2,287
Sovereign (1.3%)
Aeropuertos Argentina 2000 SA,
6.88%, 2/1/27 (a)		180		187
Argentine Bonos del Tesoro,
18.20%, 10/3/21	ARS	634		40
Argentine Republic Government International Bond,
7.13%, 6/28/17 (a)	$	100		91
				318
				2,605
Brazil (7.8%)
Corporate Bonds (3.8%)
Cosan Luxembourg SA,
7.00%, 1/20/27 (a)		240		247
Petrobras Global Finance BV,
6.13%, 1/17/22		66		68
7.38%, 1/17/27		220		233
QGOG Constellation SA,
6.25%, 11/9/19		200		145
Rumo Luxembourg Sarl,
7.38%, 2/9/24 (a)		245		252
				945
Sovereign (4.0%)
Brazil Notas do Tesouro Nacional, Series F,
10.00%, 1/1/21	BRL	3,470		998
				1,943

	Face Amount (000)		Value (000)
Chile (1.7%)
Corporate Bonds (1.7%)
Cencosud SA,
4.88%, 1/20/23	$	200	$	215
Latam Finance Ltd.,
6.88%, 4/11/24 (a)		200		204
				419
Colombia (4.9%)
Corporate Bond (2.0%)
Millicom International Cellular SA,
6.00%, 3/15/25		485		511
Sovereign (2.9%)
Colombia Government International Bond,
5.00%, 6/15/45		266		269
Colombian TES,
7.00%, 5/4/22	COP	302,700		104
7.75%, 9/18/30		30,000		11
10.00%, 7/24/24		847,300		340
				724
				1,235
Dominican Republic (1.3%)
Corporate Bond (0.9%)
AES Andres BV/Dominican Power Partners/ Empresa Generadora de Electricidad It, (Units)
7.95%, 5/11/26 (a)(c)	$	200		218
Sovereign (0.4%)
Dominican Republic International Bond,
6.88%, 1/29/26 (a)		100		112
				330
Ecuador (1.6%)
Sovereign (1.6%)
Ecuador Government International Bond,
8.75%, 6/2/23 (a)		200		197
10.75%, 3/28/22 (a)		200		214
				411
Egypt (0.8%)
Sovereign (0.8%)
Egypt Government International Bond,
6.13%, 1/31/22 (a)		200		205
El Salvador (0.3%)
Sovereign (0.3%)
El Salvador Government International Bond,
8.63%, 2/28/29 (a)		80		83
Georgia (0.8%)
Corporate Bond (0.8%)
Bank of Georgia JSC,
11.00%, 6/1/20 (a)	GEL	500		211

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Ghana (1.0%)
Sovereign (1.0%)
Ghana Government International Bond,
10.75%, 10/14/30	$	200	$	248
Guatemala (0.8%)
Sovereign (0.8%)
Guatemala Government Bond,
4.50%, 5/3/26 (a)		200		202
Honduras (0.6%)
Sovereign (0.6%)
Honduras Government International Bond,
6.25%, 1/19/27 (a)		150		156
Hungary (1.0%)
Sovereign (1.0%)
Hungary Government Bond,
3.00%, 6/26/24	HUF	64,250		247
5.50%, 6/24/25		970		4
				251
India (0.8%)
Corporate Bond (0.8%)
Greenko Investment Co.,
4.88%, 8/16/23 (a)	$	200		195
Indonesia (7.6%)
Corporate Bonds (3.0%)
Jababeka International BV,
6.50%, 10/5/23 (a)		260		270
MPM Global Pte Ltd.,
6.75%, 9/19/19		450		468
				738
Sovereign (4.6%)
Indonesia Treasury Bond,
8.75%, 5/15/31	IDR	1,310,000		111
9.00%, 3/15/29		12,090,000		1,035
				1,146
				1,884
Jamaica (2.2%)
Corporate Bond (1.7%)
Digicel Group Ltd.,
8.25%, 9/30/20	$	460		432
Sovereign (0.5%)
Jamaica Government International Bond,
8.00%, 3/15/39		100		118
				550
Kazakhstan (1.4%)
Corporate Bond (1.4%)
Zhaikmunai LLP,
7.13%, 11/13/19		350		355

	Face Amount (000)		Value (000)
Malaysia (2.3%)
Sovereign (2.3%)
Malaysia Government Bond,
3.66%, 10/15/20	MYR	137	$	32
3.96%, 9/15/25		1,489		345
4.16%, 7/15/21		215		51
4.18%, 7/15/24		124		29
4.23%, 6/30/31		246		56
4.50%, 4/15/30		249		59
				572
Mexico (11.4%)
Sovereign (11.4%)
Comision Federal de Electricidad,
4.75%, 2/23/27 (a)	$	200		206
Mexican Bonos, Series M
6.50%, 6/10/21	MXN	20,950		1,151
7.50%, 6/3/27		7,187		417
7.75%, 5/29/31		765		45
8.00%, 6/11/20 - 12/7/23		7,672		443
10.00%, 12/5/24		1,388		91
Petroleos Mexicanos,
3.50%, 1/30/23	$	79		76
6.50%, 3/13/27 (a)		130		140
6.88%, 8/4/26		260		289
				2,858
Mongolia (2.7%)
Sovereign (2.7%)
Mongolia Government International Bond,
8.75%, 3/9/24 (a)		200		220
10.88%, 4/6/21		400		458
				678
Nigeria (4.0%)
Corporate Bonds (2.3%)
United Bank for Africa PLC,
7.75%, 6/8/22 (a)		340		329
Zenith Bank PLC,
6.25%, 4/22/19		240		242
				571
Sovereign (1.7%)
Nigeria Government International Bond,
6.38%, 7/12/23		200		206
7.88%, 2/16/32 (a)		200		218
				424
				995
Panama (0.9%)
Sovereign (0.9%)
Aeropuerto Internacional de Tocumen SA,
5.63%, 5/18/36 (a)		200		212

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Paraguay (1.6%)
Sovereign (1.6%)
Paraguay Government International Bond,
4.70%, 3/27/27 (a)	$	400	$	411
Peru (1.8%)
Sovereign (1.8%)
Peruvian Government International Bond, (Units)
6.35%, 8/12/28 (c)	PEN	569		186
6.35%, 8/12/28 (a)(c)		130		43
6.95%, 8/12/31 (c)		614		210
				439
Philippines (2.0%)
Corporate Bond (2.0%)
Petron Corp.,
7.50%, 8/6/18 (b)(d)	$	480		503
Poland (3.3%)
Sovereign (3.3%)
Poland Government Bond,
3.25%, 7/25/25	PLN	1,584		431
4.00%, 10/25/23		915		263
5.75%, 10/25/21 - 9/23/22		400		123
				817
Russia (3.9%)
Sovereign (3.9%)
Russian Federal Bond — OFZ,
6.40%, 5/27/20	RUB	12,325		202
7.00%, 1/25/23 - 8/16/23		23,641		387
7.60%, 7/20/22		16,800		283
7.75%, 9/16/26		5,771		99
				971
Senegal (0.8%)
Sovereign (0.8%)
Senegal Government International Bond,
6.25%, 5/23/33 (a)	$	200		203
South Africa (4.2%)
Corporate Bond (0.9%)
Stillwater Mining Co.,
7.13%, 6/27/25 (a)		220		217
Sovereign (3.3%)
South Africa Government Bond,
6.75%, 3/31/21	ZAR	1,170		87
8.00%, 1/31/30		9,841		681
10.50%, 12/21/26		600		51
				819
				1,036
Tanzania, United Republic of (0.8%)
Corporate Bond (0.8%)
HTA Group Ltd.,
9.13%, 3/8/22 (a)	$	200		203

	Face Amount (000)		Value (000)
Thailand (1.2%)
Sovereign (1.2%)
Thailand Government Bond,
3.63%, 6/16/23	THB	4,440	$	141
4.88%, 6/22/29		4,500		160
				301
Turkey (1.8%)
Sovereign (1.8%)
Turkey Government Bond,
7.10%, 3/8/23	TRY	955		234
8.00%, 3/12/25		503		127
10.40%, 3/20/24		290		83
				444
Ukraine (2.0%)
Sovereign (2.0%)
Ukraine Government International Bond,
7.75%, 9/1/22	$	500		504
United Arab Emirates (1.9%)
Corporate Bond (1.9%)
MAF Global Securities Ltd.,
7.13%, 10/29/18 (b)(d)		450		471
Uruguay (0.5%)
Sovereign (0.5%)
Uruguay Government International Bond,
9.88%, 6/20/22 (a)	UYU	3,400		123
Venezuela (1.8%)
Sovereign (1.8%)
Petroleos de Venezuela SA,
6.00%, 11/15/26	$	1,222		455
Zambia (1.0%)
Sovereign (1.0%)
Zambia Government International Bond,
8.50%, 4/14/24		230		241
Total Fixed Income Securities (Cost $23,099)				23,720
	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		3

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

	Shares		Value (000)
Short-Term Investments (2.1%)
Investment Company (1.0%)
United States (1.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $239)		238,815	$	239
	Face Amount (000)
Egypt (1.0%)
Sovereign (1.0%)
Egypt Treasury Bill,
18.70%, 9/12/17 (f) (Cost $248)	EGP	4,550		243
U.S. Treasury Security (0.1%)
U.S. Treasury Bill,
1.19%, 4/26/18 (f)(g) (Cost $30)	$	30		30
Total Short-Term Investments (Cost $517)				512
Total Investments (97.1%) (Cost $23,616) (h)(i)				24,235
Other Assets in Excess of Liabilities (2.9%)				735
Net Assets (100.0%)			$	24,970

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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, 2017.

(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, 2017.

(e)  Security has been deemed illiquid at June 30, 2017.

(f)  Rate shown is the yield to maturity at June 30, 2017.

(g)  All or a portion of the security was pledged to cover margin requirements for swap agreements.

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

(i)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $986,000 and the aggregate gross unrealized depreciation is approximately $367,000, resulting in net unrealized appreciation of approximately $619,000.

OFZ  Obilgatsyi Federal'novo Zaima (Russian Federal Loan Obligation).

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

Foreign Currency Forward Exchange Contracts:

The Fund had the following foreign currency forward exchange contracts open at June 30, 2017:

Counterparty	Contracts to Deliver (000)			In Exchange For (000)			Delivery Date	Unrealized Appreciation (Depreciation) (000)
JPMorgan Chase Bank NA	EUR	135		$	152		7/3/17	$	(3	)
JPMorgan Chase Bank NA	EUR	101		$	113		7/3/17		(3	)
JPMorgan Chase Bank NA	IDR	3,229,000		$	242		7/3/17		(1	)
JPMorgan Chase Bank NA	IDR	1,600,000		$	120		7/3/17		—	@
JPMorgan Chase Bank NA	IDR	1,629,000		$	122		7/3/17		—	@
JPMorgan Chase Bank NA	MYR	600		$	140		7/3/17		(—	@)
JPMorgan Chase Bank NA	MYR	600		$	140		7/3/17		(—	@)
JPMorgan Chase Bank NA	PEN	—	@	$	—	@	7/3/17		(—	@)
JPMorgan Chase Bank NA	PEN	—	@	$	—	@	7/3/17		(—	@)
JPMorgan Chase Bank NA	$	141		EUR	125		7/3/17		2
JPMorgan Chase Bank NA	$	126		EUR	111		7/3/17		—	@
JPMorgan Chase Bank NA	$	120		IDR	1,600,000		7/3/17		(—	@)
JPMorgan Chase Bank NA	$	242		IDR	3,229,000		7/3/17		(—	@)
JPMorgan Chase Bank NA	$	122		IDR	1,629,000		7/3/17		(—	@)
JPMorgan Chase Bank NA	$	140		MYR	600		7/3/17		(—	@)
JPMorgan Chase Bank NA	$	140		MYR	600		7/3/17		—	@
JPMorgan Chase Bank NA	$	—	@	PEN	—	@	7/3/17		—	@
JPMorgan Chase Bank NA	$	—	@	PEN	—	@	7/3/17		—	@
JPMorgan Chase Bank NA	BRL	300		$	90		7/5/17		(—	@)
JPMorgan Chase Bank NA	BRL	113		$	34		7/5/17		—	@
JPMorgan Chase Bank NA	BRL	330		$	100		7/5/17		—	@
JPMorgan Chase Bank NA	BRL	143		$	44		7/5/17		—	@
JPMorgan Chase Bank NA	PLN	334		$	90		7/5/17		(—	@)
JPMorgan Chase Bank NA	$	99		BRL	330		7/5/17		1
JPMorgan Chase Bank NA	$	34		BRL	113		7/5/17		(—	@)
JPMorgan Chase Bank NA	$	43		BRL	143		7/5/17		(—	@)
JPMorgan Chase Bank NA	$	91		BRL	300		7/5/17		(—	@)
JPMorgan Chase Bank NA	$	90		PLN	334		7/5/17		1
JPMorgan Chase Bank NA	CLP	43,600		$	66		7/7/17		—	@
JPMorgan Chase Bank NA	CLP	91,900		$	139		7/7/17		—	@
JPMorgan Chase Bank NA	$	202		CLP	135,500		7/7/17		2
JPMorgan Chase Bank NA	ARS	48		$	3		7/10/17		—	@
JPMorgan Chase Bank NA	RUB	30,764		$	537		7/10/17		16
JPMorgan Chase Bank NA	$	3		ARS	48		7/10/17		(—	@)
JPMorgan Chase Bank NA	$	521		RUB	30,764		7/10/17		1
JPMorgan Chase Bank NA	$	304		THB	10,350		7/11/17		—
JPMorgan Chase Bank NA	COP	295,000		$	100		7/13/17		4
JPMorgan Chase Bank NA	$	84		COP	247,500		7/13/17		(3	)
JPMorgan Chase Bank NA	$	80		COP	242,000		7/13/17		(1	)
JPMorgan Chase Bank NA	$	124		INR	8,000		7/13/17		(—	@)
JPMorgan Chase Bank NA	$	304		TRY	1,078		7/14/17		1
JPMorgan Chase Bank NA	MXN	22,264		$	1,229		7/17/17		5
JPMorgan Chase Bank NA	$	475		CZK	11,060		7/17/17		9
JPMorgan Chase Bank NA	$	114		HUF	31,479		7/24/17		3
JPMorgan Chase Bank NA	$	183		RON	753		7/24/17		6
JPMorgan Chase Bank NA	ZAR	2,411		$	184		7/24/17		(—	@)
JPMorgan Chase Bank NA	$	—	@	PEN	—	@	7/26/17		—	@
JPMorgan Chase Bank NA	EUR	111		$	127		7/31/17		(—	@)
JPMorgan Chase Bank NA	IDR	1,629,000		$	122		7/31/17		—	@
JPMorgan Chase Bank NA	RUB	30,764		$	518		7/31/17		(1	)
JPMorgan Chase Bank NA	$	139		CLP	91,900		7/31/17		(—	@)
JPMorgan Chase Bank NA	$	139		MYR	600		7/31/17		—	@
JPMorgan Chase Bank NA	BRL	113		$	34		8/2/17		—	@
JPMorgan Chase Bank NA	$	90		PLN	334		8/3/17		—	@
JPMorgan Chase Bank NA	CNY	1,700		$	245		8/18/17		(5	)
JPMorgan Chase Bank NA	EGP	4,165		$	222		9/20/17		(3	)
JPMorgan Chase Bank NA	$	163		EGP	3,000		9/20/17		(1	)
								$	30

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

Futures Contracts:

The Fund had the following futures contracts open at June 30, 2017:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Appreciation (000)
Short:
German Euro BOBL (Germany)		2	$	(301	)	Sep-17	$	3
German Euro Bund (Germany)		1		(185	)	Sep-17		3
							$	6

@    Value is less than $500.

ARS  —  Argentine Peso

BRL  —  Brazilian Real

CLP  —  Chilean Peso

CNY  —  Chinese Yuan Renminbi

COP  —  Colombian Peso

CZK  —  Czech Koruna

EGP  —  Egyptian Pound

EUR  —  Euro

HUF  —  Hungarian Forint

IDR  —  Indonesian Rupiah

INR  —  Indian Rupee

MXN  —  Mexican Peso

MYR  —  Malaysian Ringgit

PEN  —  Peruvian Nuevo Sol

PLN  —  Polish Zloty

RON  —  Romanian New Leu

RUB  —  Russian Ruble

THB  —  Thai Baht

TRY  —  Turkish Lira

UYU  —  Uruguay Peso

ZAR  —  South African Rand

Portfolio Composition

Classification	Percentage of Total Investments
Sovereign		63.7	%
Corporate Bonds		34.2
Other*		2.1
Total Investments		100.0	%**

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

**  Does not include open short futures contracts with an underlying face amount of approximately $486,000 with total unrealized appreciation of approximately $6,000. Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $30,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $23,377)	$	23,996
Investment in Security of Affiliated Issuer, at Value (Cost $239)		239
Total Investments in Securities, at Value (Cost $23,616)		24,235
Foreign Currency, at Value (Cost $163)		163
Interest Receivable		511
Receivable for Investments Sold		220
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		51
Due from Adviser		17
Receivable for Variation Margin on Futures Contracts		13
Tax Reclaim Receivable		2
Dividends Receivable		—	@
Receivable from Affiliate		—	@
Receivable for Fund Shares Sold		—	@
Other Assets		75
Total Assets		25,287
Liabilities:
Payable for Investments Purchased		180
Payable for Custodian Fees		34
Payable for Professional Fees		32
Deferred Capital Gain Country Tax		28
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		21
Payable for Directors' Fees and Expenses		8
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 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 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		12
Total Liabilities		317
Net Assets	$	24,970
Net Assets Consist of:
Paid-in-Capital	$	29,104
Undistributed Net Investment Income		408
Accumulated Net Realized Loss		(5,185	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $12 of Deferred Capital Gain Country Tax)		607
Futures Contracts		6
Foreign Currency Forward Exchange Contracts		30
Foreign Currency Translations		—	@
Net Assets	$	24,970

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	22,111
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,284,366
Net Asset Value, Offering and Redemption Price Per Share	$	9.68
CLASS A:
Net Assets	$	1,009
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		104,387
Net Asset Value, Redemption Price Per Share	$	9.66
Maximum Sales Load		4.25	%
Maximum Sales Charge	$	0.43
Maximum Offering Price Per Share	$	10.09
CLASS L:
Net Assets	$	812
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		84,233
Net Asset Value, Offering and Redemption Price Per Share	$	9.64
CLASS C:
Net Assets	$	274
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		28,434
Net Asset Value, Offering and Redemption Price Per Share	$	9.63
CLASS IS:
Net Assets	$	764
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	$	9.69

@  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, 2017 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers (Net of $6 of Foreign Taxes Withheld)	$	899
Dividends from Security of Affiliated Issuer (Note G)		2
Total Investment Income		901
Expenses:
Advisory Fees (Note B)		90
Professional Fees		56
Custodian Fees (Note F)		27
Registration Fees		20
Administration Fees (Note C)		10
Shareholder Reporting Fees		7
Pricing Fees		6
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		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		2
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		8
Total Expenses		235
Waiver of Advisory Fees (Note B)		(90	)
Expenses Reimbursed by Adviser (Note B)		(38	)
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	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		103
Net Investment Income		798
Realized Gain (Loss):
Investments Sold (Net of $8 of Capital Gain Country Tax)		74
Foreign Currency Forward Exchange Contracts		(123	)
Foreign Currency Transactions		12
Futures Contracts		(5	)
Swap Agreements		5
Net Realized Loss		(37	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $2)		989
Foreign Currency Forward Exchange Contracts		40
Foreign Currency Translations		2
Futures Contracts		10
Net Change in Unrealized Appreciation (Depreciation)		1,041
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		1,004
Net Increase in Net Assets Resulting from Operations	$	1,802

@  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, 2017

Emerging Markets Fixed Income Opportunities Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	798		$	1,703
Net Realized Loss		(37	)		(124	)
Net Change in Unrealized Appreciation (Depreciation)		1,041			1,157
Net Increase in Net Assets Resulting from Operations		1,802			2,736
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(225	)		(1,221	)
Class A:
Net Investment Income		(10	)		(62	)
Class L:
Net Investment Income		(7	)		(43	)
Class C:
Net Investment Income		(2	)		(11	)
Class IS:
Net Investment Income		(8	)		(43	)
Total Distributions		(252	)		(1,380	)
Capital Share Transactions:(1)
Class I:
Subscribed		741			541
Distributions Reinvested		28			144
Redeemed		(361	)		(760	)
Class A:
Subscribed		69			195
Distributions Reinvested		8			51
Redeemed		(106	)		(443	)
Class L:
Distributions Reinvested		7			38
Redeemed		(22	)		(42	)
Class C:
Subscribed		32			2
Distributions Reinvested		2			10
Redeemed		—			(2	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		398			(266	)
Redemption Fees		—	@		—	@
Total Increase in Net Assets		1,948			1,090
Net Assets:
Beginning of Period		23,022			21,932
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $408 and $(138), respectively)	$	24,970		$	23,022

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Emerging Markets Fixed Income Opportunities Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		78			58
Shares Issued on Distributions Reinvested		3			16
Shares Redeemed		(39	)		(85	)
Net Increase (Decrease) in Class I Shares Outstanding		42			(11	)
Class A:
Shares Subscribed		7			21
Shares Issued on Distributions Reinvested		1			6
Shares Redeemed		(11	)		(49	)
Net Decrease in Class A Shares Outstanding		(3	)		(22	)
Class L:
Shares Issued on Distributions Reinvested		1			4
Shares Redeemed		(3	)		(4	)
Net Decrease in Class L Shares Outstanding		(2	)		(—	@@)
Class C:
Shares Subscribed		4			—	@@
Shares Issued on Distributions Reinvested		—	@@		1
Shares Redeemed		—			(—	@@)
Net Increase in Class C Shares Outstanding		4			1

@  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, 2017

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from May 24, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.07		$	8.53		$	9.22		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.31			0.67			0.52			0.51			0.53			0.30
Net Realized and Unrealized Gain (Loss)		0.40			0.42			(0.68	)		(0.19	)		(1.50	)		1.18
Total from Investment Operations		0.71			1.09			(0.16	)		0.32			(0.97	)		1.48
Distributions from and/or in Excess of:
Net Investment Income		(0.10	)		(0.55	)		(0.53	)		(0.50	)		(0.48	)		(0.30	)
Net Realized Gain		(0.00	)(4)		—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.10	)		(0.55	)		(0.53	)		(0.50	)		(0.74	)		(0.37	)
Redemption Fees		—			0.00	(4)		0.00	(4)		—			0.00	(4)		—
Net Asset Value, End of Period	$	9.68		$	9.07		$	8.53		$	9.22		$	9.40		$	11.11
Total Return (5)		7.86	%(8)		12.80	%		(1.83	)%		3.38	%		(8.79	)%		14.83	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	22,111		$	20,332		$	19,219		$	18,492		$	19,400		$	22,597
Ratio of Expenses to Average Net Assets (10)		0.83	%(6)(9)		0.84	%(6)		0.83	%(6)		0.83	%(6)		0.84	%(6)		0.84	%(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		6.70	%(6)(9)		7.32	%(6)		5.74	%(6)		5.23	%(6)		5.14	%(6)		4.63	%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.01	%(9)
Portfolio Turnover Rate		43	%(8)		116	%		111	%		95	%		94	%		29	%(8)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.90	%(9)		2.03	%		1.82	%		1.91	%		2.15	%		2.02	%(9)
Net Investment Income to Average Net Assets		5.63	%(9)		6.13	%		4.75	%		4.15	%		3.83	%		3.45	%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from May 24, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.06		$	8.52		$	9.21		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.30			0.64			0.50			0.47			0.49			0.29
Net Realized and Unrealized Gain (Loss)		0.39			0.42			(0.69	)		(0.19	)		(1.49	)		1.17
Total from Investment Operations		0.69			1.06			(0.19	)		0.28			(1.00	)		1.46
Distributions from and/or in Excess of:
Net Investment Income		(0.09	)		(0.52	)		(0.50	)		(0.47	)		(0.45	)		(0.28	)
Net Realized Gain		—			—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.09	)		(0.52	)		(0.50	)		(0.47	)		(0.71	)		(0.35	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		—			0.00	(4)		—
Net Asset Value, End of Period	$	9.66		$	9.06		$	8.52		$	9.21		$	9.40		$	11.11
Total Return (5)		7.66	%(9)		12.53	%		(2.14	)%		2.90	%		(9.05	)%		14.66	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,009		$	972		$	1,103		$	291		$	196		$	111
Ratio of Expenses to Average Net Assets (11)		1.20	%(6)(10)		1.09	%(6)		1.20	%(6)		1.20	%(6)		1.14	%(6)(7)		1.09	%(6)(10)
Ratio of Net Investment Income to Average Net Assets (11)		6.31	%(6)(10)		7.03	%(6)		5.61	%(6)		4.88	%(6)		4.88	%(6)		4.38	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		43	%(9)		116	%		111	%		95	%		94	%		29	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.36	%(10)		2.28	%		2.49	%		2.85	%		2.76	%		2.27	%(10)
Net Investment Income to Average Net Assets		5.15	%(10)		5.84	%		4.32	%		3.23	%		3.26	%		3.20	%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from May 24, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.05		$	8.51		$	9.22		$	9.39		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.28			0.62			0.49			0.45			0.47			0.25
Net Realized and Unrealized Gain (Loss)		0.40			0.41			(0.72	)		(0.18	)		(1.51	)		1.18
Total from Investment Operations		0.68			1.03			(0.23	)		0.27			(1.04	)		1.43
Distributions from and/or in Excess of:
Net Investment Income		(0.09	)		(0.49	)		(0.48	)		(0.44	)		(0.42	)		(0.25	)
Net Realized Gain		—			—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.09	)		(0.49	)		(0.48	)		(0.44	)		(0.68	)		(0.32	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		—			0.00	(4)		—
Net Asset Value, End of Period	$	9.64		$	9.05		$	8.51		$	9.22		$	9.39		$	11.11
Total Return (5)		7.49	%(9)		12.15	%		(2.53	)%		2.85	%		(9.41	)%		14.33	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	812		$	777		$	735		$	98		$	100		$	111
Ratio of Expenses to Average Net Assets (11)		1.45	%(6)(10)		1.45	%(6)		1.45	%(6)		1.45	%(6)		1.41	%(6)(7)		1.59	%(6)(10)
Ratio of Net Investment Income to Average Net Assets (11)		6.07	%(6)(10)		6.70	%(6)		5.44	%(6)		4.62	%(6)		4.57	%(6)		3.88	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		43	%(9)		116	%		111	%		95	%		94	%		29	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.65	%(10)		2.78	%		2.94	%		4.10	%		3.07	%		2.77	%(10)
Net Investment Income to Average Net Assets		4.87	%(10)		5.37	%		3.95	%		1.97	%		2.91	%		2.70	%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.05		$	8.52		$	9.52
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.26			0.54			0.32
Net Realized and Unrealized Gain (Loss)		0.39			0.43			(0.97	)
Total from Investment Operations		0.65			0.97			(0.65	)
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.44	)		(0.35	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	9.63		$	9.05		$	8.52
Total Return (5)		7.25	%(8)		11.60	%		(6.95	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	274		$	225		$	202
Ratio of Expenses to Average Net Assets (10)		1.95	%(6)(9)		1.95	%(6)		1.95	%(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		5.46	%(6)(9)		5.87	%(6)		5.34	%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		43	%(8)		116	%		111	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.72	%(9)		3.97	%		6.28	%(9)
Net Investment Income to Average Net Assets		3.69	%(9)		3.85	%		1.01	%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to			��
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	9.07		$	8.53		$	9.22		$	9.40		$	9.65
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.31			0.67			0.50			0.51			0.15
Net Realized and Unrealized Gain (Loss)		0.41			0.42			(0.66	)		(0.19	)		0.04
Total from Investment Operations		0.72			1.09			(0.16	)		0.32			0.19
Distributions from and/or in Excess of:
Net Investment Income		(0.10	)		(0.55	)		(0.53	)		(0.50	)		(0.24	)
Net Realized Gain		—			—			—			—			(0.20	)
Total Distributions		(0.10	)		(0.55	)		(0.53	)		(0.50	)		(0.44	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		—			0.00	(4)
Net Asset Value, End of Period	$	9.69		$	9.07		$	8.53		$	9.22		$	9.40
Total Return (5)		7.97	%(9)		12.81	%		(1.83	)%		3.39	%		1.92	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	764		$	716		$	673		$	10		$	10
Ratio of Expenses to Average Net Assets (11)		0.82	%(6)(10)		0.82	%(6)		0.82	%(6)		0.82	%(6)		0.81	%(6)(7)(10)
Ratio of Net Investment Income to Average Net Assets (11)		6.71	%(6)(10)		7.33	%(6)		5.45	%(6)		5.25	%(6)		5.36	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		43	%(9)		116	%		111	%		95	%		94	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.12	%(10)		2.25	%		1.86	%		21.21	%		7.70	%(10)
Net Investment Income (Loss) to Average Net Assets		5.41	%(10)		5.90	%		4.41	%		(15.14	)%		(1.53	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expeses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Emerging Markets Fixed Income Opportunities Portfolio. The Fund seeks high total return.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the" Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (5) OTC swaps may be valued by an outside pricing service approved by the Directors or quotes from a broker or dealer. Swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange; (6) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Directors. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange ("NYSE"). If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

approved by the Directors; (7) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (8) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

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

The Company 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

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	$	—	$	8,276		$	—	$	8,276
Sovereign		—		15,444			—		15,444
Total Fixed Income Securities		—		23,720			—		23,720
Warrant		—		3			—		3
Short-Term Investments
Investment Company		239		—			—		239
Sovereign		—		243			—		243
U.S. Treasury Security		—		30			—		30
Total Short-Term Investments		239		273			—		512
Foreign Currency Forward Exchange Contracts		—		51			—		51
Futures Contracts		6		—			—		6
Total Assets		245		24,047			—		24,292
Liabilities:
Foreign Currency Forward Exchange Contracts		—		(21	)		—		(21	)
Total	$	245	$	24,026		$	—	$	24,271

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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 Fund'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 Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

Swaps: The Fund 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 Fund'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 Fund'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 Fund 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.

When the Fund has an unrealized loss on a swap agreement, the Fund 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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Upfront payments paid or received by the Fund will be reflected as an asset or liability, respectively, in the Statement of Assets and Liabilities.

As of June 30, 2017, the Fund did not have any open swap agreements.

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	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	$	51
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		6	(a)
Total			$	57
	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	$	(21	)

(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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(123	)
Interest Rate Risk	Futures Contracts		(5	)
Interest Rate Risk	Swap Agreements		5
	Total	$	(123	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	40
Interest Rate Risk	Futures Contracts		10
	Total	$	50

At June 30, 2017, the Fund'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	$	51	$	(21	)

(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 Fund 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 Fund 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 Fund 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 Fund 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 Fund's net liability may be delayed or denied.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2017.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Received (000)		Net Amount (not less than $0) (000)
JPMorgan Chase Bank NA	$	51	$	(21	)	$	—	$	30
Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Pledged (000)		Net Amount (not less than $0) (000)
JPMorgan Chase Bank NA	$	21	$	(21	)	$	—	$	0

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	6,611,000
Futures Contracts:
Average monthly original value	$	260,000
Swap Agreements:
Average monthly notional amount	$	105,000

6.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.75	%		0.70	%		0.65	%

For the six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.45% for Class L shares, 1.95% for Class C shares and 0.82% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund'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, 2017, approximately $90,000 of advisory fees were waived and approximately $41,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $11,016,000 and $9,868,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	1,125	$	6,693	$	7,579	$	2	$	239

The Fund 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

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

provisions of the Rule. For the six months ended June 30, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	1,380	$	—	$	1,646	$	—

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, 2016:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(348	)	$	348	$	—

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $1,383,000 and long-term capital losses of approximately $3,723,000 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 Fund 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, 2016, the Fund had utilized capital loss carryforwards for U.S. Federal income tax purposes of approximately $583,000.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	7	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund did not have record owners of 10% or greater.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was better than its peer group average for the one- and three-year periods and the period since the end of May 2012, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's contractual management fee was higher than but close to its peer group average and its actual management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMEDSAN
1858074 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Leaders Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Emerging Markets Leaders Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,177.80	$	1,019.34	$	5.94	$	5.51		1.10	%
Emerging Markets Leaders Portfolio Class A		1,000.00		1,174.80		1,017.16		8.30		7.70		1.54
Emerging Markets Leaders Portfolio Class C		1,000.00		1,171.00		1,013.44		12.33		11.43		2.29
Emerging Markets Leaders Portfolio Class IS		1,000.00		1,177.80		1,019.39		5.89		5.46		1.09

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Emerging Markets Leaders Portfolio

	Shares		Value (000)
Common Stocks (94.7%)
Belgium (4.8%)
Anheuser-Busch InBev N.V.		37,439	$	4,135
Brazil (1.3%)
Banco Bradesco SA (Preference)		127,930		1,087
China (8.5%)
Alibaba Group Holding Ltd. ADR (a)		12,241		1,725
Tencent Holdings Ltd. (b)		155,700		5,568
				7,293
Czech Republic (2.7%)
Komercni Banka AS		57,874		2,318
Germany (2.3%)
Adidas AG		10,425		1,997
Hong Kong (10.3%)
AIA Group Ltd.		550,800		4,025
Samsonite International SA		1,147,200		4,790
				8,815
Hungary (2.6%)
OTP Bank PLC		66,251		2,217
India (13.2%)
Apollo Hospitals Enterprise Ltd. (a)		126,981		2,504
Colgate-Palmolive India Ltd.		149,031		2,561
Crompton Greaves Consumer Electricals Ltd. (a)		198,256		695
Godrej Consumer Products Ltd. (a)		43,339		649
Godrej Consumer Products Ltd.		45,296		678
Ipca Laboratories Ltd. (a)		157,900		1,203
LIC Housing Finance Ltd.		85,204		978
Marico Ltd.		417,179		2,029
				11,297
Indonesia (6.3%)
Bank Mandiri Persero Tbk PT		3,765,700		3,603
Sumber Alfaria Trijaya Tbk PT		41,083,391		1,757
				5,360
Korea, Republic of (7.1%)
CJ CGV Co., Ltd.		27,030		1,739
Hanssem Co., Ltd.		14,575		2,344
Osstem Implant Co., Ltd. (a)		42,576		1,950
				6,033
Mexico (9.3%)
Alsea SAB de CV		476,765		1,807
Fomento Economico Mexicano SAB de CV ADR		35,320		3,474
Grupo Financiero Banorte SAB de CV Series O		418,466		2,655
				7,936
Peru (3.7%)
Credicorp Ltd.		17,679		3,171
Poland (3.5%)
Eurocash SA		121,071		1,013
Jeronimo Martins SGPS SA		102,344		1,997
				3,010

	Shares		Value (000)
South Africa (6.8%)
Famous Brands Ltd.		358,275	$	3,451
Life Healthcare Group Holdings Ltd.		1,193,583		2,340
				5,791
Switzerland (3.6%)
DKSH Holding AG		37,262		3,025
Taiwan (8.7%)
Advantech Co., Ltd.		53,898		382
King Slide Works Co., Ltd.		155,000		2,176
Poya International Co., Ltd.		181,420		2,302
Superalloy Industrial Co., Ltd.		187,292		911
Voltronic Power Technology Corp.		99,750		1,643
				7,414
Total Common Stocks (Cost $71,223)				80,899
Short-Term Investment (6.6%)
Investment Company (6.6%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $5,675)		5,674,722		5,675
Total Investments (101.3%) (Cost $76,898) (c)				86,574
Liabilities in Excess of Other Assets (–1.3%)				(1,151	)
Net Assets (100.0%)			$	85,423

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $10,591,000 and the aggregate gross unrealized depreciation is approximately $915,000, resulting in net unrealized appreciation of approximately $9,676,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		27.0	%
Banks		17.4
Beverages		8.8
Internet Software & Services		8.4
Textiles, Apparel & Luxury Goods		7.8
Personal Products		6.8
Short-Term Investment		6.6
Hotels, Restaurants & Leisure		6.1
Health Care Providers & Services		5.6
Food & Staples Retailing		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $71,223)	$	80,899
Investment in Security of Affiliated Issuer, at Value (Cost $5,675)		5,675
Total Investments in Securities, at Value (Cost $76,898)		86,574
Foreign Currency, at Value (Cost $158)		157
Tax Reclaim Receivable		115
Dividends Receivable		100
Receivable for Fund Shares Sold		14
Receivable from Affiliate		3
Other Assets		71
Total Assets		87,034
Liabilities:
Payable for Investments Purchased		1,333
Deferred Capital Gain Country Tax		118
Payable for Advisory Fees		104
Payable for Professional Fees		26
Payable for Custodian Fees		17
Payable for Administration Fees		6
Payable for Fund Shares Redeemed		4
Payable for Shareholder Services Fees — Class A		—	@
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 C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Other Liabilities		2
Total Liabilities		1,611
Net Assets	$	85,423
Net Assets Consist Of:
Paid-in-Capital	$	73,383
Accumulated Undistributed Net Investment Income		422
Accumulated Net Realized Gain		2,044
Unrealized Appreciation (Depreciation) on:
Investments (Net of $104 of Deferred Capital Gain Country Tax)		9,572
Foreign Currency Translations		2
Net Assets	$	85,423

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	69,770
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		6,087,299
Net Asset Value, Offering and Redemption Price Per Share	$	11.46
CLASS A:
Net Assets	$	1,005
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		88,436
Net Asset Value, Redemption Price Per Share	$	11.36
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.63
Maximum Offering Price Per Share	$	11.99
CLASS C:
Net Assets	$	754
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		67,134
Net Asset Value, Offering and Redemption Price Per Share	$	11.23
CLASS IS:
Net Assets	$	13,894
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,212,301
Net Asset Value, Offering and Redemption Price Per Share	$	11.46

@  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, 2017 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $145 of Foreign Taxes Withheld)	$	1,192
Dividends from Security of Affiliated Issuer (Note G)		16
Total Investment Income		1,208
Expenses:
Advisory Fees (Note B)		443
Professional Fees		61
Custodian Fees (Note F)		39
Administration Fees (Note C)		39
Registration Fees		27
Shareholder Reporting Fees		5
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		3
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
Directors' Fees and Expenses		3
Pricing Fees		3
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		13
Total Expenses		641
Waiver of Advisory Fees (Note B)		(90	)
Rebate from Morgan Stanley Affiliate (Note G)		(5	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		544
Net Investment Income		664
Realized Gain (Loss):
Investments Sold		2,995
Foreign Currency Transactions		(28	)
Net Realized Gain		2,967
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $104)		13,398
Foreign Currency Translations		3
Net Change in Unrealized Appreciation (Depreciation)		13,401
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		16,368
Net Increase in Net Assets Resulting from Operations	$	17,032

@  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, 2017

Emerging Markets Leaders Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	664		$	75
Net Realized Gain (Loss)		2,967			(363	)
Net Change in Unrealized Appreciation (Depreciation)		13,401			(1,853	)
Net Increase (Decrease) in Net Assets Resulting from Operations		17,032			(2,141	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(22	)
Paid-in-Capital		—			(7	)
Class A:
Net Investment Income		—			(—	@)
Paid-in-Capital		—			(—	@)
Class C:
Net Investment Income		—			(—	@)
Paid-in-Capital		—			(—	@)
Class IS:
Net Investment Income		—			(21	)
Paid-in-Capital		—			(27	)
Total Distributions		—			(77	)
Capital Share Transactions:(1)
Class I:
Subscribed		41,762			15,872
Distributions Reinvested		—			15
Redeemed		(3,675	)		(4,035	)
Class A:
Subscribed		369			1,426
Distributions Reinvested		—			—	@
Redeemed		(312	)		(691	)
Class C:
Subscribed		71			508
Distributions Reinvested		—			—	@
Redeemed		(8	)		—
Class IS:
Subscribed		750			80,451
Distributions Reinvested		—			48
Redeemed		(86,228	)		(5,300	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(47,271	)		88,294
Redemption Fees		—	@		—	@
Total Increase (Decrease) in Net Assets		(30,239	)		86,076
Net Assets:
Beginning of Period		115,662			29,586
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $422 and $(242), respectively)	$	85,423		$	115,662

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Emerging Markets Leaders Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		3,825			1,602
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(345	)		(413	)
Net Increase in Class I Shares Outstanding		3,480			1,191
Class A:
Shares Subscribed		33			137
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(30	)		(71	)
Net Increase in Class A Shares Outstanding		3			66
Class C:
Shares Subscribed		7			51
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		—
Net Increase in Class C Shares Outstanding		6			51
Class IS:
Shares Subscribed		65			7,981
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(7,984	)		(539	)
Net Increase (Decrease) in Class IS Shares Outstanding		(7,919	)		7,447

@  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, 2017

Financial Highlights

Emerging Markets Leaders Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from January 5, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.73		$	9.45		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.10			0.04			0.06
Net Realized and Unrealized Gain (Loss)		1.63			0.25			(0.49	)
Total from Investment Operations		1.73			0.29			(0.43	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.12	)
Paid-in-Capital		—			(0.00	)(4)		—
Total Distributions		—			(0.01	)		(0.12	)
Redemption Fees		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	11.46		$	9.73		$	9.45
Total Return (5)		17.78	%(7)		3.08	%		(4.26	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	69,770		$	25,374		$	13,379
Ratio of Expenses to Average Net Assets (9)		1.10	%(6)(8)		1.10	%(6)		1.14	%(6)(8)
Ratio of Net Investment Income to Average Net Assets (9)		1.87	%(6)(8)		0.37	%(6)		0.65	%(6)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.02	%		0.01	%(8)
Portfolio Turnover Rate		54	%(7)		45	%		36	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.29	%(8)		1.32	%		2.80	%(8)
Net Investment Income (Loss) to Average Net Assets		1.68	%(8)		0.15	%		(1.01	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Date of Reorganization (close of business).

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Leaders Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from January 5, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.67		$	9.43		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.06			(0.03	)		0.02
Net Realized and Unrealized Gain (Loss)		1.63			0.28			(0.48	)
Total from Investment Operations		1.69			0.25			(0.46	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.11	)
Paid-in-Capital		—			(0.00	)(4)		—
Total Distributions		—			(0.01	)		(0.11	)
Redemption Fees		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	11.36		$	9.67		$	9.43
Total Return (5)		17.48	%(7)		2.63	%		(4.61	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,005		$	821		$	182
Ratio of Expenses to Average Net Assets (9)		1.54	%(6)(8)		1.53	%(6)		1.54	%(6)(8)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		1.05	%(6)(8)		(0.33	)%(6)		0.21	%(6)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.02	%		0.01	%(8)
Portfolio Turnover Rate		54	%(7)		45	%		36	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.87	%(8)		1.96	%		5.89	%(8)
Net Investment Income (Loss) to Average Net Assets		0.72	%(8)		(0.76	)%		(4.14	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Date of Reorganization (close of business).

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Leaders Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.59		$	9.42		$	10.61
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.02			(0.10	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		1.62			0.28			(1.07	)
Total from Investment Operations		1.64			0.18			(1.13	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.06	)
Paid-in-Capital		—			(0.00	)(4)		—
Total Distributions		—			(0.01	)		(0.06	)
Redemption Fees		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	11.23		$	9.59		$	9.42
Total Return (5)		17.10	%(8)		1.89	%		(10.61	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	754		$	587		$	100
Ratio of Expenses to Average Net Assets (10)		2.29	%(6)(9)		2.28	%(6)		2.30	%(6)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.37	%(6)(9)		(0.99	)%(6)		(0.85	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.02	%		0.00	%(7)(9)
Portfolio Turnover Rate		54	%(8)		45	%		36	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.62	%(9)		3.08	%		5.73	%(9)
Net Investment Income (Loss) to Average Net Assets		0.04	%(9)		(1.79	)%		(4.28	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Leaders Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from January 5, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.73		$	9.45		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.05			(0.00	)(4)		0.07
Net Realized and Unrealized Gain (Loss)		1.68			0.29			(0.50	)
Total from Investment Operations		1.73			0.29			(0.43	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.12	)
Paid-in-Capital		—			(0.00	)(4)		—
Total Distributions		—			(0.01	)		(0.12	)
Redemption Fees		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	11.46		$	9.73		$	9.45
Total Return (5)		17.78	%(9)		3.09	%		(4.25	)%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	13,894		$	88,880		$	15,925
Ratio of Expenses to Average Net Assets (11)		1.09	%(6)(10)		1.08	%(6)		1.12	%(6)(7)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		0.93	%(6)(10)		(0.00	)%(6)(8)		0.75	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.02	%		0.01	%(10)
Portfolio Turnover Rate		54	%(9)		45	%		36	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.29	%(10)		1.31	%		2.65	%(10)
Net Investment Income (Loss) to Average Net Assets		0.73	%(10)		(0.23	)%		(0.78	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Date of Reorganization (close of business).

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Emerging Markets Leaders Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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") (the "Sub-Adviser"), a wholly 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; and

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

(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.

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

The Company 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, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Auto Components	$	911	$	—	$	—	$	911
Banks		15,051		—		—		15,051
Beverages		7,609		—		—		7,609
Electrical Equipment		1,643		—		—		1,643
Food & Staples Retailing		4,767		—		—		4,767
Health Care Equipment & Supplies		1,950		—		—		1,950
Health Care Providers & Services		4,844		—		—		4,844
Hotels, Restaurants & Leisure		5,258		—		—		5,258
Household Durables		3,039		—		—		3,039
Insurance		4,025		—		—		4,025
Internet Software & Services		7,293		—		—		7,293
Machinery		2,176		—		—		2,176
Media		1,739		—		—		1,739
Multi-Line Retail		2,302		—		—		2,302
Personal Products		5,268		649		—		5,917
Pharmaceuticals		1,203		—		—		1,203
Professional Services		3,025		—		—		3,025
Tech Hardware, Storage & Peripherals		382		—		—		382
Textiles, Apparel & Luxury Goods		6,787		—		—		6,787
Thrifts & Mortgage Finance		978		—		—		978
Total Common Stocks		80,250		649		—		80,899
Short-Term Investment
Investment Company		5,675		—		—		5,675
Total Assets	$	85,925	$	649	$	—	$	86,574

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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, 2017

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.71% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 one year 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, 2017, approximately $90,000 of advisory fees were waived and approximately $2,000 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, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Company's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee,

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $54,434,000 and $51,717,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $5,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	2,727	$	48,270	$	45,322	$	16	$	5,675

During the six months ended June 30, 2017, the Fund incurred approximately $9,000 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 Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2016 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 2016 and 2015 was as follows:

2016 Distributions Paid From:						2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	43	$	—	$	34	$	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 and a dividend redesignation, resulted in the following reclassifications among the Funds' components of net assets at December 31, 2016:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(51	)	$	52	$	(1	)

At December 31, 2106, the Fund had no distributable earnings on a tax basis.

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $608,000 and long-term capital losses of approximately $134,000 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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	6	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

facility. During the six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 80.6%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (The Adviser and the Sub-Adviser together are referred to as the "Adviser" and 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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period but better than its peer group average for the 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMLSAN
1859488 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	25
Privacy Notice	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Emerging Markets Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,198.80	$	1,019.69	$	5.62	$	5.16		1.03	%
Emerging Markets Portfolio Class A		1,000.00		1,196.50		1,018.05		7.41		6.81		1.36
Emerging Markets Portfolio Class L		1,000.00		1,193.20		1,015.37		10.33		9.49		1.90
Emerging Markets Portfolio Class C		1,000.00		1,191.60		1,014.13		11.68		10.74		2.15
Emerging Markets Portfolio Class IS		1,000.00		1,199.20		1,020.08		5.18		4.76		0.95

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Emerging Markets Portfolio

	Shares		Value (000)
Common Stocks (97.5%)
Argentina (1.1%)
Banco Macro SA ADR		74,436	$	6,862
Grupo Financiero Galicia SA ADR		154,083		6,570
				13,432
Austria (1.0%)
Erste Group Bank AG (a)		302,877		11,597
Brazil (6.9%)
Banco Bradesco SA (Preference)		1,868,977		15,881
BRF SA		831,477		9,838
Itau Unibanco Holding SA (Preference)		1,619,302		17,963
Lojas Renner SA		1,360,832		11,247
Petroleo Brasileiro SA (a)		1,647,351		6,564
Petroleo Brasileiro SA (Preference) (a)		2,144,363		8,007
Raia Drogasil SA		528,058		11,175
				80,675
Chile (0.5%)
SACI Falabella		795,777		6,539
China (18.9%)
Alibaba Group Holding Ltd. ADR (a)(b)		211,626		29,818
Bank of China Ltd. H Shares (c)		48,971,000		24,023
China Construction Bank Corp. H Shares (c)		20,836,750		16,146
China Mengniu Dairy Co., Ltd. (a)(c)		2,082,000		4,080
China Mobile Ltd. (c)		1,289,000		13,678
China Overseas Land & Investment Ltd. (c)		808,000		2,365
China Pacific Insurance Group Co., Ltd. H Shares (c)		2,945,200		12,034
China Unicom Hong Kong Ltd. (a)(c)		5,124,000		7,613
CRCC High-Tech Equipment Corp., Ltd. H Shares (c)		3,971,000		1,678
CSPC Pharmaceutical Group Ltd. (c)		3,610,000		5,271
JD.com, Inc. ADR (a)		243,030		9,532
NetEase, Inc. ADR		15,488		4,656
New Oriental Education & Technology Group, Inc. ADR (a)		75,049		5,290
PetroChina Co., Ltd. H Shares (c)		6,566,000		4,020
Shenzhou International Group Holdings Ltd. (c)		887,000		5,828
Sino Biopharmaceutical Ltd. (c)		3,670,000		3,244
TAL Education Group ADR		56,633		6,927
Tencent Holdings Ltd. (c)		1,826,300		65,310
Zoomlion Heavy Industry Science and Technology Co., Ltd. H Shares (c)		3,028,200		1,474
				222,987
Czech Republic (1.1%)
Komercni Banka AS		317,750		12,727
Egypt (0.6%)
Commercial International Bank Egypt SAE		1,605,406		7,081
Germany (0.7%)
Adidas AG		43,632		8,360
Hong Kong (2.4%)
AIA Group Ltd.		1,642,400		12,001
Samsonite International SA		4,022,700		16,797
				28,798

	Shares		Value (000)
Hungary (1.2%)
OTP Bank PLC		425,686	$	14,247
India (8.8%)
Ashok Leyland Ltd.		6,866,296		9,969
Bharat Petroleum Corp., Ltd.		1,146,723		11,343
Housing Development Finance Corp., Ltd.		576,239		14,397
ICICI Bank Ltd.		649,491		2,915
ICICI Bank Ltd. ADR		331,400		2,973
IndusInd Bank Ltd.		616,876		14,115
Marico Ltd.		2,951,318		14,353
Maruti Suzuki India Ltd.		105,456		11,776
Shree Cement Ltd.		41,904		10,991
Zee Entertainment Enterprises Ltd.		1,391,649		10,579
				103,411
Indonesia (5.3%)
Astra International Tbk PT		17,048,400		11,417
Bank Mandiri Persero Tbk PT		10,925,500		10,452
Bumi Serpong Damai Tbk PT		38,535,100		5,291
Semen Indonesia Persero Tbk PT		10,920,800		8,194
Telekomunikasi Indonesia Persero Tbk PT		34,082,100		11,559
Unilever Indonesia Tbk PT		2,508,300		9,184
XL Axiata Tbk PT (a)		22,906,300		5,861
				61,958
Korea, Republic of (10.6%)
Amorepacific Corp.		22,184		5,894
CJ Corp.		48,674		8,062
Coway Co., Ltd.		84,399		7,672
Hanwha Techwin Co., Ltd. (a)		79,983		3,111
Hugel, Inc. (a)		15,096		7,382
Hyundai Development Co-Engineering & Construction		183,215		7,518
Hyundai Motor Co.		79,156		11,035
Innocean Worldwide, Inc.		6,185		345
Korea Aerospace Industries Ltd.		165,773		8,258
Mando Corp.		28,996		6,526
NAVER Corp.		18,080		13,242
Samsung Electronics Co., Ltd.		15,788		32,800
Samsung Electronics Co., Ltd. (Preference)		8,008		13,032
				124,877
Malaysia (3.7%)
Genting Malaysia Bhd		6,782,300		8,690
IHH Healthcare Bhd		7,138,900		9,562
Malayan Banking Bhd		4,296,729		9,639
Malaysia Airports Holdings Bhd		2,992,600		5,968
Sime Darby Bhd		4,235,300		9,373
				43,232
Mexico (6.0%)
Alsea SAB de CV		1,547,229		5,865
Cemex SAB de CV ADR (a)		1,494,367		14,077
Fomento Economico Mexicano SAB de CV ADR		147,544		14,509
Grupo Financiero Banorte SAB de CV Series O		3,546,871		22,504

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

	Shares		Value (000)
Mexico (cont'd)
Grupo Financiero Santander Mexico SAB de CV ADR		765,936	$	7,384
Mexichem SAB de CV		2,278,813		6,104
				70,443
Pakistan (1.1%)
Lucky Cement Ltd.		632,300		5,071
United Bank Ltd.		3,388,900		7,628
				12,699
Panama (0.7%)
Copa Holdings SA, Class A		66,555		7,787
Peru (1.1%)
Credicorp Ltd.		72,064		12,928
Philippines (2.8%)
Ayala Land, Inc.		12,650,600		9,966
Metropolitan Bank & Trust Co.		6,249,277		10,836
SM Investments Corp.		759,765		12,091
				32,893
Poland (4.5%)
Bank Zachodni WBK SA		117,374		10,842
CCC SA		157,657		9,573
Jeronimo Martins SGPS SA		446,022		8,706
LPP SA		3,602		6,950
Powszechna Kasa Oszczednosci Bank Polski SA (a)		1,466,174		13,634
Powszechny Zaklad Ubezpieczen SA		254,928		3,068
				52,773
Russia (2.7%)
Gazprom PJSC ADR		31,560		126
Gazprom PJSC ADR		2,276,451		9,010
Mail.ru Group Ltd. GDR (a)		170,036		4,480
MMC Norilsk Nickel PJSC ADR		278,929		3,849
X5 Retail Group N.V. GDR (a)		243,427		8,435
Yandex N.V., Class A (a)		247,570		6,496
				32,396
South Africa (3.1%)
AVI Ltd.		986,322		7,162
Capitec Bank Holdings Ltd.		110,268		6,996
Clicks Group Ltd.		495,117		5,298
Naspers Ltd., Class N		36,191		7,041
Steinhoff International Holdings N.V. H Shares		1,979,912		10,147
				36,644
Switzerland (0.5%)
DKSH Holding AG		76,996		6,251
Taiwan (8.1%)
Advanced Semiconductor Engineering, Inc.		5,805,253		7,452
Advantech Co., Ltd.		479,584		3,398
Delta Electronics, Inc.		1,542,557		8,443
E.Sun Financial Holding Co., Ltd.		3,419,310		2,102
Hon Hai Precision Industry Co., Ltd.		3,571,700		13,737
Largan Precision Co., Ltd.		56,000		8,928

	Shares		Value (000)
Nien Made Enterprise Co., Ltd.		715,000	$	7,933
Taiwan Semiconductor Manufacturing Co., Ltd.		5,066,205		34,724
Uni-President Enterprises Corp.		4,101,290		8,224
				94,941
Thailand (2.1%)
Bangkok Dusit Medical Services PCL (Foreign)		8,578,400		4,848
Central Pattana PCL (Foreign)		3,321,500		6,771
PTT PCL (Foreign)		756,400		8,239
Sino-Thai Engineering & Construction PCL (Foreign)		5,683,800		4,643
				24,501
United Kingdom (0.5%)
Mondi PLC		218,828		5,698
United States (1.5%)
MercadoLibre, Inc.		68,531		17,193
Total Common Stocks (Cost $873,494)				1,147,068
Short-Term Investment (2.5%)
Investment Company (2.5%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $29,780)		29,779,714		29,780
Total Investments (100.0%) (Cost $903,274) Including $29,818 of Securities Loaned (d)				1,176,848
Liabilities in Excess of Other Assets (0.0%)				(268	)
Net Assets (100.0%)			$	1,176,580

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2017.

(c)  Security trades on the Hong Kong exchange.

(d)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $295,896,000 and the aggregate gross unrealized depreciation is approximately $22,322,000, resulting in net unrealized appreciation of approximately $273,574,000.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

PJSC  Public Joint Stock Company.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		65.2	%
Banks		22.8
Internet Software & Services		12.0
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, 2017 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $873,494)	$	1,147,068
Investment in Security of Affiliated Issuer, at Value (Cost $29,780)		29,780
Total Investments in Securities, at Value (Cost $903,274)		1,176,848
Foreign Currency, at Value (Cost $1,073)		1,069
Dividends Receivable		3,154
Receivable for Investments Sold		1,032
Receivable for Fund Shares Sold		803
Tax Reclaim Receivable		150
Receivable from Affiliate		19
Other Assets		163
Total Assets		1,183,238
Liabilities:
Payable for Investments Purchased		2,804
Payable for Advisory Fees		2,141
Deferred Capital Gain Country Tax		1,030
Payable for Custodian Fees		216
Payable for Fund Shares Redeemed		177
Payable for Directors' Fees and Expenses		90
Payable for Administration Fees		77
Payable for Sub Transfer Agency Fees — Class I		31
Payable for Sub Transfer Agency Fees — Class A		3
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Professional Fees		31
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		1
Payable for Transfer Agency Fees — Class I		3
Payable for Transfer Agency Fees — Class A		1
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		49
Total Liabilities		6,658
Net Assets	$	1,176,580
Net Assets Consist Of:
Paid-in-Capital	$	953,836
Accumulated Undistributed Net Investment Income		7,950
Accumulated Net Realized Loss		(57,722	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $1,012 of Deferred Capital Gain Country Tax)		272,562
Foreign Currency Translations		(46	)
Net Assets	$	1,176,580

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	313,588
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		12,559,929
Net Asset Value, Offering and Redemption Price Per Share	$	24.97
CLASS A:
Net Assets	$	21,772
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		895,771
Net Asset Value, Redemption Price Per Share	$	24.31
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.35
Maximum Offering Price Per Share	$	25.66
CLASS L:
Net Assets	$	284
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,843
Net Asset Value, Offering and Redemption Price Per Share	$	23.96
CLASS C:
Net Assets	$	725
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,419
Net Asset Value, Offering and Redemption Price Per Share	$	23.82
CLASS IS:
Net Assets	$	840,211
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		33,637,414
Net Asset Value, Offering and Redemption Price Per Share	$	24.98
(1) Including: Securities on Loan, at Value:	$	29,818

@  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, 2017 (unaudited)

Emerging Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,505 of Foreign Taxes Withheld)	$	12,298
Dividends from Security of Affiliated Issuer (Note G)		86
Income from Securities Loaned — Net		23
Total Investment Income		12,407
Expenses:
Advisory Fees (Note B)		4,267
Administration Fees (Note C)		431
Custodian Fees (Note F)		408
Sub Transfer Agency Fees — Class I		120
Sub Transfer Agency Fees — Class A		13
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Professional Fees		59
Shareholder Services Fees — Class A (Note D)		25
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		3
Registration Fees		27
Shareholder Reporting Fees		20
Directors' Fees and Expenses		14
Transfer Agency Fees — Class I (Note E)		7
Transfer Agency Fees — Class A (Note E)		3
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		7
Other Expenses		18
Total Expenses		5,426
Waiver of Advisory Fees (Note B)		(132	)
Rebate from Morgan Stanley Affiliate (Note G)		(25	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		5,267
Net Investment Income		7,140
Realized Gain (Loss):
Investments Sold (Net of $167 of Capital Gain Country Tax)		24,775
Foreign Currency Forward Exchange Contracts		146
Foreign Currency Transactions		(275	)
Net Realized Gain		24,646
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $417)		160,645
Foreign Currency Forward Exchange Contracts		(264	)
Foreign Currency Translations		(21	)
Net Change in Unrealized Appreciation (Depreciation)		160,360
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		185,006
Net Increase in Net Assets Resulting from Operations	$	192,146

@  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, 2017

Emerging Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	7,140		$	8,448
Net Realized Gain (Loss)		24,646			(25,501	)
Net Change in Unrealized Appreciation (Depreciation)		160,360			72,717
Net Increase in Net Assets Resulting from Operations		192,146			55,664
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(2,318	)
Class A:
Net Investment Income		—			(93	)
Class C:
Net Investment Income		—			(—	@)
Class IS:
Net Investment Income		—			(5,700	)
Total Distributions		—			(8,111	)
Capital Share Transactions:(1)
Class I:
Subscribed		23,628			76,859
Distributions Reinvested		—			2,281
Redeemed		(47,020	)		(323,673	)
Class A:
Subscribed		3,110			5,925
Distributions Reinvested		—			90
Redeemed		(3,730	)		(7,085	)
Class L:
Exchanged		2			—
Redeemed		(3	)		—
Class C:
Subscribed		—			562
Distributions Reinvested		—			—	@
Class IS:
Subscribed		70,398			348,817
Distributions Reinvested		—			5,700
Redeemed		(21,412	)		(45,556	)
Net Increase in Net Assets Resulting from Capital Share Transactions		24,973			63,920
Redemption Fees		10			14
Total Increase in Net Assets		217,129			111,487
Net Assets:
Beginning of Period		959,451			847,964
End of Period (Including Accumulated Undistributed Net Investment Income of $7,950 and $810)	$	1,176,580		$	959,451

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,006			3,587
Shares Issued on Distributions Reinvested		—			111
Shares Redeemed		(2,015	)		(17,121	)
Net Decrease in Class I Shares Outstanding		(1,009	)		(13,423	)
Class A:
Shares Subscribed		135			294
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(166	)		(366	)
Net Decrease in Class A Shares Outstanding		(31	)		(67	)
Class L:
Shares Exchanged		—	@@		—
Shares Redeemed		(—	@@)		—
Net Decrease in Class L Shares Outstanding		(—	@@)		—
Class C:
Shares Subscribed		—			30
Shares Issued on Distributions Reinvested		—			—	@@
Net Increase in Class C Shares Outstanding		—			30
Class IS:
Shares Subscribed		3,025			18,363
Shares Issued on Distributions Reinvested		—			278
Shares Redeemed		(929	)		(2,215	)
Net Increase in Class IS Shares Outstanding		2,096			16,426

@  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, 2017

Financial Highlights

Emerging Markets Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	20.83		$	19.68		$	22.13		$	24.64		$	25.94		$	21.73
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.14			0.17			0.15			0.17			0.20			0.19
Net Realized and Unrealized Gain (Loss)		4.00			1.15			(2.43	)		(1.30	)		(0.44	)		4.19
Total from Investment Operations		4.14			1.32			(2.28	)		(1.13	)		(0.24	)		4.38
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.17	)		(0.20	)		(0.20	)		(0.17	)
Net Realized Gain		—			—			—			(1.18	)		(0.86	)		—
Total Distributions		—			(0.17	)		(0.17	)		(1.38	)		(1.06	)		(0.17	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	24.97		$	20.83		$	19.68		$	22.13		$	24.64		$	25.94
Total Return (4)		19.88	%(10)		6.73	%		(10.33	)%		(4.47	)%		(0.80	)%		20.19	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	313,588		$	282,674		$	531,194		$	644,537		$	1,128,618		$	1,278,837
Ratio of Expenses to Average Net Assets (12)		1.03	%(5)(11)		1.11	%(5)(8)		1.24	%(5)(7)		1.25	%(5)		1.24	%(5)		1.28	%(5)(6)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.24	%(5)		N/A
Ratio of Net Investment Income to Average Net Assets (12)		1.23	%(5)(11)		0.83	%(5)		0.68	%(5)		0.68	%(5)		0.79	%(5)		0.80	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(9)(11)		0.00	%(9)		0.00	%(9)		0.00	%(9)		0.01	%		0.01	%
Portfolio Turnover Rate		21	%(10)		33	%		40	%		43	%		49	%		47	%
(12) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.06	%(11)		1.16	%		1.45	%		1.52	%		1.51	%		1.49	%
Net Investment Income to Average Net Assets		1.20	%(11)		0.78	%		0.47	%		0.41	%		0.52	%		0.59	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Effective September 30, 2016, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.05% for Class I shares. Prior to September 30, 2016, the maximum ratio was 1.20% for Class I shares.

(9)  Amount is less than 0.005%.

(10)  Not Annualized.

(11)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	20.31		$	19.19		$	21.57		$	24.02		$	25.31		$	21.20
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.10			0.11			0.07			0.11			0.12			0.14
Net Realized and Unrealized Gain (Loss)		3.90			1.11			(2.36	)		(1.28	)		(0.42	)		4.07
Total from Investment Operations		4.00			1.22			(2.29	)		(1.17	)		(0.30	)		4.21
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.09	)		(0.10	)		(0.13	)		(0.10	)
Net Realized Gain		—			—			—			(1.18	)		(0.86	)		—
Total Distributions		—			(0.10	)		(0.09	)		(1.28	)		(0.99	)		(0.10	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	24.31		$	20.31		$	19.19		$	21.57		$	24.02		$	25.31
Total Return (4)		19.65	%(11)		6.37	%		(10.63	)%		(4.77	)%		(1.07	)%		19.87	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21,772		$	18,824		$	19,065		$	26,701		$	35,863		$	40,824
Ratio of Expenses to Average Net Assets (13)		1.36	%(5)(12)		1.45	%(5)(9)		1.56	%(5)(8)		1.57	%(5)		1.52	%(5)(7)		1.53	%(5)(6)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.52	%(5)(7)		N/A
Ratio of Net Investment Income to Average Net Assets (13)		0.93	%(5)(12)		0.55	%(5)		0.34	%(5)		0.45	%(5)		0.49	%(5)		0.61	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(10)(12)		0.00	%(10)		0.00	%(10)		0.00	%(10)		0.01	%		0.01	%
Portfolio Turnover Rate		21	%(11)		33	%		40	%		43	%		49	%		47	%
(13) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.39	%(12)		1.48	%		1.76	%		1.82	%		1.78	%		1.74	%
Net Investment Income to Average Net Assets		0.90	%(12)		0.52	%		0.14	%		0.20	%		0.23	%		0.40	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  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.

(9)  Effective September 30, 2016, 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 30, 2016, the maximum ratio was 1.55% for Class A shares.

(10)  Amount is less than 0.005%.

(11)  Not Annualized.

(12)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from April 27, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	20.08		$	18.98		$	21.39		$	23.91		$	25.27		$	23.85
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.04			0.00	(4)		(0.04	)		(0.05	)		(0.05	)		0.04
Net Realized and Unrealized Gain (Loss)		3.84			1.10			(2.33	)		(1.23	)		(0.37	)		1.44
Total from Investment Operations		3.88			1.10			(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	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	23.96		$	20.08		$	18.98		$	21.39		$	23.91		$	25.27
Total Return (5)		19.32	%(11)		5.80	%		(11.11	)%		(5.26	)%		(1.56	)%		6.20	%(11)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	284		$	239		$	226		$	210		$	203		$	11
Ratio of Expenses to Average Net Assets (13)		1.90	%(6)(12)		2.01	%(6)(9)		2.09	%(6)(8)		2.10	%(6)		2.03	%(6)(7)		1.99	%(6)(12)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			2.03	%(6)(7)		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (13)		0.40	%(6)(12)		0.00	%(6)(10)		(0.19	)%(6)		(0.21	)%(6)		(0.18	)%(6)		0.27	%(6)(12)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(10)(12)		0.00	%(10)		0.00	%(10)		0.00	%(10)		0.01	%		0.01	%(12)
Portfolio Turnover Rate		21	%(11)		33	%		40	%		43	%		49	%		47	%
(13) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.42	%(12)		2.69	%		2.78	%		2.97	%		2.54	%		2.28	%(12)
Net Investment Loss to Average Net Assets		(0.12	)%(12)		(0.68	)%		(0.88	)%		(1.08	)%		(0.69	)%		(0.02	)%(12)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  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.

(9)  Effective September 30, 2016, 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 30, 2016, the maximum ratio was 2.05% for Class L shares.

(10)  Amount is less than 0.005%.

(11)  Not Annualized.

(12)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	19.99		$	18.95		$	23.16
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.02			(0.04	)		(0.03	)
Net Realized and Unrealized Gain (Loss)		3.81			1.09			(4.14	)
Total from Investment Operations		3.83			1.05			(4.17	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.04	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	23.82		$	19.99		$	18.95
Total Return (5)		19.16	%(10)		5.56	%		(18.03	)%(10)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	725		$	608		$	10
Ratio of Expenses to Average Net Assets (12)		2.15	%(6)(11)		2.24	%(6)(8)		2.33	%(6)(7)(11)
Ratio of Net Investment Income (Loss) to Average Net Assets (12)		0.15	%(6)(11)		(0.19	)%(6)		(0.23	)%(6)(11)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(9)(11)		0.00	%(9)		0.00	%(9)(11)
Portfolio Turnover Rate		21	%(10)		33	%		40	%
(12) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:

Expense to Average Net Assets	2.28	%(11)	2.58	%	22.89	%(11)
Net Investment Income (Loss) to Average Net Assets	0.02	%(11)	(0.53	)%	(20.79	)%(11)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Effective September 30, 2016, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.15% for Class C shares. Prior to September 30, 2016, the maximum ratio was 2.30% for Class C shares.

(9)  Amount is less than 0.005%.

(10)  Not Annualized.

(11)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	20.83		$	19.68		$	22.14		$	24.64		$	24.92
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.16			0.21			0.17			0.22			(0.01	)
Net Realized and Unrealized Gain (Loss)		3.99			1.12			(2.44	)		(1.32	)		0.46
Total from Investment Operations		4.15			1.33			(2.27	)		(1.10	)		0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.19	)		(0.22	)		(0.14	)
Net Realized Gain		—			—			—			(1.18	)		(0.59	)
Total Distributions		—			(0.18	)		(0.19	)		(1.40	)		(0.73	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	24.98		$	20.83		$	19.68		$	22.14		$	24.64
Total Return (5)		19.92	%(11)		6.79	%		(10.29	)%		(4.36	)%		1.85	%(11)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	840,211		$	657,106		$	297,469		$	325,029		$	10
Ratio of Expenses to Average Net Assets (13)		0.95	%(6)(12)		1.04	%(6)(9)		1.16	%(6)(8)		1.18	%(6)		1.17	%(6)(7)(12)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.17	%(6)(7)(12
Ratio of Net Investment Income (Loss) to Average Net Assets (13)		1.37	%(6)(12)		0.99	%(6)		0.75	%(6)		0.89	%(6)		(0.21	)%(6)(12)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(10)(12)		0.00	%(10)		0.00	%(10)		0.00	%(10)		0.01	%(12)
Portfolio Turnover Rate		21	%(11)		33	%		40	%		43	%		49	%
(13) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.97	%(12)		1.07	%		1.35	%		1.42	%		6.65	%(12)
Net Investment Income (Loss) to Average Net Assets		1.35	%(12)		0.96	%		0.56	%		0.65	%		(5.69	)%(12)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  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.

(9)  Effective September 30, 2016, 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 September 30, 2016, the maximum ratio was 1.10% for Class IS shares.

(10)  Amount is less than 0.005%.

(11)  Not Annualized.

(12)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Emerging Markets Portfolio. The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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") (the "Sub-Adviser"), a wholly-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 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	11,369	$	—	$	—	$	11,369
Airlines		7,787		—		—		7,787
Auto Components		6,526		—		—		6,526
Automobiles		34,228		—		—		34,228
Banks		268,045		—		—		268,045
Beverages		14,509		—		—		14,509
Biotechnology		7,382		—		—		7,382
Chemicals		6,104		—		—		6,104
Construction & Engineering		7,518		4,643		—		12,161
Construction Materials		38,333		—		—		38,333
Diversified Consumer Services		12,217		—		—		12,217
Diversified Telecommunication Services		19,172		—		—		19,172
Electronic Equipment, Instruments & Components		31,108		—		—		31,108
Food & Staples Retailing		33,614		—		—		33,614
Food Products		29,304		—		—		29,304
Health Care Providers & Services		9,562		4,848		—		14,410
Hotels, Restaurants & Leisure		14,555		—		—		14,555
Household Durables		25,752		—		—		25,752
Household Products		9,184		—		—		9,184
Industrial Conglomerates		29,526		—		—		29,526
Insurance		27,103		—		—		27,103
Internet & Direct Marketing Retail		9,532		—		—		9,532
Internet Software & Services		141,195		—		—		141,195

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)
Machinery	$	13,121	$	—	$	—	$	13,121
Media		17,965		—		—		17,965
Metals & Mining		3,849		—		—		3,849
Multi-Line Retail		17,786		—		—		17,786
Oil, Gas & Consumable Fuels		39,070		8,239		—		47,309
Paper & Forest Products		5,698		—		—		5,698
Personal Products		20,247		—		—		20,247
Pharmaceuticals		8,515		—		—		8,515
Professional Services		6,251		—		—		6,251
Real Estate Management & Development		17,622		6,771		—		24,393
Semiconductors & Semiconductor Equipment		42,176		—		—		42,176
Tech Hardware, Storage & Peripherals		49,230		—		—		49,230
Textiles, Apparel & Luxury Goods		47,508		—		—		47,508
Thrifts & Mortgage Finance		14,397		—		—		14,397
Transportation Infrastructure		5,968		—		—		5,968
Wireless Telecommunication Services		19,539		—		—		19,539
Total Common Stocks		1,122,567		24,501		—		1,147,068
Short-Term Investment
Investment Company		29,780		—		—		29,780
Total Assets	$	1,152,347	$	24,501	$	—	$	1,176,848

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund to liquidate portfolio

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser and/or Sub-Adviser seek to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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, 2017, the Fund did not have any open foreign currency forward exchange contracts.

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	146
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(264	)

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	7,358,000

5.  Securities Lending: The Fund 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 Fund. The Fund 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

("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 Fund'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 Fund 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, 2017.

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)
$	29,818	(a)	$	—	$	(29,818	)(b)(c)	$	0

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

(b) The Fund received non-cash collateral of approximately $30,421,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

6.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is

unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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
	0.85	%		0.75	%		0.70	%		0.65	%

For the six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.76% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Class A shares, 1.90% for Class L shares, 2.15% 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 Fund'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, 2017, approximately $132,000 of advisory fees were waived and approximately $2,000 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, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $245,782,000 and $224,326,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $25,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	18,610	$	114,462	$	103,292	$	86	$	29,780

During the six months ended June 30, 2017, the Fund incurred approximately $39,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	8,111	$	—	$	7,596	$	—

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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	3,761	$	(3,761	)	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	1,134	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $36,051,000 and long-term capital losses of approximately $40,574,000 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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 63.4%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly

related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period but better than its peer group average for the 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

30

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

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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMSAN
1860571 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Small Cap Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Emerging Markets Small Cap Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,176.60	$	1,017.11	$	8.37	$	7.75		1.55	%
Emerging Markets Small Cap Portfolio Class A		1,000.00		1,173.60		1,015.12		10.51		9.74		1.95
Emerging Markets Small Cap Portfolio Class C		1,000.00		1,168.70		1,011.46		14.46		13.42		2.69
Emerging Markets Small Cap Portfolio Class IS		1,000.00		1,175.60		1,017.16		8.31		7.70		1.54

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Emerging Markets Small Cap Portfolio

	Shares		Value (000)
Common Stocks (86.8%)
Argentina (4.4%)
Adecoagro SA (a)		20,420	$	204
Arcos Dorados Holdings, Inc., Class A (a)		32,284		240
Banco Macro SA ADR		3,145		290
Pampa Energia SA ADR (a)		4,675		275
				1,009
Bangladesh (1.2%)
Brac Bank Ltd.		283,434		284
Brazil (2.6%)
Raia Drogasil SA		11,539		244
Ser Educacional SA (b)		47,940		355
				599
China (16.7%)
51job, Inc. ADR (a)		7,698		344
Bitauto Holdings Ltd. ADR (a)(c)		12,800		368
Canvest Environmental Protection Group Co., Ltd. (d)		608,000		319
China Mengniu Dairy Co., Ltd. (a)(d)		139,000		272
China New Higher Education Group Ltd. (a)(b)(d)		804,000		318
China Resources Phoenix Healthcare Holdings Co., Ltd. (c)(d)		183,500		226
IMAX China Holding, Inc. (a)(b)(d)		68,300		210
NavInfo Co., Ltd., Class A		75,746		221
TAL Education Group ADR		3,297		403
Tarena International, Inc. ADR		21,926		393
Wanda Film Holding Co., Ltd., Class A		25,696		193
Yestar Healthcare Holdings Co., Ltd. (d)		792,500		404
Zoomlion Heavy Industry Science and Technology Co., Ltd. H Shares (c)(d)		417,400		203
				3,874
Egypt (2.6%)
Credit Agricole Egypt SAE		124,259		302
Egyptian Financial Group-Hermes Holding Co.		223,458		298
				600
Indonesia (3.4%)
Bank Tabungan Negara Persero Tbk PT		1,288,400		251
Nippon Indosari Corpindo Tbk PT		1,991,400		184
Sumber Alfaria Trijaya Tbk PT		8,262,200		353
				788
Korea, Republic of (13.5%)
Boryung Pharmaceutical Co., Ltd.		7,003		307
Cosmax, Inc.		1,739		175
GS Retail Co., Ltd.		4,797		216
Hanwha Techwin Co., Ltd. (a)		7,461		290
Hugel, Inc. (a)		860		421
Koh Young Technology, Inc.		6,602		346
Korea Kolmar Co., Ltd.		4,618		291
LIG Nex1 Co., Ltd.		3,126		202
Loen Entertainment, Inc.		4,309		329
Nasmedia Co., Ltd.		6,115		289
Viatron Technologies, Inc.		12,578		272
				3,138

	Shares		Value (000)
Malaysia (5.6%)
BIMB Holdings Bhd		219,500	$	233
Bison Consolidated Bhd		444,500		242
Carlsberg Brewery Malaysia Bhd, Class B		67,100		235
Malaysia Airports Holdings Bhd		124,100		247
My EG Services Bhd		656,200		335
				1,292
Mexico (4.1%)
Alsea SAB de CV		64,586		245
Banregio Grupo Financiero SAB de CV		55,858		354
Grupo Aeroportuario del Centro Norte SAB de CV		59,673		359
				958
Pakistan (2.8%)
Habib Bank Ltd.		84,300		217
Honda Atlas Cars Pakistan Ltd.		29,250		240
Maple Leaf Cement Factory Ltd.		185,892		197
				654
Philippines (4.3%)
Megawide Construction Corp. (a)		869,500		322
Security Bank Corp.		49,510		213
Shakey's Pizza Asia Ventures, Inc.		854,900		219
Xurpas, Inc.		1,470,100		247
				1,001
Poland (3.6%)
CCC SA		3,804		231
Dino Polska SA (a)(b)		25,000		316
mBank SA (a)		2,250		281
				828
Romania (1.1%)
Banca Transilvania SA		367,160		247
South Africa (1.8%)
AVI Ltd.		33,217		241
Famous Brands Ltd.		17,692		171
				412
Taiwan (13.1%)
Bon Fame Co., Ltd.		75,000		274
Cub Elecparts, Inc.		38,191		498
Gourmet Master Co., Ltd.		45,320		489
King Slide Works Co., Ltd.		18,000		253
Poya International Co., Ltd.		29,200		370
President Chain Store Corp.		28,000		252
Taiwan Secom Co., Ltd.		78,000		235
TCI Co., Ltd.		62,000		394
Voltronic Power Technology Corp.		17,000		280
				3,045
Thailand (3.7%)
Mega Lifesciences PCL (Foreign)		384,600		317
Muangthai Leasing PCL (Foreign)		290,600		286
Sino-Thai Engineering & Construction PCL (Foreign)		326,400		267
				870

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Small Cap Portfolio

	Shares		Value (000)
United Arab Emirates (1.1%)
Aramex PJSC		176,345	$	249
United Kingdom (1.2%)
DP Eurasia N.V. (a)(b)		115,930		275
Total Common Stocks (Cost $17,255)				20,123
Participation Note (1.4%)
Vietnam (1.4%)
Bank for Foreign Trade of Vietnam JSC, Equity Linked Notes, expires 12/10/18 (a) (Cost $264)		183,246		311
Investment Companies (10.8%)
India (6.0%)
iShares MSCI India Small-Cap ETF		31,173		1,384
United States (4.8%)
Morgan Stanley India Investment Fund, Inc. (See Note G)		34,400		1,114
Total Investment Companies (Cost $1,893)				2,498
Short-Term Investments (2.7%)
Securities held as Collateral on Loaned Securities (1.2%)
Investment Company (1.2%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $286)		286,212		286
Investment Company (1.5%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $345)		345,098		345
Total Short-Term Investments (Cost $631)				631
Total Investments (101.7%) (Cost $20,043) Including $448 of Securities Loaned (e)				23,563
Liabilities in Excess of Other Assets (–1.7%)				(383	)
Net Assets (100.0%)			$	23,180

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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, 2017.

(d)  Security trades on the Hong Kong exchange.

(e)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $4,262,000 and the aggregate gross unrealized depreciation is approximately $742,000, resulting in net unrealized appreciation of approximately $3,520,000.

ADR  American Depositary Receipt.

ETF  Exchange Traded Fund.

PJSC  Public Joint Stock Company.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		57.2	%
Banks		12.8
Investment Companies		10.7
Hotels, Restaurants & Leisure		7.1
Diversified Consumer Services		6.3
Food & Staples Retailing		5.9
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

**  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, 2017 (unaudited)

Emerging Markets Small Cap Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $18,553)	$	21,818
Investment in Security of Affiliated Issuer, at Value (Cost $1,490)		1,745
Total Investments in Securities, at Value (Cost $20,043)		23,563
Foreign Currency, at Value (Cost $44)		44
Receivable for Investments Sold		146
Dividends Receivable		27
Receivable from Affiliate		25
Tax Reclaim Receivable		—	@
Other Assets		48
Total Assets		23,853
Liabilities:
Payable for Investments Purchased		302
Collateral on Securities Loaned, at Value		286
Deferred Capital Gain Country Tax		41
Payable for Advisory Fees		20
Payable for Professional Fees		16
Payable for Custodian Fees		3
Payable for Administration Fees		2
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		3
Total Liabilities		673
Net Assets	$	23,180
Net Assets Consist Of:
Paid-in-Capital	$	19,985
Distributions in Excess of Net Investment Income		(92	)
Accumulated Net Realized Loss		(190	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $41 of Deferred Capital Gain Country Tax)		3,224
Investments in Affiliates		255
Foreign Currency Translations		(2	)
Net Assets	$	23,180

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Emerging Markets Small Cap Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	23,136
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	$	11.59
CLASS A:
Net Assets	$	21
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,834
Net Asset Value, Redemption Price Per Share	$	11.56
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.64
Maximum Offering Price Per Share	$	12.20
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	$	11.50
CLASS IS:
Net Assets	$	12
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	$	11.59
(1) Including: Securities on Loan, at Value:	$	448

@  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, 2017 (unaudited)

Emerging Markets Small Cap Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $17 of Foreign Taxes Withheld)	$	183
Dividends from Security of Affiliated Issuer (Note G)		26
Income from Securities Loaned — Net		15
Total Investment Income		224
Expenses:
Advisory Fees (Note B)		135
Professional Fees		48
Registration Fees		21
Custodian Fees (Note F)		13
Administration Fees (Note C)		9
Shareholder Reporting 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
Directors' Fees and Expenses		2
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class A		—	@
Other Expenses		10
Total Expenses		249
Waiver of Advisory Fees (Note B)		(71	)
Rebate from Morgan Stanley Affiliate (Note G)		(7	)
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	)
Net Expenses		168
Net Investment Income		56
Realized Gain (Loss):
Investments Sold		645
Foreign Currency Transactions		(8	)
Net Realized Gain		637
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Decrease in Deferred Capital Gain Country Tax of $12)		2,544
Investments in Affiliates		233
Foreign Currency Translations		(2	)
Net Change in Unrealized Appreciation (Depreciation)		2,775
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		3,412
Net Increase in Net Assets Resulting from Operations	$	3,468

@  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, 2017

Emerging Markets Small Cap Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)		Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	56	$	32
Net Realized Gain (Loss)		637		(821	)
Net Change in Unrealized Appreciation		2,775		127
Net Increase (Decrease) in Net Assets Resulting from Operations		3,468		(662	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—		(201	)
Class A:
Net Investment Income		—		(—	@)
Class IS:
Net Investment Income		—		(—	@)
Total Distributions		—		(201	)
Capital Share Transactions:(1)
Class A:
Subscribed		9		—
Net Increase in Net Assets Resulting from Capital Share Transactions		9		—
Total Increase (Decrease) in Net Assets		3,477		(863	)
Net Assets:
Beginning of Period		19,703		20,566
End of Period (Including Accumulated Net Investment Loss of $(92) and $(148))	$	23,180	$	19,703
(1) Capital Share Transactions:
Class A:
Shares Subscribed		1		—

@  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, 2017

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 15, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.85		$	10.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.03			0.02			0.01
Net Realized and Unrealized Gain (Loss)		1.71			(0.35	)		0.27
Total from Investment Operations		1.74			(0.33	)		0.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		—
Net Asset Value, End of Period	$	11.59		$	9.85		$	10.28
Total Return (3)		17.66	%(6)		(3.19	)%		2.80	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	23,136		$	19,673		$	20,536
Ratio of Expenses to Average Net Assets (8)		1.55	%(4)(7)		1.61	%(4)		1.58	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.52	%(4)(7)		0.16	%(4)		1.01	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.06	%(7)		0.00	%(5)		0.03	%(7)
Portfolio Turnover Rate		36	%(6)		69	%		5	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.26	%(7)		2.63	%		7.62	%(7)
Net Investment Loss to Average Net Assets		(0.19	)%(7)		(0.86	)%		(5.03	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 15, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.85		$	10.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.01			(0.02	)		0.00	(3)
Net Realized and Unrealized Gain (Loss)		1.70			(0.35	)		0.28
Total from Investment Operations		1.71			(0.37	)		0.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		—
Net Asset Value, End of Period	$	11.56		$	9.85		$	10.28
Total Return (4)		17.36	%(7)		(3.58	)%		2.80	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21		$	10		$	10
Ratio of Expenses to Average Net Assets (9)		1.95	%(5)(8)		2.00	%(5)		1.97	%(5)(8)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		0.26	%(5)(8)		(0.22	)%(5)		0.62	%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%(8)		0.00	%(6)		0.03	%(8)
Portfolio Turnover Rate		36	%(7)		69	%		5	%(7)
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		13.18	%(8)		22.65	%		21.45	%(8)
Net Investment Loss to Average Net Assets		(10.97	)%(8)		(20.87	)%		(18.86	)%(8)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 15, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.84		$	10.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.03	)		(0.10	)		(0.00	)(3)
Net Realized and Unrealized Gain (Loss)		1.69			(0.34	)		0.28
Total from Investment Operations		1.66			(0.44	)		0.28
Net Asset Value, End of Period	$	11.50		$	9.84		$	10.28
Total Return (4)		16.87	%(7)		(4.28	)%		2.80	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10		$	10
Ratio of Expenses to Average Net Assets (9)		2.69	%(5)(8)		2.75	%(5)		2.73	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(0.62	)%(5)(8)		(0.99	)%(5)		(0.14	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.06	%(8)		0.00	%(6)		0.02	%(8)
Portfolio Turnover Rate		36	%(7)		69	%		5	%(7)
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		19.65	%(8)		23.48	%		22.20	%(8)
Net Investment Loss to Average Net Assets		(17.58	)%(8)		(21.72	)%		(19.61	)%(8)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016			Period from December 15, 2015(1) to December 31, 2015
Net Asset Value, Beginning of Period	$	9.85		$	10.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.03			0.02			0.01
Net Realized and Unrealized Gain (Loss)		1.71			(0.35	)		0.27
Total from Investment Operations		1.74			(0.33	)		0.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		—
Net Asset Value, End of Period	$	11.59		$	9.85		$	10.28
Total Return (3)		17.56	%(6)		(3.18	)%		2.80	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	10		$	10
Ratio of Expenses to Average Net Assets (8)		1.54	%(4)(7)		1.60	%(4)		1.58	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.53	%(4)(7)		0.16	%(4)		1.01	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.06	%(7)		0.00	%(5)		0.02	%(7)
Portfolio Turnover Rate		36	%(6)		69	%		5	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		17.66	%(7)		21.37	%		21.20	%(7)
Net Investment Loss to Average Net Assets		(15.59	)%(7)		(19.61	)%		(18.61	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Emerging Markets Small Cap Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (4) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Directors. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange ("NYSE"). If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (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.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Company 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, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	492	$	—	$	—	$	492
Air Freight & Logistics		249		—		—		249
Auto Components		498		—		—		498
Automobiles		240		—		—		240
Banks		2,672		—		—		2,672
Beverages		235		—		—		235
Biotechnology		421		—		—		421
Capital Markets		298		—		—		298
Commercial Services & Supplies		235		—		—		235
Construction & Engineering		—		267		—		267
Construction Materials		197		—		—		197
Consumer Finance		—		286		—		286
Diversified Consumer Services		1,469		—		—		1,469
Electric Utilities		275		—		—		275
Electrical Equipment		280		—		—		280
Food & Staples Retailing		1,381		—		—		1,381
Food Products		901		—		—		901
Health Care Equipment & Supplies		404		—		—		404
Health Care Providers & Services		226		—		—		226
Hotels, Restaurants & Leisure		1,639		—		—		1,639
Household Durables		543		—		—		543
Independent Power and Renewable Electricity Producers		319		—		—		319
Information Technology Services		335		—		—		335
Internet Software & Services		368		—		—		368
Machinery		456		—		—		456
Media		1,021		—		—		1,021
Multi-Line Retail		370		—		—		370
Personal Products		860		—		—		860
Pharmaceuticals		307		317		—		624
Professional Services		344		—		—		344
Semiconductors & Semiconductor Equipment		618		—		—		618
Software		247		—		—		247
Specialty Retail		242		—		—		242
Textiles, Apparel & Luxury Goods		505		—		—		505
Transportation Infrastructure		606		—		—		606
Total Common Stocks		19,253		870		—		20,123
Participation Note		—		311		—		311
Investment Companies		2,498		—		—		2,498
Short-Term Investments
Investment Company		631		—		—		631
Total Assets	$	22,382	$	1,181	$	—	$	23,563

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

A significant portion of the Fund'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 securities 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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

5.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund has the right under the lending agreement to recover the securities from the borrower on demand.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2017.

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)
$	448	(a)	$	—	$	(448	)(b)(c)	$	0

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

(b) The Fund received cash collateral of approximately $286,000, which was subsequently invested in Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $207,000 in the form of U.S. Government obligations, which the Fund 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	286	$	—	$	—	$	—	$	286
Total Borrowings	$	286	$	—	$	—	$	—	$	286
Gross amount of recognized liabilities for securities lending transactions									$	286

6.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is

designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes,

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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, 2017, approximately $71,000 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 Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $8,077,000 and $7,685,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	700	$	3,214	$	3,283	$	1	$	631

The Fund invests in Morgan Stanley India Investment Fund, Inc., an open-end management investment company advised by an affiliate of the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in Morgan Stanley India Investment Fund, Inc. For

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

the six months ended June 30, 2017, advisory fees paid were reduced by approximately $7,000 relating to the Fund's investment in the Morgan Stanley India Investment Fund, Inc. The Morgan Stanley India Investment Fund, Inc. has a cost basis of approximately $859,000 at June 30, 2017.

A summary of the Fund's transactions in shares of the Morgan Stanley India Investment Fund, Inc. during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Realized Gain (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	881	$	—	$	—	$	—	$	25	$	1,114

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2016, remains subject to examination by taxing authorities.

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 tax character of distributions paid during fiscal years 2016 and 2015 was as follows:

2016 Distributions Paid From:						2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	178	$	—	$	23	$	—	$	—

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

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

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies, a tax return of capital and nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	28	$	(6	)	$	(22	)

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $754,000 and $73,000 respectively, 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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	38	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund did not have record owners of 10% or greater.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period and the period since the end of December 2015, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's contractual management fee and total expense ratio were higher than its peer group averages, its actual management fee was lower than its peer group average. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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
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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.
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© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMSCSAN
1860563 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Frontier Markets Portfolio

(formerly Frontier Emerging Markets Portfolio)

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Frontier Markets Portfolio (the "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Frontier Markets Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Frontier Markets Portfolio Class I	$	1,000.00	$	1,127.70	$	1,016.46	$	8.86	$	8.40		1.68	%
Frontier Markets Portfolio Class A		1,000.00		1,125.40		1,014.83		10.59		10.04		2.01
Frontier Markets Portfolio Class L		1,000.00		1,121.70		1,011.41		14.20		13.47		2.70
Frontier Markets Portfolio Class C		1,000.00		1,121.30		1,011.11		14.52		13.76		2.76
Frontier Markets Portfolio Class IS		1,000.00		1,127.70		1,016.71		8.60		8.15		1.63

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Frontier Markets Portfolio

	Shares		Value (000)
Common Stocks (98.0%)
Argentina (21.7%)
Adecoagro SA (a)		678,092	$	6,774
Arcos Dorados Holdings, Inc., Class A (a)		1,287,435		9,591
Banco Macro SA ADR		373,253		34,410
Globant SA (a)		321,847		13,981
Grupo Financiero Galicia SA ADR		620,356		26,452
Grupo Supervielle SA ADR		416,398		7,529
Pampa Energia SA ADR (a)		411,484		24,216
YPF SA ADR		1,156,754		25,333
				148,286
Bangladesh (6.0%)
Beximco Pharmaceuticals Ltd.		10,230,636		14,344
GrameenPhone Ltd.		1,504,390		6,429
Olympic Industries Ltd.		3,733,228		12,900
Square Pharmaceuticals Ltd.		2,052,122		7,387
				41,060
Egypt (3.9%)
Commercial International Bank Egypt SAE		3,517,023		15,512
Egyptian Financial Group-Hermes Holding Co.		7,071,397		9,425
Egyptian Financial Group-Hermes Holding Co. GDR		650,613		1,698
				26,635
Kazakhstan (1.8%)
Halyk Savings Bank of Kazakhstan JSC GDR (a)		10,476		97
KazMunaiGas Exploration Production JSC GDR		1,294,893		12,211
				12,308
Kenya (2.9%)
Safaricom Ltd.		90,146,419		19,559
Kuwait (11.9%)
Boubyan Bank KSCP		5,320,311		7,100
Human Soft Holding Co. KSC		1,092,981		15,128
Mezzan Holding Co. KSCC		2,704,492		8,449
National Bank of Kuwait		22,710,108		50,517
				81,194
Morocco (4.1%)
Attijariwafa Bank		430,249		19,621
Societe d'Exploitation des Ports		557,761		8,260
				27,881
Nigeria (2.6%)
Nigerian Breweries PLC		26,056,846		11,236
Zenith Bank PLC		117,020,244		6,672
				17,908
Pakistan (14.6%)
Habib Bank Ltd.		9,531,900		24,533
Honda Atlas Cars Pakistan Ltd.		660,800		5,420
Lucky Cement Ltd.		1,962,662		15,742
Maple Leaf Cement Factory Ltd.		9,431,478		9,985
Oil & Gas Development Co., Ltd.		9,984,100		13,397
Pak Elektron Ltd.		10,271,500		10,807
United Bank Ltd.		8,735,778		19,663
				99,547

	Shares		Value (000)
Panama (1.4%)
Copa Holdings SA, Class A		81,023	$	9,480
Romania (5.3%)
Banca Transilvania SA		30,840,803		20,748
BRD-Groupe Societe Generale SA		4,459,160		15,060
				35,808
Sri Lanka (1.9%)
Commercial Bank of Ceylon PLC		14,284,053		12,966
Tanzania, United Republic Of (2.3%)
National Microfinance Bank PLC		6,718,721		7,022
Tanzania Breweries Ltd.		1,422,724		8,515
				15,537
United Arab Emirates (8.0%)
Aramex PJSC		4,436,304		6,256
DP World Ltd.		488,150		10,212
Dubai Islamic Bank PJSC		6,006,509		9,321
Emaar Properties PJSC		4,939,896		10,464
NMC Health PLC		649,231		18,485
				54,738
United States (1.9%)
MercadoLibre, Inc.		51,591		12,943
Vietnam (7.7%)
Bank for Foreign Trade of Vietnam JSC		9,168,753		15,529
Saigon Beer Alcohol Beverage Corp.		849,330		7,783
Vietjet Aviation JSC		2,544,770		14,140
Vietnam Dairy Products JSC		2,203,780		15,279
				52,731
Total Common Stocks (Cost $525,137)				668,581
Participation Notes (2.6%)
Saudi Arabia (2.5%)
Al Rajhi Bank, Equity Linked Notes, expires 1/22/18 (a)		393,097		7,264
Bupa Arabia for Cooperative, Equity Linked Notes, expires 10/19/18 (a)		279,837		9,700
				16,964
United Arab Emirates (0.1%)
Aramex PJSC, Equity Linked Notes, expires 3/14/19 (a)		589,123		831
Total Participation Notes (Cost $17,104)				17,795
Short-Term Investment (0.2%)
Investment Company (0.2%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $1,422)		1,421,634		1,422
Total Investments (100.8%) (Cost $543,663) (b)				687,798
Liabilities in Excess of Other Assets (–0.8%)				(5,495	)
Net Assets (100.0%)			$	682,303

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Frontier Markets Portfolio

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $168,829,000 and the aggregate gross unrealized depreciation is approximately $24,694,000, resulting in net unrealized appreciation of approximately $144,135,000.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

PJSC  Public Joint Stock Company.

Portfolio Composition

Classification	Percentage of Total Investments
Banks		43.6	%
Other*		42.7
Oil, Gas & Consumable Fuels		7.4
Food 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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Frontier Markets Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $542,241)	$	686,376
Investment in Security of Affiliated Issuer, at Value (Cost $1,422)		1,422
Total Investments in Securities, at Value (Cost $543,663)		687,798
Cash		21
Foreign Currency, at Value (Cost $977)		977
Receivable for Investments Sold		8,474
Dividends Receivable		1,048
Receivable for Fund Shares Sold		772
Receivable from Affiliate		5
Tax Reclaim Receivable		3
Other Assets		123
Total Assets		699,221
Liabilities:
Deferred Capital Gain Country Tax		12,902
Payable for Advisory Fees		2,156
Payable for Investments Purchased		791
Payable for Custodian Fees		509
Payable for Fund Shares Redeemed		402
Payable for Professional Fees		47
Payable for Administration Fees		45
Payable for Sub Transfer Agency Fees — Class I		20
Payable for Sub Transfer Agency Fees — Class A		15
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		19
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		2
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		2
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		5
Total Liabilities		16,918
Net Assets	$	682,303
Net Assets Consist Of:
Paid-in-Capital	$	666,732
Undistributed Net Investment Income		6,427
Accumulated Net Realized Loss		(123,735	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $11,261 of Deferred Capital Gain Country Tax)		132,874
Foreign Currency Translations		5
Net Assets	$	682,303

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Frontier Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	575,174
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		29,334,285
Net Asset Value, Offering and Redemption Price Per Share	$	19.61
CLASS A:
Net Assets	$	89,931
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,615,698
Net Asset Value, Redemption Price Per Share	$	19.48
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.08
Maximum Offering Price Per Share	$	20.56
CLASS L:
Net Assets	$	2,521
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		130,292
Net Asset Value, Offering and Redemption Price Per Share	$	19.35
CLASS C:
Net Assets	$	2,710
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		141,579
Net Asset Value, Offering and Redemption Price Per Share	$	19.14
CLASS IS:
Net Assets	$	11,967
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		610,593
Net Asset Value, Offering and Redemption Price Per Share	$	19.60

@  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, 2017 (unaudited)

Frontier Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $738 of Foreign Taxes Withheld)	$	12,511
Dividends from Security of Affiliated Issuer (Note G)		36
Total Investment Income		12,547
Expenses:
Advisory Fees (Note B)		4,233
Custodian Fees (Note F)		778
Administration Fees (Note C)		271
Sub Transfer Agency Fees — Class I		193
Sub Transfer Agency Fees — Class A		73
Sub Transfer Agency Fees — Class L		1
Sub Transfer Agency Fees — Class C		1
Shareholder Services Fees — Class A (Note D)		119
Distribution and Shareholder Services Fees — Class L (Note D)		10
Distribution and Shareholder Services Fees — Class C (Note D)		12
Professional Fees		59
Transfer Agency Fees — Class I (Note E)		35
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
Registration Fees		38
Shareholder Reporting Fees		21
Directors' Fees and Expenses		9
Pricing Fees		3
Other Expenses		12
Expenses Before Non Operating Expenses		5,879
Bank Overdraft Expense		3
Total Expenses		5,882
Rebate from Morgan Stanley Affiliate (Note G)		(11	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(4	)
Net Expenses		5,867
Net Investment Income		6,680
Realized Gain (Loss):
Investments Sold (Net of $2,516 of Capital Gain Country Tax)		12,207
Foreign Currency Transactions		(1,161	)
Net Realized Gain		11,046
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $3,346)		62,428
Foreign Currency Translations		7
Net Change in Unrealized Appreciation (Depreciation)		62,435
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		73,481
Net Increase in Net Assets Resulting from Operations	$	80,161

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Frontier Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	6,680		$	11,125
Net Realized Gain (Loss)		11,046			(65,651	)
Net Change in Unrealized Appreciation (Depreciation)		62,435			79,451
Net Increase in Net Assets Resulting from Operations		80,161			24,925
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(6,910	)
Paid-in-Capital		—			(132	)
Class A:
Net Investment Income		—			(900	)
Paid-in-Capital		—			(23	)
Class L:
Net Investment Income		—			(2	)
Paid-in-Capital		—			(1	)
Class C:
Net Investment Income		—			(5	)
Paid-in-Capital		—			(1	)
Class IS:
Net Investment Income		—			(163	)
Paid-in-Capital		—			(3	)
Total Distributions		—			(8,140	)
Capital Share Transactions:(1)
Class I:
Subscribed		111,522			227,451
Distributions Reinvested		—			4,530
Redeemed		(128,993	)		(252,360	)
Class A:
Subscribed		12,583			33,925
Distributions Reinvested		—			923
Redeemed		(24,751	)		(28,799	)
Class L:
Distributions Reinvested		—			3
Redeemed		(412	)		(1,934	)
Class C:
Subscribed		884			663
Distributions Reinvested		—			6
Redeemed		(364	)		(193	)
Class IS:
Subscribed		7,762			4,172
Distributions Reinvested		—			166
Redeemed		(9,188	)		(295	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(30,957	)		(11,742	)
Redemption Fees		8			19
Total Increase in Net Assets		49,212			5,062
Net Assets:
Beginning of Period		633,091			628,029
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $6,427 and $(253), respectively)	$	682,303		$	633,091

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Frontier Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		5,939			13,505
Shares Issued on Distributions Reinvested		—			267
Shares Redeemed		(6,826	)		(14,884	)
Net Decrease in Class I Shares Outstanding		(887	)		(1,112	)
Class A:
Shares Subscribed		686			2,007
Shares Issued on Distributions Reinvested		—			55
Shares Redeemed		(1,316	)		(1,697	)
Net Increase (Decrease) in Class A Shares Outstanding		(630	)		365
Class L:
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(22	)		(115	)
Net Decrease in Class L Shares Outstanding		(22	)		(115	)
Class C:
Shares Subscribed		48			41
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(19	)		(12	)
Net Increase in Class C Shares Outstanding		29			29
Class IS:
Shares Subscribed		405			245
Shares Issued on Distributions Reinvested		—			10
Shares Redeemed		(488	)		(17	)
Net Increase (Decrease) in Class IS Shares Outstanding		(83	)		238

@@  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, 2017

Financial Highlights

Frontier Markets Portfolio

	Class I
	Six Months Ended			Year Ended December 31,												Period from November 1, 2012 to			Year Ended
	June 30, 2017															December 31,			October 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012			2012(2)
Net Asset Value, Beginning of Period	$	17.39		$	16.98		$	19.15		$	18.86		$	14.24		$	14.00		$	12.75
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.19			0.31			0.19			0.25			0.09			(0.03	)		0.19
Net Realized and Unrealized Gain (Loss)		2.03			0.33			(2.21	)		0.23			4.60			0.56			1.26
Total from Investment Operations		2.22			0.64			(2.02	)		0.48			4.69			0.53			1.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.23	)		(0.14	)		(0.18	)		(0.07	)		(0.30	)		(0.22	)
Paid-in-Capital		—			(0.00	)(4)		(0.01	)		(0.01	)		—			—			—
Total Distributions		—			(0.23	)		(0.15	)		(0.19	)		(0.07	)		(0.30	)		(0.22	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.01			0.02
Net Asset Value, End of Period	$	19.61		$	17.39		$	16.98		$	19.15		$	18.86		$	14.24		$	14.00
Total Return (5)		12.77	%(8)		3.83	%		(10.58	)%		2.66	%		32.95	%		3.94	%(8)		12.03	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	575,174		$	525,664		$	531,927		$	547,535		$	239,378		$	51,415		$	58,729
Ratio of Expenses to Average Net Assets (10)		1.68	%(6)(9)		1.67	%(6)		1.72	%(6)		1.69	%(6)		1.77	%(6)		1.85	%(6)(9)		2.38	%(6)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.68	%(6)(9)		N/A			N/A			1.71	%(6)		N/A			N/A			2.38	%(6)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		2.02	%(6)(9)		1.82	%(6)		1.02	%(6)		1.23	%(6)		0.54	%(6)		(1.23	)%(6)(9)		1.47	%(6)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.01	%		0.01	%		0.00	%(7)(9)		0.01	%
Portfolio Turnover Rate		23	%(8)		30	%		37	%		52	%		34	%		13	%(8)		59	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.69	%		N/A			1.72	%		1.89	%		3.31	%(9)		2.47	%
Net Investment Income (Loss) to Average Net Assets		N/A			1.80	%		N/A			1.20	%		0.42	%		(2.69	)%(9)		1.38	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  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 "Fund"). 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.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Frontier Markets Portfolio

	Class A
	Six Months Ended			Year Ended December 31,												Period from November 1, 2012 to			Period from September 14, 2012(2) to
	June 30, 2017															December 31,			October 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012			2012
Net Asset Value, Beginning of Period	$	17.31		$	16.90		$	19.06		$	18.78		$	14.20		$	13.97		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.16			0.24			0.11			0.18			(0.15	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		2.01			0.35			(2.18	)		0.24			4.79			0.56			0.23
Total from Investment Operations		2.17			0.59			(2.07	)		0.42			4.64			0.53			0.21
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.08	)		(0.13	)		(0.06	)		(0.30	)		—
Paid-in-Capital		—			(0.00	)(4)		(0.01	)		(0.01	)		—			—			—
Total Distributions		—			(0.18	)		(0.09	)		(0.14	)		(0.06	)		(0.30	)		—
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		—			—
Net Asset Value, End of Period	$	19.48		$	17.31		$	16.90		$	19.06		$	18.78		$	14.20		$	13.97
Total Return (5)		12.54	%(9)		3.49	%		(10.90	)%		2.39	%		32.53	%		3.77	%(9)		1.67	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	89,931		$	90,817		$	82,480		$	76,839		$	23,762		$	10		$	10
Ratio of Expenses to Average Net Assets (11)		2.01	%(6)(10)		2.01	%(6)		2.07	%(6)		2.02	%(6)		1.95	%(6)(7)		2.10	%(6)(10)		2.10	%(6)(10)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.01	%(6)(10)		N/A			N/A			2.04	%(6)		N/A			N/A			2.09	%(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.69	%(6)(10)		1.40	%(6)		0.60	%(6)		0.90	%(6)		(0.81	)%(6)		(1.48	)%(6)(10)		(0.88	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.01	%		0.01	%		0.00	%(8)(10)		0.01	%(10)
Portfolio Turnover Rate		23	%(9)		30	%		37	%		52	%		34	%		13	%(9)		59	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			2.03	%		N/A			2.05	%		N/A			3.56	%(10)		2.92	%(10)
Net Investment Income (Loss) to Average Net Assets		N/A			1.38	%		N/A			0.87	%		N/A			(2.94	)%(10)		(1.70	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Frontier Markets Portfolio

	Class L
	Six Months Ended			Year Ended December 31,												Period from November 1, 2012 to			Period from September 14, 2012(2) to
	June 30, 2017															December 31,			October 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012			2012
Net Asset Value, Beginning of Period	$	17.25		$	16.79		$	18.96		$	18.71		$	14.19		$	13.96		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.09			0.15			0.05			0.06			(0.16	)		(0.05	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		2.01			0.32			(2.22	)		0.25			4.69			0.57			0.22
Total from Investment Operations		2.10			0.47			(2.17	)		0.31			4.53			0.52			0.20
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		—			(0.05	)		(0.01	)		(0.29	)		—
Paid-in-Capital		—			(0.00	)(4)		—			(0.01	)		—			—			—
Total Distributions		—			(0.01	)		—			(0.06	)		(0.01	)		(0.29	)		—
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		—			—
Net Asset Value, End of Period	$	19.35		$	17.25		$	16.79		$	18.96		$	18.71		$	14.19		$	13.96
Total Return (5)		12.17	%(9)		2.77	%		(11.49	)%		1.77	%		31.81	%		3.71	%(9)		1.60	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,521		$	2,630		$	4,490		$	8,003		$	3,212		$	10		$	10
Ratio of Expenses to Average Net Assets (11)		2.70	%(6)(10)		2.70	%(6)		2.70	%(6)		2.65	%(6)		2.53	%(6)(7)		2.60	%(6)(10)		2.60	%(6)(10)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.70	%(6)(10)		N/A			N/A			2.67	%(6)		N/A			N/A			2.59	%(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		0.97	%(6)(10)		0.88	%(6)		0.26	%(6)		0.27	%(6)		(0.92	)%(6)		(1.98	)%(6)(10)		(1.37	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.01	%		0.00	%(8)		0.00	%(8)(10)		0.01	%(10)
Portfolio Turnover Rate		23	%(9)		30	%		37	%		52	%		34	%		13	%(9)		59	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.98	%(10)		2.80	%		2.73	%		2.68	%		N/A			4.08	%(10)		3.49	%(10)
Net Investment Income (Loss) to Average Net Assets		0.69	%(10)		0.78	%		0.23	%		0.24	%		N/A			(3.46	)%(10)		(2.26	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Frontier Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	17.07		$	16.69		$	19.53
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.09			0.10			(0.16	)
Net Realized and Unrealized Gain (Loss)		1.98			0.34			(2.60	)
Total from Investment Operations		2.07			0.44			(2.76	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		(0.07	)
Paid-in-Capital		—			(0.00	)(4)		(0.01	)
Total Distributions		—			(0.06	)		(0.08	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	19.14		$	17.07		$	16.69
Total Return (5)		12.13	%(8)		2.63	%		(14.10	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,710		$	1,925		$	1,400
Ratio of Expenses to Average Net Assets (10)		2.76	%(6)(9)		2.88	%(6)		2.95	%(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.76	%(6)(9)		N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		1.03	%(6)(9)		0.57	%(6)		(1.38	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		23	%(8)		30	%		37	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		N/A			2.89	%		3.17	%(9)
Net Investment Income (Loss) to Average Net Assets		N/A			0.56	%		(1.60	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Frontier Markets Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from February 27, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	17.39		$	16.97		$	19.28
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.21			0.30			0.26
Net Realized and Unrealized Gain (Loss)		2.00			0.36			(2.41	)
Total from Investment Operations		2.21			0.66			(2.15	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.24	)		(0.15	)
Paid-in-Capital		—			(0.00	)(4)		(0.01	)
Total Distributions		—			(0.24	)		(0.16	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	19.60		$	17.39		$	16.97
Total Return (5)		12.77	%(8)		3.88	%		(11.14	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11,967		$	12,055		$	7,732
Ratio of Expenses to Average Net Assets (10)		1.63	%(6)(9)		1.62	%(6)		1.68	%(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses	1.63%(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		2.22	%(6)(9)		1.75	%(6)		1.67	%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		23	%(8)		30	%		37	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.64	%		1.68	%(9)
Net Investment Income to Average Net Assets		N/A			1.73	%		1.67	%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Frontier Markets Portfolio (name changed on March 31, 2017, formerly Frontier Emerging Markets Portfolio). The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

(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.

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

The Company 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, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	6,256	$	—	$	—	$	6,256
Airlines		23,620		—		—		23,620
Automobiles		5,420		—		—		5,420
Banks		292,752		—		—		292,752
Beverages		27,534		—		—		27,534
Capital Markets		11,123		—		—		11,123
Construction Materials		25,727		—		—		25,727
Diversified Consumer Services		15,128		—		—		15,128
Electric Utilities		24,216		—		—		24,216
Electrical Equipment		10,807		—		—		10,807
Food Products		43,402		—		—		43,402
Health Care Providers & Services		18,485		—		—		18,485
Hotels, Restaurants & Leisure		9,591		—		—		9,591
Internet Software & Services		12,943		—		—		12,943
Oil, Gas & Consumable Fuels		50,941		—		—		50,941
Pharmaceuticals		21,731		—		—		21,731
Real Estate Management & Development		10,464		—		—		10,464
Software		13,981		—		—		13,981
Transportation Infrastructure		18,472		—		—		18,472
Wireless Telecommunication Services		25,988		—		—		25,988
Total Common Stocks		668,581		—		—		668,581
Participation Notes		—		17,795		—		17,795
Short-Term Investment
Investment Company		1,422		—		—		1,422
Total Assets	$	670,003	$	17,795	$	—	$	687,798

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

A significant portion of the Fund'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 securities and investment income from foreign currency

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

5.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund with advisory services under the terms of an Investment Advisory Agreement, paid

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

quarterly, at an annual rate of 1.25% of the daily net assets of the Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $4,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $151,962,000 and $183,397,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

approximately $11,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	4,479	$	112,903	$	115,960	$	36	$	1,422

During the six months ended June 30, 2017, the Fund incurred approximately $30,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:						2015 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)
$	7,980	$	—	$	160	$	4,967	$	—	$	232

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

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

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and an expired capital loss carryforward resulted in the following reclassifications among the components of net assets at December 31, 2016:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(3,286	)	$	23,296	$	(20,010	)

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

At December 31, 2016, the Fund had available for federal income tax purposes unused short term and long term capital losses of approximately $49,958,000 and $77,987,000 respectively, that do not have an expiration date.

In addition, at December 31, 2016, the Fund had available for federal income tax purposes unused capital losses which will expire on the indicated dates:

Amount (000)		Expiration
$	4,191	December 31, 2017

During the year ended December 31, 2016, capital loss carryforwards of approximately $20,010,000 expired for federal income tax purposes.

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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. These also include non-specified ordinary losses incurred after December 31 but within the same taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	242	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 55.1%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period but better than its peer group average for the 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's contractual management fee and total expense ratio were lower than its peer group averages, while its actual management fee was higher than but close to its peer group average. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

(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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIFEMSAN
1860555 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Advantage Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Advantage Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Global Advantage Portfolio Class I	$	1,000.00	$	1,229.40	$	1,019.34	$	6.08	$	5.51		1.10	%
Global Advantage Portfolio Class A		1,000.00		1,226.50		1,017.60		8.00		7.25		1.45
Global Advantage Portfolio Class L		1,000.00		1,224.90		1,015.12		10.76		9.74		1.95
Global Advantage Portfolio Class C		1,000.00		1,223.00		1,013.88		12.13		10.99		2.20

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Advantage Portfolio

	Shares		Value (000)
Common Stocks (96.4%)
China (10.4%)
Alibaba Group Holding Ltd. ADR (a)		3,081	$	434
Tencent Holdings Ltd. (b)		10,800		386
				820
Denmark (1.5%)
Novo Nordisk A/S Series B		2,770		118
France (8.8%)
Hermes International		393		194
LVMH Moet Hennessy Louis Vuitton SE		2,017		503
				697
Germany (1.6%)
ThyssenKrupp AG		4,510		128
Italy (1.5%)
Brunello Cucinelli SpA		4,449		117
Japan (1.5%)
Calbee, Inc.		3,100		122
Spain (1.4%)
Industria de Diseno Textil SA		2,936		113
United Kingdom (10.0%)
BBA Aviation PLC		67,918		272
Fevertree Drinks PLC		5,310		118
Whitbread PLC		7,739		400
				790
United States (59.7%)
Activision Blizzard, Inc.		2,013		116
Alphabet, Inc., Class C (a)		399		363
Amazon.com, Inc. (a)		519		502
Berkshire Hathaway, Inc., Class B (a)		1,643		278
Facebook, Inc., Class A (a)		3,185		481
IHS Markit Ltd. (a)		4,338		191
Liberty Media Corp.-Liberty Formula One, Class C (a)		3,759		138
Mastercard, Inc., Class A		2,137		260
MercadoLibre, Inc.		713		179
MSCI, Inc.		1,161		120
Priceline Group, Inc. (The) (a)		149		279
S&P Global, Inc.		1,930		282
Salesforce.com, Inc. (a)		2,271		197
Starbucks Corp.		4,683		273
TransDigm Group, Inc.		452		121
Twitter, Inc. (a)		5,222		93
United Technologies Corp.		2,291		280
Verisk Analytics, Inc. (a)		1,459		123
Visa, Inc., Class A		1,423		133
Workday, Inc., Class A (a)		1,953		189
Zoetis, Inc.		1,962		122
				4,720
Total Common Stocks (Cost $5,979)				7,625

	Notional Amount (000)		Value (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY November 2017 @ CNY 7.40, Royal Bank of Scotland (Cost $4)		1,157	$	1
	Shares
Short-Term Investment (1.9%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $153)		153,149		153
Total Investments (98.3%) (Cost $6,136) (c)				7,779
Other Assets in Excess of Liabilities (1.7%)				135
Net Assets (100.0%)			$	7,914

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,739,000 and the aggregate gross unrealized depreciation is approximately $96,000, resulting in net unrealized appreciation of approximately $1,643,000.

ADR  American Depositary Receipt.

CNY —  Chinese Yuan Renminbi

USD —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Internet Software & Services		24.9	%
Other*		24.1
Textiles, Apparel & Luxury Goods		10.5
Internet & Direct Marketing Retail		10.0
Hotels, Restaurants & Leisure		8.6
Software		6.5
Capital Markets		5.2
Aerospace & Defense		5.2
Information Technology Services		5.0
Total Investments		100.0	%

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

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,983)	$	7,626
Investment in Security of Affiliated Issuer, at Value (Cost $153)		153
Total Investments in Securities, at Value (Cost $6,136)		7,779
Foreign Currency, at Value (Cost —@)		—	@
Receivable for Fund Shares Sold		40
Receivable for Investments Sold		39
Due from Adviser		35
Dividends Receivable		6
Tax Reclaim Receivable		1
Receivable from Affiliate		—	@
Other Assets		51
Total Assets		7,951
Liabilities:
Payable for Professional Fees		26
Payable for Custodian Fees		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 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 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		4
Total Liabilities		37
Net Assets	$	7,914
Net Assets Consist of:
Paid-in-Capital	$	5,897
Accumulated Net Investment Loss		(16	)
Accumulated Net Realized Gain		390
Unrealized Appreciation (Depreciation) on:
Investments		1,643
Foreign Currency Translations		—	@
Net Assets	$	7,914

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	3,764
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		252,593
Net Asset Value, Offering and Redemption Price Per Share	$	14.90
CLASS A:
Net Assets	$	3,521
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		238,988
Net Asset Value, Redemption Price Per Share	$	14.73
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.82
Maximum Offering Price Per Share	$	15.55
CLASS L:
Net Assets	$	239
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,658
Net Asset Value, Offering and Redemption Price Per Share	$	14.38
CLASS C:
Net Assets	$	390
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		27,343
Net Asset Value, Offering and Redemption Price Per Share	$	14.26

@  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, 2017 (unaudited)

Global Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	33
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		33
Expenses:
Professional Fees		50
Advisory Fees (Note B)		28
Registration Fees		21
Custodian Fees (Note F)		6
Shareholder Services Fees — Class A (Note D)		4
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		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		2
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		8
Total Expenses		136
Expenses Reimbursed by Adviser (Note B)		(59	)
Waiver of Advisory Fees (Note B)		(28	)
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		46
Net Investment Loss		(13	)
Realized Gain:
Investments Sold		431
Foreign Currency Transactions		—	@
Net Realized Gain		431
Change in Unrealized Appreciation (Depreciation):
Investments		995
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		995
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		1,426
Net Increase in Net Assets Resulting from Operations	$	1,413

@  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, 2017

Global Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(13	)	$	(18	)
Net Realized Gain		431			46
Net Change in Unrealized Appreciation (Depreciation)		995			110
Net Increase in Net Assets Resulting from Operations		1,413			138
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(61	)
Class A:
Net Realized Gain		—			(74	)
Class L:
Net Realized Gain		—			(6	)
Class C:
Net Realized Gain		—			(5	)
Total Distributions		—			(146	)
Capital Share Transactions:(1)
Class I:
Subscribed		222			2,106
Distributions Reinvested		—			58
Redeemed		(397	)		(671	)
Class A:
Subscribed		386			1,326
Distributions Reinvested		—			71
Redeemed		(116	)		(2,218	)
Class L:
Exchanged		21			21
Distributions Reinvested		—			4
Redeemed		(44	)		(183	)
Class C:
Subscribed		170			223
Distributions Reinvested		—			5
Redeemed		(7	)		(108	)
Net Increase in Net Assets Resulting from Capital Share Transactions		235			634
Total Increase in Net Assets		1,648			626
Net Assets:
Beginning of Period		6,266			5,640
End of Period (Including Accumulated Net Investment Loss of $(16) and $(3))	$	7,914		$	6,266

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		16			171
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(30	)		(54	)
Net Increase (Decrease) in Class I Shares Outstanding		(14	)		122
Class A:
Shares Subscribed		27			114
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(8	)		(178	)
Net Increase (Decrease) in Class A Shares Outstanding		19			(58	)
Class L:
Shares Exchanged		3			2
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(5	)		(15	)
Net Decrease in Class L Shares Outstanding		(2	)		(13	)
Class C:
Shares Subscribed		13			20
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		(9	)
Net Increase in Class C Shares Outstanding		12			11

@@  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, 2017

Financial Highlights

Global Advantage Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.12		$	12.36		$	12.74		$	13.57		$	11.37		$	9.97
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.01	)		0.00	(3)		0.05			0.05			0.04			0.16
Net Realized and Unrealized Gain		2.79			0.02			0.46			0.04			3.27			2.12
Total from Investment Operations		2.78			0.02			0.51			0.09			3.31			2.28
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.03	)		(0.01	)		(0.08	)		(0.12	)
Net Realized Gain		—			(0.26	)		(0.86	)		(0.91	)		(1.03	)		(0.76	)
Total Distributions		—			(0.26	)		(0.89	)		(0.92	)		(1.11	)		(0.88	)
Net Asset Value, End of Period	$	14.90		$	12.12		$	12.36		$	12.74		$	13.57		$	11.37
Total Return (4)		22.94	%(8)		0.21	%		3.85	%		0.83	%		29.71	%		22.83	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,764		$	3,229		$	1,785		$	3,181		$	2,868		$	1,129
Ratio of Expenses to Average Net Assets (10)		1.10	%(5)(9)		1.09	%(5)		1.11	%(5)(6)		1.30	%(5)		1.29	%(5)		1.30	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.15	)%(5)(9)		0.04	%(5)		0.37	%(5)		0.40	%(5)		0.29	%(5)		1.39	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.01	%		0.00	%(7)		0.00	%(7)		0.01	%		0.00	%(7)
Portfolio Turnover Rate		42	%(8)		90	%		90	%		46	%		57	%		63	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.67	%(9)		3.82	%		5.38	%		5.31	%		8.07	%		7.28	%
Net Investment Loss to Average Net Assets		(2.72	)%(9)		(2.69	)%		(3.90	)%		(3.61	)%		(6.49	)%		(4.59	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Advantage Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.01		$	12.29		$	12.70		$	13.57		$	11.36		$	9.97
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.03	)		(0.05	)		(0.04	)		0.01			(0.04	)		0.13
Net Realized and Unrealized Gain		2.75			0.03			0.49			0.04			3.31			2.11
Total from Investment Operations		2.72			(0.02	)		0.45			0.05			3.27			2.24
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.01	)		(0.03	)		(0.09	)
Net Realized Gain		—			(0.26	)		(0.86	)		(0.91	)		(1.03	)		(0.76	)
Total Distributions		—			(0.26	)		(0.86	)		(0.92	)		(1.06	)		(0.85	)
Net Asset Value, End of Period	$	14.73		$	12.01		$	12.29		$	12.70		$	13.57		$	11.36
Total Return (3)		22.65	%(8)		(0.11	)%		3.40	%		0.46	%		29.48	%		22.44	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,521		$	2,640		$	3,414		$	790		$	681		$	114
Ratio of Expenses to Average Net Assets (10)		1.45	%(4)(9)		1.44	%(4)		1.45	%(4)(6)		1.65	%(4)		1.60	%(4)(5)		1.55	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.48	)%(4)(9)		(0.38	)%(4)		(0.34	)%(4)		0.05	%(4)		(0.35	)%(4)		1.14	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.01	%		0.01	%		0.00	%(7)		0.01	%		0.00	%(7)
Portfolio Turnover Rate		42	%(8)		90	%		90	%		46	%		57	%		63	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.93	%(9)		4.09	%		5.92	%		5.79	%		8.43	%		7.53	%
Net Investment Loss to Average Net Assets		(2.96	)%(9)		(3.03	)%		(4.81	)%		(4.09	)%		(7.18	)%		(4.84	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.65% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.55% for Class A shares.

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Advantage Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.74		$	12.09		$	12.56		$	13.50		$	11.35		$	9.96
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.07	)		(0.10	)		(0.08	)		(0.06	)		(0.09	)		0.07
Net Realized and Unrealized Gain		2.71			0.01			0.47			0.04			3.28			2.11
Total from Investment Operations		2.64			(0.09	)		0.39			(0.02	)		3.19			2.18
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.01	)		(0.01	)		(0.03	)
Net Realized Gain		—			(0.26	)		(0.86	)		(0.91	)		(1.03	)		(0.76	)
Total Distributions		—			(0.26	)		(0.86	)		(0.92	)		(1.04	)		(0.79	)
Net Asset Value, End of Period	$	14.38		$	11.74		$	12.09		$	12.56		$	13.50		$	11.35
Total Return (3)		22.49	%(8)		(0.70	)%		2.96	%		(0.07	)%		28.78	%		21.89	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	239		$	217		$	382		$	338		$	254		$	113
Ratio of Expenses to Average Net Assets (10)		1.95	%(4)(9)		1.94	%(4)		1.96	%(4)(6)		2.15	%(4)		2.09	%(4)(5)		2.05	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(1.00	)%(4)(9)		(0.86	)%(4)		(0.60	)%(4)		(0.45	)%(4)		(0.71	)%(4)		0.64	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.01	%		0.00	%(7)		0.00	%(7)		0.01	%		0.00	%(7)
Portfolio Turnover Rate		42	%(8)		90	%		90	%		46	%		57	%		63	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.12	%(9)		5.12	%		6.58	%		6.55	%		9.07	%		8.03	%
Net Investment Loss to Average Net Assets		(4.17	)%(9)		(4.04	)%		(5.22	)%		(4.85	)%		(7.69	)%		(5.34	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  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 shares.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	11.66		$	12.04		$	13.30
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.08	)		(0.13	)		(0.11	)
Net Realized and Unrealized Gain (Loss)		2.68			0.01			(0.26	)
Total from Investment Operations		2.60			(0.12	)		(0.37	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.03	)
Net Realized Gain		—			(0.26	)		(0.86	)
Total Distributions		—			(0.26	)		(0.89	)
Net Asset Value, End of Period	$	14.26		$	11.66		$	12.04
Total Return (4)		22.30	%(7)		(0.95	)%		(2.94	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	390		$	180		$	59
Ratio of Expenses to Average Net Assets (9)		2.20	%(5)(8)		2.19	%(5)		2.20	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(1.23	)%(5)(8)		(1.12	)%(5)		(1.33	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.01	%		0.00	%(6)(8)
Portfolio Turnover Rate		42	%(7)		90	%		90	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		5.45	%(8)		6.12	%		12.84	%(8)
Net Investment Loss to Average Net Assets		(4.48	)%(8)		(5.05	)%		(11.97	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Advantage Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (4) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	401	$	—	$	—	$	401
Beverages		118		—		—		118
Capital Markets		402		—		—		402
Diversified Financial Services		278		—		—		278
Food Products		122		—		—		122
Hotels, Restaurants & Leisure		673		—		—		673
Information Technology Services		393		—		—		393
Internet & Direct Marketing Retail		781		—		—		781
Internet Software & Services		1,936		—		—		1,936
Media		138		—		—		138
Metals & Mining		128		—		—		128
Pharmaceuticals		240		—		—		240
Professional Services		314		—		—		314
Software		502		—		—		502
Specialty Retail		113		—		—		113
Textiles, Apparel & Luxury Goods		814		—		—		814
Transportation Infrastructure		272		—		—		272
Total Common Stocks		7,625		—		—		7,625
Call Option Purchased		—		1		—		1
Short-Term Investment
Investment Company		153		—		—		153
Total Assets	$	7,778	$	1	$	—	$	7,779

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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, 2017

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund may have difficulty closing out its

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option 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 (Option Purchased)		$(3)(c)

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

At June 30, 2017, the Fund'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 Fund 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 Fund 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 Fund 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 Fund 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 Fund'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, 2017.

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, 2017

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	919,000

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $28,000 of advisory fees were waived and approximately $62,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $2,876,000 and $2,865,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced

by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2017 (000)
$	29	$	1,578	$	1,454	$	—	@	$	153

@ Amount is less than $500.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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, 2017

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 there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	146	$	7	$	350

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, 2016:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	19	$	5	$	(24	)

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

Qualified late year losses are capital losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31,

2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	3	$	6

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 77.3%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods but better than 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's contractual management fee was equal to its peer group average and the actual management fee was lower than its peer group average. The Board also noted that the total expense ratio was higher than but close to its peer group average. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

27

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGASAN
1858189 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Concentrated Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Concentrated Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,113.20	$	1,019.89	$	5.19	$	4.96		0.99	%
Global Concentrated Portfolio Class A		1,000.00		1,111.30		1,018.10		7.07		6.76		1.35
Global Concentrated Portfolio Class C		1,000.00		1,106.40		1,014.38		10.97		10.49		2.10
Global Concentrated Portfolio Class IS		1,000.00		1,114.20		1,020.08		4.98		4.76		0.95

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Concentrated Portfolio

	Shares		Value (000)
Common Stocks (98.3%)
China (12.5%)
TAL Education Group ADR		3,065	$	375
Tencent Holdings Ltd. ADR		22,847		822
				1,197
Ireland (6.4%)
Ryanair Holdings PLC ADR (a)		5,747		618
Japan (4.3%)
Nippon Telegraph & Telephone Corp. ADR		8,692		410
Switzerland (10.0%)
ABB Ltd. ADR		18,837		469
UBS Group AG (Registered) (a)		28,845		490
				959
Taiwan (6.5%)
Taiwan Semiconductor Manufacturing Co., Ltd. ADR		17,747		620
United States (58.6%)
Allergan PLC		1,518		369
Alphabet, Inc., Class A (a)		577		536
Comcast Corp., Class A		15,019		585
Emerson Electric Co.		4,391		262
Franklin Resources, Inc.		11,844		530
Illinois Tool Works, Inc.		2,812		403
JPMorgan Chase & Co.		5,399		493
Mastercard, Inc., Class A		2,215		269
National Oilwell Varco, Inc.		10,555		348
Priceline Group, Inc. (The) (a)		339		634
QUALCOMM, Inc.		6,236		344
Synchrony Financial		9,880		295
VMware, Inc., Class A (a)		6,218		544
				5,612
Total Common Stocks (Cost $8,132)				9,416
Short-Term Investment (1.3%)
Investment Company (1.3%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $127)		126,943		127
Total Investments (99.6%) (Cost $8,259) (b)				9,543
Other Assets in Excess of Liabilities (0.4%)				36
Net Assets (100.0%)			$	9,579

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,369,000 and the aggregate gross unrealized depreciation is approximately $85,000, resulting in net unrealized appreciation of approximately $1,284,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		27.2	%
Internet Software & Services		14.2
Capital Markets		10.7
Semiconductors & Semiconductor Equipment		10.1
Electrical Equipment		7.7
Internet & Direct Marketing Retail		6.6
Airlines		6.5
Media		6.1
Software		5.7
Banks		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, 2017 (unaudited)

Global Concentrated Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $8,132)	$	9,416
Investment in Security of Affiliated Issuer, at Value (Cost $127)		127
Total Investments in Securities, at Value (Cost $8,259)		9,543
Due from Adviser		51
Dividends Receivable		23
Receivable for Fund Shares Sold		11
Receivable from Affiliate		—	@
Other Assets		49
Total Assets		9,677
Liabilities:
Payable for Investments Purchased		70
Payable for Offering Costs		18
Payable for Professional Fees		5
Payable for Custodian Fees		2
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		1
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 Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Other Liabilities		1
Total Liabilities		98
Net Assets	$	9,579
Net Assets Consist of:
Paid-in-Capital	$	8,567
Accumulated Undistributed Net Investment Income		2
Accumulated Net Realized Loss		(274	)
Unrealized Appreciation (Depreciation) on:
Investments		1,284
Net Assets	$	9,579

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Concentrated Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	7,384
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		652,604
Net Asset Value, Offering and Redemption Price Per Share	$	11.31
CLASS A:
Net Assets	$	1,016
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		90,083
Net Asset Value, Redemption Price Per Share	$	11.28
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.63
Maximum Offering Price Per Share	$	11.91
CLASS C:
Net Assets	$	1,168
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		103,944
Net Asset Value, Offering and Redemption Price Per Share	$	11.23
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	$	11.32

@  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, 2017 (unaudited)

Global Concentrated Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)	$	85
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		85
Expenses:
Offering Costs		48
Professional Fees		45
Advisory Fees (Note B)		34
Registration Fees		7
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		5
Shareholder Reporting Fees		4
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 C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		2
Directors' Fees and Expenses		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		7
Total Expenses		162
Expenses Reimbursed by Adviser (Note B)		(75	)
Waiver of Advisory Fees (Note B)		(34	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		51
Net Investment Income		34
Realized Loss:
Investments Sold		(89	)
Change in Unrealized Appreciation (Depreciation):
Investments		1,012
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		923
Net Increase in Net Assets Resulting from Operations	$	957

@  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, 2017

Global Concentrated Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Period from May 27, 2016^ to December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	34		$	17
Net Realized Loss		(89	)		(185	)
Net Change in Unrealized Appreciation (Depreciation)		1,012			272
Net Increase in Net Assets Resulting from Operations		957			104
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(43	)
Class A:
Net Investment Income		—			(4	)
Class C:
Net Investment Income		—			(2	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(49	)
Capital Share Transactions:(1)
Class I:
Subscribed		225			8,440
Distributions Reinvested		—			11
Redeemed		(522	)		(1,574	)
Class A:
Subscribed		218			789
Distributions Reinvested		—			4
Redeemed		(75	)		(12	)
Class C:
Subscribed		229			870
Distributions Reinvested		—			2
Redeemed		(44	)		(4	)
Class IS:
Subscribed		—			10
Net Increase in Net Assets Resulting from Capital Share Transactions		31			8,536
Total Increase in Net Assets		988			8,591
Net Assets:
Beginning of Period		8,591			—
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $2 and $(32), respectively)	$	9,579		$	8,591
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		21			837
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(49	)		(157	)
Net Increase (Decrease) in Class I Shares Outstanding		(28	)		681
Class A:
Shares Subscribed		20			78
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(7	)		(1	)
Net Increase in Class A Shares Outstanding		13			77
Class C:
Shares Subscribed		21			86
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(4	)		(—	@@)
Net Increase in Class C Shares Outstanding		17			86
Class IS:
Shares Subscribed		—			1

^  Commencement of Operations.

@  Amount is less than $500.

@@  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, 2017

Financial Highlights

Global Concentrated Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.16		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.03
Net Realized and Unrealized Gain		1.10			0.19
Total from Investment Operations		1.15			0.22
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)
Net Asset Value, End of Period	$	11.31		$	10.16
Total Return (3)		11.32	%(6)		2.24	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,384		$	6,922
Ratio of Expenses to Average Net Assets (8)		0.99	%(4)(7)		0.97	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.91	%(4)(7)		0.48	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		36	%(6)		44	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.40	%(7)		3.57	%(7)
Net Investment Loss to Average Net Assets		(1.50	)%(7)		(2.12	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Concentrated Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period		10.15		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.03			0.01
Net Realized and Unrealized Gain		1.10			0.19
Total from Investment Operations		1.13			0.20
Distributions from and/or in Excess of:
Net Investment Income		—			(0.05	)
Net Asset Value, End of Period	$	11.28		$	10.15
Total Return (3)		11.13	%(6)		2.02	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,016		$	782
Ratio of Expenses to Average Net Assets (8)		1.35	%(4)(7)		1.35	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.60	%(4)(7)		0.16	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		36	%(6)		44	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.89	%(7)		4.23	%(7)
Net Investment Loss to Average Net Assets		(1.94	)%(7)		(2.72	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Concentrated Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.15		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.01	)		(0.04	)
Net Realized and Unrealized Gain		1.09			0.21
Total from Investment Operations		1.08			0.17
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)
Net Asset Value, End of Period	$	11.23		$	10.15
Total Return (3)		10.64	%(6)		1.69	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,168		$	877
Ratio of Expenses to Average Net Assets (8)		2.10	%(4)(7)		2.10	%(4)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(0.14	)%(4)(7)		(0.69	)%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		36	%(6)		44	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.59	%(7)		4.81	%(7)
Net Investment Loss to Average Net Assets		(2.63	)%(7)		(3.40	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Concentrated Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.16		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.03
Net Realized and Unrealized Gain		1.11			0.20
Total from Investment Operations		1.16			0.23
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)
Net Asset Value, End of Period	$	11.32		$	10.16
Total Return (3)		11.42	%(6)		2.25	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (8)		0.95	%(4)(7)		0.95	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.96	%(4)(7)		0.56	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		36	%(6)		44	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		18.78	%(7)		19.43	%(7)
Net Investment Loss to Average Net Assets		(16.87	)%(7)		(17.92	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Concentrated Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and (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.

The Directors have responsibility for determining in good faith the fair value of the investments, and the

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

The Company 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, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	618	$	—	$	—	$	618
Banks		493		—		—		493
Capital Markets		1,020		—		—		1,020
Consumer Finance		295		—		—		295
Diversified Consumer Services		375		—		—		375
Diversified Telecommunication Services		410		—		—		410
Electrical Equipment		731		—		—		731
Energy Equipment & Services		348		—		—		348
Information Technology Services		269		—		—		269
Internet & Direct Marketing Retail		634		—		—		634
Internet Software & Services		1,358		—		—		1,358
Machinery		403		—		—		403
Media		585		—		—		585
Pharmaceuticals		369		—		—		369
Semiconductors & Semiconductor Equipment		964		—		—		964
Software		544		—		—		544
Total Common Stocks		9,416		—		—		9,416
Short-Term Investment
Investment Company		127		—		—		127
Total Assets	$	9,543	$	—	$	—	$	9,543

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $34,000 of advisory fees

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

were waived and approximately $77,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $3,233,000 and $3,184,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2017 (000)
$	107	$	947	$	927	$	—	@	$	127

@ Amount is less than $500.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. The tax period ended December 31, 2016, 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 year 2016 was as follows:

2016 Distributions Paid From:
Ordinary Income (000)
$	49

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.

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	23	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $121,000 that do not have an expiration date.

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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 40.8%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the period since the end of May 2016, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that while the Fund'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 Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCNPSAN
1860540 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Core Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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
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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Core Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,108.70	$	1,019.98	$	5.07	$	4.86		0.97	%
Global Core Portfolio Class A		1,000.00		1,106.80		1,018.10		7.05		6.76		1.35
Global Core Portfolio Class C		1,000.00		1,102.00		1,014.38		10.94		10.49		2.10
Global Core Portfolio Class IS		1,000.00		1,108.70		1,020.08		4.97		4.76		0.95

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Core Portfolio

	Shares		Value (000)
Common Stocks (98.4%)
Canada (0.5%)
Agnico-Eagle Mines Ltd.		1,285	$	58
China (6.2%)
NetEase, Inc. ADR		379		114
TAL Education Group ADR		743		91
Tencent Holdings Ltd. ADR		14,174		509
				714
Germany (1.1%)
BASF SE ADR		1,292		120
Ireland (4.4%)
Ryanair Holdings PLC ADR (a)		4,746		511
Japan (5.2%)
Nippon Telegraph & Telephone Corp. ADR		11,221		529
Toyota Motor Corp. ADR		709		74
				603
Netherlands (1.3%)
AerCap Holdings N.V. (a)		3,225		150
Spain (2.1%)
Banco Bilbao Vizcaya Argentaria SA ADR		28,852		241
Switzerland (9.6%)
ABB Ltd. ADR		16,417		409
Logitech International SA (Registered)		4,667		171
UBS Group AG (Registered) (a)		31,334		532
				1,112
Taiwan (3.9%)
Taiwan Semiconductor Manufacturing Co., Ltd. ADR		12,870		450
United Kingdom (4.2%)
British American Tobacco PLC ADR		5,323		365
Shire PLC ADR		692		114
				479
United States (59.9%)
Allergan PLC		1,253		305
Alphabet, Inc., Class A (a)		506		470
Ameriprise Financial, Inc.		2,833		361
Apple, Inc.		3,812		549
Broadcom Ltd.		1,870		436
Celgene Corp. (a)		228		30
Cigna Corp.		518		87
Comcast Corp., Class A		12,940		504
Danaher Corp.		1,167		98
Emerson Electric Co.		4,686		279
Franklin Resources, Inc.		10,500		470
Illinois Tool Works, Inc.		2,833		406
Invesco Ltd.		1,429		50
JPMorgan Chase & Co.		6,432		588
Mastercard, Inc., Class A		2,915		354
National Oilwell Varco, Inc.		7,265		239
Northrop Grumman Corp.		1,296		333
Priceline Group, Inc. (The) (a)		287		537
QUALCOMM, Inc.		4,599		254

	Shares		Value (000)
Schlumberger Ltd.		833	$	55
Synchrony Financial		5,715		170
Target Corp.		893		47
VMware, Inc., Class A (a)		3,242		283
				6,905
Total Common Stocks (Cost $9,975)				11,343
Short-Term Investment (0.9%)
Investment Company (0.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $108)		107,592		108
Total Investments (99.3%) (Cost $10,083) (b)				11,451
Other Assets in Excess of Liabilities (0.7%)				85
Net Assets (100.0%)			$	11,536

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,495,000 and the aggregate gross unrealized depreciation is approximately $127,000, resulting in net unrealized appreciation of approximately $1,368,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		48.6	%
Capital Markets		12.3
Semiconductors & Semiconductor Equipment		10.0
Internet Software & Services		9.6
Banks		7.2
Tech Hardware, Storage & Peripherals		6.3
Electrical Equipment		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Core Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $9,975)	$	11,343
Investment in Security of Affiliated Issuer, at Value (Cost $108)		108
Total Investments in Securities, at Value (Cost $10,083)		11,451
Due from Adviser		48
Receivable for Investments Sold		32
Dividends Receivable		19
Receivable from Affiliate		—	@
Other Assets		50
Total Assets		11,600
Liabilities:
Payable for Investments Purchased		36
Payable for Offering Costs		18
Payable for Professional Fees		5
Payable for Custodian Fees		3
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		1
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 Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Other Liabilities		—	@
Total Liabilities		64
Net Assets	$	11,536
Net Assets Consist of:
Paid-in-Capital	$	10,481
Accumulated Undistributed Net Investment Income		13
Accumulated Net Realized Loss		(326	)
Unrealized Appreciation (Depreciation) on:
Investments		1,368
Net Assets	$	11,536
CLASS I:
Net Assets	$	9,104
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		818,732
Net Asset Value, Offering and Redemption Price Per Share	$	11.12
CLASS A:
Net Assets	$	1,392
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		125,579
Net Asset Value, Redemption Price Per Share	$	11.09
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.61
Maximum Offering Price Per Share	$	11.70
CLASS C:
Net Assets	$	1,029
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		93,350
Net Asset Value, Offering and Redemption Price Per Share	$	11.02
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	$	11.12

@  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, 2017 (unaudited)

Global Core Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)	$	106
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		106
Expenses:
Offering Costs		48
Professional Fees		45
Advisory Fees (Note B)		40
Registration Fees		7
Shareholder Services Fees — Class A (Note D)		2
Distribution and Shareholder Services Fees — Class C (Note D)		5
Shareholder Reporting Fees		4
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 C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		3
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 C		—	@
Other Expenses		6
Total Expenses		170
Expenses Reimbursed by Adviser (Note B)		(69	)
Waiver of Advisory Fees (Note B)		(40	)
Reimbursement of Class Specific Expenses — Class A (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		59
Net Investment Income		47
Realized Loss:
Investments Sold		(222	)
Change in Unrealized Appreciation (Depreciation):
Investments		1,232
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		1,010
Net Increase in Net Assets Resulting from Operations	$	1,057

@  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, 2017

Global Core Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Period from May 27, 2016^ to December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	47		$	28
Net Realized Loss		(222	)		(104	)
Net Change in Unrealized Appreciation (Depreciation)		1,232			136
Net Increase in Net Assets Resulting from Operations		1,057			60
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(50	)
Class A:
Net Investment Income		—			(8	)
Class C:
Net Investment Income		—			(4	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(62	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,773			6,525
Distributions Reinvested		—			11
Redeemed		(16	)		(31	)
Class A:
Subscribed		32			1,365
Distributions Reinvested		—			8
Redeemed		(35	)		(102	)
Class C:
Subscribed		94			904
Distributions Reinvested		—			4
Redeemed		(60	)		(1	)
Class IS:
Subscribed		—			10
Net Increase in Net Assets Resulting from Capital Share Transactions		1,788			8,693
Total Increase in Net Assets		2,845			8,691
Net Assets:
Beginning of Period		8,691			—
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $13 and $(34), respectively)	$	11,536		$	8,691
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		171			652
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(2	)		(3	)
Net Increase in Class I Shares Outstanding		169			650
Class A:
Shares Subscribed		3			135
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(3	)		(10	)
Net Increase (Decrease) in Class A Shares Outstanding		(—	@)		126
Class C:
Shares Subscribed		9			90
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(6	)		(—	@@)
Net Increase in Class C Shares Outstanding		3			90
Class IS:
Shares Subscribed		—			1

^  Commencement of Operations.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Core Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.05
Net Realized and Unrealized Gain		1.04			0.06
Total from Investment Operations		1.09			0.11
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)
Net Asset Value, End of Period	$	11.12		$	10.03
Total Return (3)		10.87	%(6)		1.08	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9,104		$	6,517
Ratio of Expenses to Average Net Assets (8)		0.97	%(4)(7)		0.98	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		1.02	%(4)(7)		0.82	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.01	%(7)
Portfolio Turnover Rate		27	%(6)		22	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.01	%(7)		3.73	%(7)
Net Investment Loss to Average Net Assets		(1.02	)%(7)		(1.93	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Core Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.02		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.03			0.02
Net Realized and Unrealized Gain		1.04			0.06
Total from Investment Operations		1.07			0.08
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)
Net Asset Value, End of Period	$	11.09		$	10.02
Total Return (3)		10.68	%(6)		0.83	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,392		$	1,263
Ratio of Expenses to Average Net Assets (8)		1.35	%(4)(7)		1.35	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.62	%(4)(7)		0.39	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		27	%(6)		22	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.44	%(7)		4.16	%(7)
Net Investment Loss to Average Net Assets		(1.47	)%(7)		(2.42	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Core Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.00		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.01	)		(0.02	)
Net Realized and Unrealized Gain		1.03			0.06
Total from Investment Operations		1.02			0.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)
Net Asset Value, End of Period	$	11.02		$	10.00
Total Return (3)		10.20	%(6)		0.41	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,029		$	901
Ratio of Expenses to Average Net Assets (8)		2.10	%(4)(7)		2.10	%(4)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(0.12	)%(4)(7)		(0.36	)%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		27	%(6)		22	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.25	%(7)		5.02	%(7)
Net Investment Loss to Average Net Assets		(2.27	)%(7)		(3.28	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Core Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.05
Net Realized and Unrealized Gain		1.04			0.06
Total from Investment Operations		1.09			0.11
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)
Net Asset Value, End of Period	$	11.12		$	10.03
Total Return (3)		10.87	%(6)		1.10	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (8)		0.95	%(4)(7)		0.95	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		1.02	%(4)(7)		0.84	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		27	%(6)		22	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		18.63	%(7)		19.70	%(7)
Net Investment Loss to Average Net Assets		(16.66	)%(7)		(17.91	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Core Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and (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.

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

12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

The Company 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.

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	333	$	—	$	—	$	333
Airlines		511		—		—		511
Automobiles		74		—		—		74
Banks		829		—		—		829
Biotechnology		144		—		—		144
Capital Markets		1,413		—		—		1,413
Chemicals		120		—		—		120
Consumer Finance		170		—		—		170
Diversified Consumer Services		91		—		—		91
Diversified Telecommunication Services		529		—		—		529
Electrical Equipment		688		—		—		688
Energy Equipment & Services		294		—		—		294
Health Care Equipment & Supplies		98		—		—		98
Health Care Providers & Services		87		—		—		87
Information Technology Services		354		—		—		354
Internet & Direct Marketing Retail		537		—		—		537
Internet Software & Services		1,093		—		—		1,093
Machinery		406		—		—		406
Media		504		—		—		504
Metals & Mining		58		—		—		58
Multi-Line Retail		47		—		—		47
Pharmaceuticals		305		—		—		305
Semiconductors & Semiconductor Equipment		1,140		—		—		1,140
Software		283		—		—		283
Tech Hardware, Storage & Peripherals		720		—		—		720
Tobacco		365		—		—		365
Trading Companies & Distributors		150		—		—		150
Total Common Stocks		11,343		—		—		11,343
Short-Term Investment
Investment Company		108		—		—		108
Total Assets	$	11,451	$	—	$	—	$	11,451

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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			Over $1.5 million			Next $750 billion
	0.75	%		0.70	%		0.65	%

For the six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $40,000 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 Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $4,607,000 and $2,852,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2017 (000)
$	61	$	1,935	$	1,888	$	—	@	$	108

@ Amount is less than $500.

The Fund 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. The tax period ended December 31, 2016, 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 year 2016 was as follows:

2016 Distributions Paid From:
Ordinary Income (000)
$	62

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.

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	12	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $65,000 that do not have an expiration date.

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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 43.0%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the period since the end of May 2016, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that while the Fund'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 Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

U.S. Privacy Policy (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, 2017

U.S. Privacy Policy (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 non-affiliated 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, 2017

U.S. Privacy Policy (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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

23

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCPSAN
1860552 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Discovery Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Discovery Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,149.90	$	1,018.15	$	7.14	$	6.71		1.34	%
Global Discovery Portfolio Class A		1,000.00		1,147.30		1,016.51		8.89		8.35		1.67
Global Discovery Portfolio Class L		1,000.00		1,144.60		1,013.98		11.59		10.89		2.18
Global Discovery Portfolio Class C		1,000.00		1,143.00		1,012.79		12.86		12.08		2.42

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Discovery Portfolio

	Shares		Value (000)
Common Stocks (94.5%)
Brazil (5.4%)
JHSF Participacoes SA (a)		757,013	$	432
Ouro Fino Saude Animal Participacoes SA		91,017		864
Porto Seguro SA		309,929		2,864
				4,160
Canada (6.2%)
Agrium, Inc.		52,553		4,763
Second Cup Ltd. (The) (a)		56,670		71
				4,834
Denmark (9.5%)
Novo Nordisk A/S Series B		170,989		7,322
France (16.3%)
Christian Dior SE		21,725		6,212
Criteo SA ADR (a)		51,166		2,510
Edenred		103,108		2,689
JCDecaux SA		37,080		1,216
				12,627
Germany (3.3%)
ThyssenKrupp AG		57,588		1,636
Vapiano SE (a)(b)		36,107		940
				2,576
Italy (1.1%)
Tamburi Investment Partners SpA		142,195		814
New Zealand (0.3%)
Kathmandu Holdings Ltd.		165,206		247
United Kingdom (7.9%)
BBA Aviation PLC		621,875		2,490
Clarkson PLC		30,709		1,010
Whitbread PLC		50,974		2,634
				6,134
United States (44.5%)
Biogen, Inc. (a)		9,861		2,676
BWX Technologies, Inc.		24,659		1,202
Cars.com, Inc. (a)		46,323		1,234
Container Store Group, Inc. (The) (a)		44,950		266
Dillard's, Inc., Class A (c)		40,976		2,364
Dril-Quip, Inc. (a)		26,589		1,298
Dropbox, Inc. (a)(d)(e)(f) (acquisition cost — $25; acquired 5/1/12)		2,743		24
Habit Restaurants, Inc. (The) (a)		4,964		78
Harley-Davidson, Inc.		27,936		1,509
Hewlett Packard Enterprise Co.		67,690		1,123
Mosaic Co. (The)		108,854		2,485
Potbelly Corp. (a)		122,216		1,405
TEGNA, Inc.		123,294		1,777
Terex Corp.		42,795		1,605

	Shares		Value (000)
Time Warner, Inc.		80,584	$	8,091
United Technologies Corp.		21,007		2,565
Welbilt, Inc. (a)		255,388		4,814
				34,516
Total Common Stocks (Cost $66,555)				73,230
Preferred Stocks (0.6%)
India (0.2%)
Flipkart Online Services Pvt Ltd. Series D (a)(d)(e)(f) (acquisition cost — $44; acquired 10/4/13)		1,910		135
United States (0.4%)
Airbnb, Inc. Series D (a)(d)(e)(f) (acquisition cost — $78; acquired 4/16/14)		1,917		207
Blue Bottle Coffee, Inc. Series B (a)(d)(e)(f) (acquisition cost — $56; acquirred 1/24/14)		3,945		51
DOMO, Inc. (a)(d)(e)(f) (acquisition cost — $37; acquired 1/31/14 - 2/7/14)		9,082		58
Lookout, Inc. Series F (a)(d)(e)(f) (acquisition cost — $73; acquired 6/17/14)		6,374		20
Palantir Technologies, Inc. Series G (a)(d)(e)(f) (acquisition cost — $9; acquired 7/19/12)		2,935		12
Palantir Technologies, Inc. Series H (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572		6
Palantir Technologies, Inc. Series H1 (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572		6
				360
Total Preferred Stocks (Cost $309)				495
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		2
	Notional Amount (000)
Call Options Purchased (0.8%)
United States (0.8%)
Harley-Davidson, Inc. January 2019 @ $45, UBS Securities, LLC (g)		40		491
United Technologies Corp. January 2018 @ $120, UBS Securities, LLC (g)		14		91
Total Call Options Purchased (Cost $708)				582
	Shares
Short-Term Investments (5.6%)
Securities held as Collateral on Loaned Securities (1.2%)
Investment Company (0.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		710,574		711

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Discovery Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (0.3%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $86; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $88)	$	86	$	86
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $79; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $80)		79		79
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $56; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $57)		56		56
				221
Total Securities held as Collateral on Loaned Securities (Cost $932)				932
	Shares
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $3,449)		3,449,355		3,449
Total Short-Term Investments (Cost $4,381)				4,381
Total Investments (101.5%) (Cost $71,956) Including $885 of Securities Loaned (h)(i)				78,690
Liabilities in Excess of Other Assets (–1.5%)				(1,157	)
Net Assets (100.0%)			$	77,533

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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, 2017.

(d)  At June 30, 2017, the Fund held fair valued securities valued at approximately $521,000, representing 0.7% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Company's Directors.

(e)  Security has been deemed illiquid at June 30, 2017.

(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 Fund 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, 2017, amounts to approximately $521,000 and represents 0.7% of net assets.

(g)  Cleared option.

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

(i)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $7,631,000 and the aggregate gross unrealized depreciation is approximately $897,000, resulting in net unrealized appreciation of approximately $6,734,000.

ADR  American Depositary Receipt.

Foreign Currency Forward Exchange Contracts:

The Fund had the following foreign currency forward exchange contracts open at June 30, 2017:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
UBS AG	EUR	106	$	113	8/24/17	$	(9	)
UBS AG	EUR	601	$	645	10/12/17		(45	)
UBS AG	EUR	340	$	373	11/15/17		(18	)
UBS AG	KRW	133,872	$	117	8/24/17		—	@
UBS AG	KRW	765,055	$	675	10/12/17		6
UBS AG	KRW	418,670	$	373	11/15/17		6
						$	(60	)

EUR  —  Euro

KRW  —  South Korean Won

@    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, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Discovery Portfolio

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		43.0	%
Media		14.2
Pharmaceuticals		10.5
Chemicals		9.3
Machinery		8.3
Textiles, Apparel & Luxury Goods		8.0
Hotels, Restaurants & Leisure		6.7
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

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

***  Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $60,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $67,796)	$	74,530
Investment in Security of Affiliated Issuer, at Value (Cost $4,160)		4,160
Total Investments in Securities, at Value (Cost $71,956)		78,690
Foreign Currency, at Value (Cost $36)		36
Receivable for Fund Shares Sold		835
Dividends Receivable		94
Tax Reclaim Receivable		17
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		12
Receivable from Affiliate		2
Other Assets		68
Total Assets		79,754
Liabilities:
Collateral on Securities Loaned, at Value		932
Payable for Investments Purchased		905
Payable for Advisory Fees		138
Payable for Fund Shares Redeemed		130
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		72
Payable for Professional Fees		26
Payable for Shareholder Services Fees — Class A		6
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		7
Payable for Administration Fees		5
Payable for Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
Other Liabilities		—	@
Total Liabilities		2,221
Net Assets	$	77,533
Net Assets Consist Of:
Paid-in-Capital	$	67,148
Accumulated Undistributed Net Investment Income		8
Accumulated Net Realized Gain		3,701
Unrealized Appreciation (Depreciation) on:
Investments		6,734
Foreign Currency Forward Exchange Contracts		(60	)
Foreign Currency Translations		2
Net Assets	$	77,533

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	36,487
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,366,546
Net Asset Value, Offering and Redemption Price Per Share	$	15.42
CLASS A:
Net Assets	$	32,376
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,110,995
Net Asset Value, Redemption Price Per Share	$	15.34
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.85
Maximum Offering Price Per Share	$	16.19
CLASS L:
Net Assets	$	296
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,450
Net Asset Value, Offering and Redemption Price Per Share	$	15.20
CLASS C:
Net Assets	$	8,374
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		557,209
Net Asset Value, Offering and Redemption Price Per Share	$	15.03
(1) Including: Securities on Loan, at Value:	$	885

@  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, 2017 (unaudited)

Global Discovery Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $41 of Foreign Taxes Withheld)	$	475
Dividends from Security of Affiliated Issuer (Note G)		12
Income from Securities Loaned — Net		1
Total Investment Income		488
Expenses:
Advisory Fees (Note B)		240
Shareholder Services Fees — Class A (Note D)		32
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		33
Professional Fees		50
Registration Fees		23
Administration Fees (Note C)		21
Sub Transfer Agency Fees — Class I		4
Sub Transfer Agency Fees — Class A		9
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Custodian Fees (Note F)		12
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)		2
Shareholder Reporting Fees		6
Pricing Fees		3
Directors' Fees and Expenses		2
Other Expenses		9
Total Expenses		451
Reimbursement of Class Specific Expenses — Class I (Note B)		(6	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Waiver of Advisory Fees (Note B)		(6	)
Rebate from Morgan Stanley Affiliate (Note G)		(4	)
Net Expenses		434
Net Investment Income		54
Realized Gain:
Investments Sold		3,332
Foreign Currency Forward Exchange Contracts		28
Foreign Currency Transactions		18
Net Realized Gain		3,378
Change in Unrealized Appreciation (Depreciation):
Investments		3,658
Foreign Currency Forward Exchange Contracts		(177	)
Foreign Currency Translations		2
Net Change in Unrealized Appreciation (Depreciation)		3,483
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		6,861
Net Increase in Net Assets Resulting from Operations	$	6,915

@  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, 2017

Global Discovery Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	54		$	(17	)
Net Realized Gain		3,378			1,068
Net Change in Unrealized Appreciation (Depreciation)		3,483			3,676
Net Increase in Net Assets Resulting from Operations		6,915			4,727
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(21	)
Net Realized Gain		—			(204	)
Class A:
Net Investment Income		—			(3	)
Net Realized Gain		—			(265	)
Class L:
Net Realized Gain		—			(4	)
Class C:
Net Realized Gain		—			(82	)
Total Distributions		—			(579	)
Capital Share Transactions:(1)
Class I:
Subscribed		27,828			8,858
Distributions Reinvested		—			224
Redeemed		(6,733	)		(2,138	)
Class A:
Subscribed		14,825			15,954
Distributions Reinvested		—			269
Redeemed		(4,461	)		(4,793	)
Class L:
Exchanged		27			7
Distributions Reinvested		—			4
Redeemed		—			(115	)
Class C:
Subscribed		3,159			3,903
Distributions Reinvested		—			82
Redeemed		(345	)		(29	)
Net Increase in Net Assets Resulting from Capital Share Transactions		34,300			22,226
Total Increase in Net Assets		41,215			26,374
Net Assets:
Beginning of Period		36,318			9,944
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $8 and $(46), respectively)	$	77,533		$	36,318

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Discovery Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,884			731
Shares Issued on Distributions Reinvested		—			17
Shares Redeemed		(472	)		(180	)
Net Increase in Class I Shares Outstanding		1,412			568
Class A:
Shares Subscribed		1,031			1,277
Shares Issued on Distributions Reinvested		—			20
Shares Redeemed		(310	)		(444	)
Net Increase in Class A Shares Outstanding		721			853
Class L:
Shares Exchanged		2			1
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(9	)
Net Increase (Decrease) in Class L Shares Outstanding		2			(8	)
Class C:
Shares Subscribed		223			309
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(24	)		(2	)
Net Increase in Class C Shares Outstanding		199			313

@@  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, 2017

Financial Highlights

Global Discovery Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.42		$	10.02		$	10.62		$	13.70		$	11.11		$	9.06
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.04			0.02			0.10			0.48			(0.01	)		0.25
Net Realized and Unrealized Gain (Loss)		1.96			3.64			(0.55	)		(0.77	)		4.43			2.62
Total from Investment Operations		2.00			3.66			(0.45	)		(0.29	)		4.42			2.87
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.15	)		(0.55	)		(0.07	)		(0.30	)
Net Realized Gain		—			(0.24	)		—			(1.95	)		(1.76	)		(0.52	)
Paid-in-Capital		—			—			—			(0.29	)		—			—
Total Distributions		—			(0.26	)		(0.15	)		(2.79	)		(1.83	)		(0.82	)
Net Asset Value, End of Period	$	15.42		$	13.42		$	10.02		$	10.62		$	13.70		$	11.11
Total Return (3)		14.99	%(6)		36.51	%		(4.27	)%		(1.96	)%		40.72	%		31.64	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	36,487		$	12,802		$	3,867		$	6,421		$	8,493		$	3,432
Ratio of Expenses to Average Net Assets (8)		1.34	%(4)(7)		1.34	%(4)		1.34	%(4)		1.34	%(4)		1.34	%(4)		1.35	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (8)		0.55	%(4)(7)		0.17	%(4)		0.88	%(4)		3.70	%(4)		(0.07	)%(4)		2.41	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%(5)
Portfolio Turnover Rate		40	%(6)		64	%		118	%		84	%		100	%		96	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.43	%(7)		2.38	%		3.09	%		2.65	%		3.65	%		4.33	%
Net Investment Income (Loss) to Average Net Assets		0.46	%(7)		(0.87	)%		(0.87	)%		2.39	%		(2.38	)%		(0.57	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Discovery Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.37		$	10.01		$	10.62		$	13.69		$	11.11		$	9.07
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.01			(0.03	)		0.02			0.44			(0.09	)		0.22
Net Realized and Unrealized Gain (Loss)		1.96			3.63			(0.51	)		(0.76	)		4.47			2.62
Total from Investment Operations		1.97			3.60			(0.49	)		(0.32	)		4.38			2.84
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(3)		(0.12	)		(0.51	)		(0.04	)		(0.28	)
Net Realized Gain		—			(0.24	)		—			(1.95	)		(1.76	)		(0.52	)
Paid-in-Capital		—			—			—			(0.29	)		—			—
Total Distributions		—			(0.24	)		(0.12	)		(2.75	)		(1.80	)		(0.80	)
Net Asset Value, End of Period	$	15.34		$	13.37		$	10.01		$	10.62		$	13.69		$	11.11
Total Return (4)		14.73	%(8)		36.04	%		(4.59	)%		(2.25	)%		40.33	%		31.40	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	32,376		$	18,574		$	5,375		$	2,965		$	1,455		$	137
Ratio of Expenses to Average Net Assets (10)		1.67	%(5)(9)		1.69	%(5)		1.69	%(5)		1.69	%(5)		1.65	%(5)(6)		1.60	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.13	%(5)(9)		(0.28	)%(5)		0.16	%(5)		3.35	%(5)		(0.66	)%(5)		2.16	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%(7)
Portfolio Turnover Rate		40	%(8)		64	%		118	%		84	%		100	%		96	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.71	%(9)		2.67	%		3.52	%		3.02	%		3.87	%		4.58	%
Net Investment Income (Loss) to Average Net Assets		0.09	%(9)		(1.26	)%		(1.67	)%		2.02	%		(2.88	)%		(0.82	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Discovery Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.28		$	9.99		$	10.59		$	13.64		$	11.11		$	9.07
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.03	)		(0.09	)		(0.03	)		0.37			(0.14	)		0.17
Net Realized and Unrealized Gain (Loss)		1.95			3.62			(0.51	)		(0.76	)		4.45			2.61
Total from Investment Operations		1.92			3.53			(0.54	)		(0.39	)		4.31			2.78
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.06	)		(0.42	)		(0.02	)		(0.22	)
Net Realized Gain		—			(0.24	)		—			(1.95	)		(1.76	)		(0.52	)
Paid-in-Capital		—			—			—			(0.29	)		—			—
Total Distributions		—			(0.24	)		(0.06	)		(2.66	)		(1.78	)		(0.74	)
Net Asset Value, End of Period	$	15.20		$	13.28		$	9.99		$	10.59		$	13.64		$	11.11
Total Return (3)		14.46	%(7)		35.38	%		(5.05	)%		(2.81	)%		39.68	%		30.62	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	296		$	233		$	259		$	226		$	269		$	111
Ratio of Expenses to Average Net Assets (9)		2.18	%(4)(8)		2.19	%(4)		2.19	%(4)		2.19	%(4)		2.13	%(4)(5)		2.10	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		(0.45	)%(4)(8)		(0.80	)%(4)		(0.26	)%(4)		2.85	%(4)		(1.05	)%(4)		1.66	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(8)		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%(6)
Portfolio Turnover Rate		40	%(7)		64	%		118	%		84	%		100	%		96	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.80	%(8)		3.81	%		4.55	%		4.08	%		4.62	%		5.08	%
Net Investment Income (Loss) to Average Net Assets		(1.07	)%(8)		(2.42	)%		(2.62	)%		0.96	%		(3.54	)%		(1.32	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Discovery Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December, 31 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	13.15		$	9.92		$	11.07
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.04	)		(0.10	)		(0.08	)
Net Realized and Unrealized Gain (Loss)		1.92			3.57			(0.95	)
Total from Investment Operations		1.88			3.47			(1.03	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.12	)
Net Realized Gain		—			(0.24	)		—
Total Distributions		—			(0.24	)		(0.12	)
Net Asset Value, End of Period	$	15.03		$	13.15		$	9.92
Total Return (4)		14.30	%(7)		35.03	%		(9.28	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,374		$	4,709		$	443
Ratio of Expenses to Average Net Assets (9)		2.42	%(5)(8)		2.43	%(5)		2.45	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(0.63	)%(5)(8)		(0.83	)%(5)		(1.21	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(8)		0.02	%		0.00	%(6)(8)
Portfolio Turnover Rate		40	%(7)		64	%		118	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.46	%(8)		3.53	%		5.66	%(8)
Net Investment Loss to Average Net Assets		(0.67	)%(8)		(1.93	)%		(4.42	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Discovery Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (4) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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,

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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	$	3,767	$	—	$	—	$	3,767
Automobiles		1,509		—		—		1,509
Biotechnology		2,676		—		—		2,676
Capital Markets		814		—		—		814
Chemicals		7,248		—		—		7,248
Commercial Services & Supplies		2,689		—		—		2,689
Energy Equipment & Services		1,298		—		—		1,298
Hotels, Restaurants & Leisure		5,128		—		—		5,128
Insurance		2,864		—		—		2,864
Internet Software & Services		3,744		—		24		3,768
Machinery		6,419		—		—		6,419
Marine		1,010		—		—		1,010
Media		11,084		—		—		11,084
Metals & Mining		1,636		—		—		1,636
Multi-Line Retail		2,364		—		—		2,364
Pharmaceuticals		8,186		—		—		8,186
Real Estate Management & Development		432		—		—		432
Specialty Retail		513		—		—		513
Tech Hardware, Storage & Peripherals		1,123		—		—		1,123
Textiles, Apparel & Luxury Goods		6,212		—		—		6,212
Transportation Infrastructure		2,490		—		—		2,490
Total Common Stocks		73,206		—		24		73,230

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	$	—	$	—		$	495	$	495
Convertible Preferred Stock		—		—			2		2
Call Options Purchased		582		—			—		582
Short-Term Investments
Investment Company		4,160		—			—		4,160
Repurchase Agreements		—		221			—		221
Total Short-Term Investments		4,160		221			—		4,381
Foreign Currency Forward Exchange Contracts		—		12			—		12
Total Assets		77,948		233			521		78,702
Liabilities:
Foreign Currency Forward Exchange Contracts		—		(72	)		—		(72	)
Total	$	77,948	$	161		$	521	$	78,630

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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 Stock (000)			Preferred Stocks (000)		Convertible Preferred Stock (000)
Beginning Balance	$	24		$	440	$	2
Purchases		—			—		—
Sales		—			—		—
Amortization of discount		—			—		—
Transfers in		—			—		—
Transfers out		—			—		—
Corporate actions		—			—		—
Change in unrealized appreciation (depreciation)		(—	@)		55		(—	@)
Realized gains (losses)		—			—		—
Ending Balance	$	24		$	495	$	2
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(—	@)	$	55	$	(—	@)

@  Value is less than $500.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Hotels, Restaurants & Leisure
Preferred Stock	$	51	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		2.2	x		5.7	x		2.5	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet & Direct Marketing Retail
Preferred Stocks	$	207	Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%		17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		9.7	x		15.5	x		9.7	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	135	Market Transaction Method	Pending Private Placement	$	88.11		$	88.11		$	88.11		Increase
				Proposed Secondary Transaction	$	61.68		$	61.68		$	61.68		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		17.5	%		19.5	%		18.5	%	Decrease
				Perpetual Growth Rate		3.5	%		4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.1	x		2.8	x		2.4	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet Software & Services
Common Stock	$	24	Market Transaction Method	Pending Transactions	$	8.15		$	9.05		$	8.60		Increase
Convertible Preferred Stock	$	2	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		2.8	x		7.6	x		5.5	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Software
Preferred Stocks	$	58	Market Transaction Method	Precedent Transaction	$	8.43		$	8.43		$	8.43		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		3.0	x		7.7	x		6.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	20	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		4.8	x		6.6	x		5.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	24	Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%		17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		7.5	x		10.1	x		8.3	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

from changes in the market prices of securities held at period end. Similarly, the Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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.

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Options Purchased	Investments, at Value (Options Purchased)	Equity Risk	$	582	(a)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts	Currency Risk		12
Total			$	594

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

	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	$	(72	)

The following table sets forth by primary risk exposure the Fund's change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	28
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Equity Risk	Investments (Options Purchased)	$	(67	)(b)
Currency Risk	Foreign Currency Forward Exchange Contracts		(177	)
	Total	$	(244	)

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

At June 30, 2017, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives(c)	Assets(d) (000)		Liabilities(d) (000)
Foreign Currency Forward Exchange Contracts	$	12	$	72

(c) Excludes exchange traded derivatives.

(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 Fund 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 Fund 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 Fund 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 Fund 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 Fund'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, 2017.

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	$	12	$	(12	)	$	—	$	0

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	2,257,000
Options Purchased:
Average monthly notional amount		49,000

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	885	(e)	$	—	$	(885	)(f)(g)	$	0

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

(f) The Fund received cash collateral of approximately $932,000, which was subsequently invested in a Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments.

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

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	932	$	—	$	—	$	—	$	932
Total Borrowings	$	932	$	—	$	—	$	—	$	932
Gross amount of recognized liabilities for securities lending transactions.									$	932

7.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

8.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.86% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $6,000 of advisory fees were waived and approximately $7,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

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 Company's Distributor of Fund the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to shares pursuant to a Distribution Agreement. The Company 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 Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $55,907,000 and $20,022,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $4,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	4,886	$	29,570	$	30,296	$	12	$	4,160

During the six months ended June 30, 2017, the Fund incurred less than $500 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	377	$	202	$	128	$	—

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, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	5	$	(4	)	$	(1	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	320	$	222

During the year ended December 31, 2016, the Fund had utilized capital loss carryforwards for U.S. federal income tax purposes of approximately $84,000.

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 40.1%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's management fee was lower than its peer group average, its total expense ratio was higher than its peer group average. After discussion, the Board concluded that the Fund's (i) performance was competitive with its peer group average; (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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGDSAN
1858567 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Franchise Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Franchise Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,164.40	$	1,020.03	$	5.15	$	4.81		0.96	%
Global Franchise Portfolio Class A		1,000.00		1,163.20		1,018.79		6.49		6.06		1.21
Global Franchise Portfolio Class L		1,000.00		1,160.50		1,016.41		9.05		8.45		1.69
Global Franchise Portfolio Class C		1,000.00		1,159.00		1,015.03		10.55		9.84		1.97
Global Franchise Portfolio Class IS		1,000.00		1,165.00		1,020.33		4.83		4.51		0.90

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Franchise Portfolio

	Shares		Value (000)
Common Stocks (97.7%)
France (9.0%)
L'Oreal SA		240,798	$	50,165
Pernod Ricard SA		248,718		33,308
				83,473
Germany (3.6%)
SAP SE		321,557		33,587
Italy (1.6%)
Davide Campari-Milano SpA		2,129,891		15,009
Netherlands (0.9%)
RELX N.V.		417,511		8,583
Switzerland (1.1%)
Nestle SA (Registered)		121,915		10,610
United Kingdom (26.7%)
British American Tobacco PLC		616,656		42,038
Experian PLC		865,886		17,762
Reckitt Benckiser Group PLC		818,080		82,939
RELX PLC		726,788		15,714
Unilever PLC		1,653,857		89,501
				247,954
United States (54.8%)
Accenture PLC, Class A		362,742		44,864
Altria Group, Inc.		552,344		41,133
Automatic Data Processing, Inc.		237,669		24,352
Coca-Cola Co.		584,617		26,220
International Flavors & Fragrances, Inc.		106,718		14,407
Intuit, Inc.		95,899		12,736
Microsoft Corp.		904,506		62,348
Moody's Corp.		78,188		9,514
NIKE, Inc., Class B		524,221		30,929
Philip Morris International, Inc.		511,578		60,085
Reynolds American, Inc.		618,328		40,216
Time Warner, Inc.		47,383		4,758
Twenty-First Century Fox, Inc., Class A		816,984		23,153
Twenty-First Century Fox, Inc., Class B		664,926		18,531
Visa, Inc., Class A		410,976		38,541
Walt Disney Co. (The)		265,120		28,169
Zoetis, Inc.		479,505		29,912
				509,868
Total Common Stocks (Cost $687,914)				909,084

	Shares		Value (000)
Short-Term Investment (2.4%)
Investment Company (2.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $21,919)		21,919,296	$	21,919
Total Investments (100.1%) (Cost $709,833) (a)				931,003
Liabilities in Excess of Other Assets (–0.1%)				(621	)
Net Assets (100.0%)			$	930,382

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $223,133,000 and the aggregate gross unrealized depreciation is approximately $1,963,000 resulting in net unrealized appreciation of approximately $221,170,000.

Portfolio Composition

Classification	Percentage of Total Investments
Tobacco		19.7	%
Other*		17.1
Personal Products		15.0
Software		11.7
Information Technology Services		11.6
Household Products		8.9
Media		8.0
Beverages		8.0
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, 2017 (unaudited)

Global Franchise Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $687,914)	$	909,084
Investment in Security of Affiliated Issuer, at Value (Cost $21,919)		21,919
Total Investments in Securities, at Value (Cost $709,833)		931,003
Receivable for Investments Sold		3,367
Receivable for Fund Shares Sold		2,146
Dividends Receivable		1,976
Tax Reclaim Receivable		562
Receivable from Affiliate		13
Other Assets		118
Total Assets		939,185
Liabilities:
Payable for Investments Purchased		6,534
Payable for Advisory Fees		1,716
Payable for Fund Shares Redeemed		267
Payable for Sub Transfer Agency Fees — Class I		51
Payable for Sub Transfer Agency Fees — Class A		8
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Sub Transfer Agency Fees — Class C		4
Payable for Shareholder Services Fees — Class A		24
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		33
Payable for Administration Fees		61
Payable for Professional Fees		37
Payable for Custodian Fees		28
Payable for Directors' Fees and Expenses		12
Payable for Transfer Agency Fees — Class I		4
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		1
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		17
Total Liabilities		8,803
Net Assets	$	930,382
Net Assets Consist Of:
Paid-in-Capital	$	690,069
Accumulated Undistributed Net Investment Income		5,774
Accumulated Net Realized Gain		13,351
Unrealized Appreciation (Depreciation) on:
Investments		221,170
Foreign Currency Translations		18
Net Assets	$	930,382

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Franchise Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	740,116
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,911,962
Net Asset Value, Offering and Redemption Price Per Share	$	23.94
CLASS A:
Net Assets	$	119,439
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,093,890
Net Asset Value, Redemption Price Per Share	$	23.45
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.30
Maximum Offering Price Per Share	$	24.75
CLASS L:
Net Assets	$	8,253
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		353,286
Net Asset Value, Offering and Redemption Price Per Share	$	23.36
CLASS C:
Net Assets	$	40,051
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,738,579
Net Asset Value, Offering and Redemption Price Per Share	$	23.04
CLASS IS:
Net Assets	$	22,523
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		940,677
Net Asset Value, Offering and Redemption Price Per Share	$	23.94

@  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, 2017 (unaudited)

Global Franchise Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $276 of Foreign Taxes Withheld)	$	10,072
Dividends from Security of Affiliated Issuer (Note G)		50
Total Investment Income		10,122
Expenses:
Advisory Fees (Note B)		3,277
Shareholder Services Fees — Class A (Note D)		143
Distribution and Shareholder Services Fees — Class L (Note D)		29
Distribution and Shareholder Services Fees — Class C (Note D)		170
Administration Fees (Note C)		336
Sub Transfer Agency Fees — Class I		209
Sub Transfer Agency Fees — Class A		34
Sub Transfer Agency Fees — Class L		1
Sub Transfer Agency Fees — Class C		10
Professional Fees		45
Registration Fees		41
Custodian Fees (Note F)		40
Transfer Agency Fees — Class I (Note E)		9
Transfer Agency Fees — Class A (Note E)		2
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		3
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Reporting Fees		14
Directors' Fees and Expenses		11
Pricing Fees		2
Other Expenses		11
Total Expenses		4,389
Rebate from Morgan Stanley Affiliate (Note G)		(15	)
Net Expenses		4,374
Net Investment Income		5,748
Realized Gain:
Investments Sold		16,074
Foreign Currency Transactions		20
Net Realized Gain		16,094
Change in Unrealized Appreciation (Depreciation):
Investments		104,403
Foreign Currency Translations		105
Net Change in Unrealized Appreciation (Depreciation)		104,508
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		120,602
Net Increase in Net Assets Resulting from Operations	$	126,350

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Franchise Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	5,748		$	9,545
Net Realized Gain		16,094			19,757
Net Change in Unrealized Appreciation (Depreciation)		104,508			8,577
Net Increase in Net Assets Resulting from Operations		126,350			37,879
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(7,868	)
Net Realized Gain		—			(18,038	)
Class A:
Net Investment Income		—			(1,154	)
Net Realized Gain		—			(3,160	)
Class L:
Net Investment Income		—			(37	)
Net Realized Gain		—			(234	)
Class C:
Net Investment Income		—			(198	)
Net Realized Gain		—			(898	)
Class IS:
Net Investment Income		—			(255	)
Net Realized Gain		—			(495	)
Total Distributions		—			(32,337	)
Capital Share Transactions:(1)
Class I:
Subscribed		95,526			202,282
Distributions Reinvested		—			24,953
Redeemed		(56,650	)		(137,931	)
Class A:
Subscribed		18,477			52,962
Distributions Reinvested		—			4,282
Redeemed		(20,563	)		(28,456	)
Class L:
Subscribed		178			348
Distributions Reinvested		—			271
Redeemed		(529	)		(2,167	)
Class C:
Subscribed		8,973			27,106
Distributions Reinvested		—			1,094
Redeemed		(3,458	)		(3,734	)
Class IS:
Subscribed		7			19,487
Distributions Reinvested		—			750
Redeemed		(8	)		(—	@)
Net Increase in Net Assets Resulting from Capital Share Transactions		41,953			161,247
Total Increase in Net Assets		168,303			166,789
Net Assets:
Beginning of Period		762,079			595,290
End of Period (Including Accumulated Undistributed Net Investment Income of $5,774 and $26)	$	930,382		$	762,079

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Franchise Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		4,193			9,702
Shares Issued on Distributions Reinvested		—			1,219
Shares Redeemed		(2,531	)		(6,525	)
Net Increase in Class I Shares Outstanding		1,662			4,396
Class A:
Shares Subscribed		830			2,566
Shares Issued on Distributions Reinvested		—			213
Shares Redeemed		(911	)		(1,378	)
Net Increase (Decrease) in Class A Shares Outstanding		(81	)		1,401
Class L:
Shares Subscribed		8			17
Shares Issued on Distributions Reinvested		—			13
Shares Redeemed		(25	)		(107	)
Net Decrease in Class L Shares Outstanding		(17	)		(77	)
Class C:
Shares Subscribed		405			1,330
Shares Issued on Distributions Reinvested		—			55
Shares Redeemed		(158	)		(185	)
Net Increase in Class C Shares Outstanding		247			1,200
Class IS:
Shares Subscribed		—	@@		903
Shares Issued on Distributions Reinvested		—			37
Shares Redeemed		(—	@@)		(—	@@)
Net Increase (Decrease) in Class IS Shares Outstanding		(—	@@)		940

@  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, 2017

Financial Highlights

Global Franchise Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	20.56		$	20.33		$	20.27		$	20.77		$	18.13		$	16.24
Income from Investment Operations:
Net Investment Income (2)		0.16			0.30			0.31			0.41			0.36			0.40
Net Realized and Unrealized Gain		3.22			0.84			1.02			0.57			3.17			2.11
Total from Investment Operations		3.38			1.14			1.33			0.98			3.53			2.51
Distributions from and/or in Excess of:
Net Investment Income		—			(0.28	)		(0.35	)		(0.37	)		(0.35	)		(0.32	)
Net Realized Gain		—			(0.63	)		(0.92	)		(1.11	)		(0.54	)		(0.30	)
Total Distributions		—			(0.91	)		(1.27	)		(1.48	)		(0.89	)		(0.62	)
Net Asset Value, End of Period	$	23.94		$	20.56		$	20.33		$	20.27		$	20.77		$	18.13
Total Return(3)		16.44	%(6)		5.64	%		6.50	%		4.82	%		19.71	%		15.38	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	740,116		$	601,340		$	505,321		$	515,012		$	570,261		$	404,762
Ratio of Expenses to Average Net Assets (8)		0.96	%(4)(7)		0.97	%(4)		0.98	%(4)		0.97	%(4)		0.95	%(4)		0.98	%(4)
Ratio of Net Investment Income to Average Net Assets (8)		1.44	%(4)(7)		1.40	%(4)		1.46	%(4)		1.94	%(4)		1.79	%(4)		2.21	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.01	%
Portfolio Turnover Rate		14	%(6)		30	%		37	%		33	%		24	%		34	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.98	%		0.99	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			1.39	%		1.45	%		N/A			N/A			N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Franchise Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	20.16		$	19.96		$	19.92		$	20.44		$	17.86		$	16.01
Income from Investment Operations:
Net Investment Income (2)		0.13			0.23			0.24			0.34			0.28			0.35
Net Realized and Unrealized Gain		3.16			0.83			1.02			0.55			3.14			2.09
Total from Investment Operations		3.29			1.06			1.26			0.89			3.42			2.44
Distributions from and/or in Excess of:
Net Investment Income		—			(0.23	)		(0.30	)		(0.30	)		(0.30	)		(0.29	)
Net Realized Gain		—			(0.63	)		(0.92	)		(1.11	)		(0.54	)		(0.30	)
Total Distributions		—			(0.86	)		(1.22	)		(1.41	)		(0.84	)		(0.59	)
Net Asset Value, End of Period	$	23.45		$	20.16		$	19.96		$	19.92		$	20.44		$	17.86
Total Return (3)		16.32	%(7)		5.36	%		6.25	%		4.45	%		19.42	%		15.14	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	119,439		$	104,306		$	75,297		$	64,515		$	83,135		$	35,901
Ratio of Expenses to Average Net Assets (9)		1.21	%(4)(8)		1.22	%(4)		1.25	%(4)		1.27	%(4)		1.20	%(4)(5)		1.23	%(4)
Ratio of Net Investment Income to Average Net Assets (9)		1.22	%(4)(8)		1.13	%(4)		1.15	%(4)		1.64	%(4)		1.42	%(4)		1.99	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.01	%
Portfolio Turnover Rate		14	%(7)		30	%		37	%		33	%		24	%		34	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.23	%		1.25	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			1.12	%		1.15	%		N/A			N/A			N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Franchise Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from April 27, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	20.13		$	19.91		$	19.87		$	20.39		$	17.83		$	18.13
Income from Investment Operations:
Net Investment Income (3)		0.08			0.13			0.15			0.25			0.20			0.10
Net Realized and Unrealized Gain		3.15			0.82			1.00			0.55			3.11			0.16
Total from Investment Operations		3.23			0.95			1.15			0.80			3.31			0.26
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.19	)		(0.21	)		(0.21	)		(0.26	)
Net Realized Gain		—			(0.63	)		(0.92	)		(1.11	)		(0.54	)		(0.30	)
Total Distributions		—			(0.73	)		(1.11	)		(1.32	)		(0.75	)		(0.56	)
Net Asset Value, End of Period	$	23.36		$	20.13		$	19.91		$	19.87		$	20.39		$	17.83
Total Return (4)		16.05	%(8)		4.82	%		5.72	%		4.00	%		18.78	%		1.36	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,253		$	7,449		$	8,898		$	9,315		$	9,112		$	4,525
Ratio of Expenses to Average Net Assets (10)		1.69	%(5)(9)		1.71	%(5)		1.72	%(5)		1.72	%(5)		1.70	%(5)(6)		1.73	%(5)(9)
Ratio of Net Investment Income to Average Net Assets (10)		0.69	%(5)(9)		0.65	%(5)		0.72	%(5)		1.19	%(5)		1.03	%(5)		0.84	%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.01	%(9)
Portfolio Turnover Rate		14	%(8)		30	%		37	%		33	%		24	%		34	%(8)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.72	%		1.73	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			0.64	%		0.71	%		N/A			N/A			N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Franchise Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from September 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	19.88		$	19.75		$	19.79
Income from Investment Operations:
Net Investment Income (3)		0.05			0.06			0.01
Net Realized and Unrealized Gain		3.11			0.84			1.02
Total from Investment Operations		3.16			0.90			1.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)		(0.28	)
Net Realized Gain		—			(0.63	)		(0.79	)
Total Distributions		—			(0.77	)		(1.07	)
Net Asset Value, End of Period	$	23.04		$	19.88		$	19.75
Total Return (4)		15.90	%(7)		4.58	%		5.11	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	40,051		$	29,650		$	5,765
Ratio of Expenses to Average Net Assets (9)		1.97	%(5)(8)		1.99	%(5)		2.03	%(5)(8)
Ratio of Net Investment Income to Average Net Assets (9)		0.45	%(5)(8)		0.29	%(5)		0.11	%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.00	%(6)		0.00	%(6)(8)
Portfolio Turnover Rate		14	%(7)		30	%		37	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		N/A			2.00	%		N/A
Net Investment Income to Average Net Assets		N/A			0.28	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Franchise Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from May 29, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	20.55		$	20.33		$	21.49
Income from Investment Operations:
Net Investment Income (3)		0.17			0.21			0.12
Net Realized and Unrealized Gain		3.22			0.93			0.00	(4)
Total from Investment Operations		3.39			1.14			0.12
Distributions from and/or in Excess of:
Net Investment Income		—			(0.29	)		(0.36	)
Net Realized Gain		—			(0.63	)		(0.92	)
Total Distributions		—			(0.92	)		(1.28	)
Net Asset Value, End of Period	$	23.94		$	20.55		$	20.33
Total Return (5)		16.50	%(8)		5.70	%		0.45	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	22,523		$	19,334		$	9
Ratio of Expenses to Average Net Assets (10)		0.90	%(6)(9)		0.92	%(6)		0.94	%(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		1.50	%(6)(9)		0.99	%(6)		0.95	%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		14	%(8)		30	%		37	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.94	%		16.54	%(9)
Net Investment Income (Loss) to Average Net Assets		N/A			0.97	%		(14.65	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Franchise Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	74,537	$	—	$	—	$	74,537
Capital Markets		9,514		—		—		9,514
Chemicals		14,407		—		—		14,407
Food Products		10,610		—		—		10,610
Household Products		82,939		—		—		82,939
Information Technology Services		107,757		—		—		107,757
Media		74,611		—		—		74,611
Personal Products		139,666		—		—		139,666
Pharmaceuticals		29,912		—		—		29,912
Professional Services		42,059		—		—		42,059
Software		108,671		—		—		108,671
Textiles, Apparel & Luxury Goods		30,929		—		—		30,929
Tobacco		183,472		—		—		183,472
Total Common Stocks		909,084		—		—		909,084
Short-Term Investment
Investment Company		21,919		—		—		21,919
Total Assets	$	931,003	$	—	$	—	$	931,003

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.78% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Sub-Advisers and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $152,702,000 and $112,027,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $15,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	14,913	$	87,865	$	80,859	$	50	$	21,919

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	9,564	$	22,773	$	9,168	$	24,405

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 dividend redesignation, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)			Distributions in Excess of Net Realized Gain (000)		Paid-in- Capital (000)
$	(214	)	$	214	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	37	$	1,156

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 30.3%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were higher than but close to its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGFSAN
1858595 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Infrastructure Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Infrastructure Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,088.40	$	1,020.58	$	4.40	$	4.26		0.85	%
Global Infrastructure Portfolio Class A		1,000.00		1,087.20		1,019.34		5.69		5.51		1.10
Global Infrastructure Portfolio Class L		1,000.00		1,083.90		1,016.51		8.63		8.35		1.67
Global Infrastructure Portfolio Class C		1,000.00		1,082.50		1,015.08		10.12		9.79		1.96
Global Infrastructure Portfolio Class IS		1,000.00		1,088.40		1,020.68		4.30		4.16		0.83

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Infrastructure Portfolio

	Shares		Value (000)
Common Stocks (92.9%)
Australia (8.6%)
APA Group		826,052	$	5,822
Macquarie Atlas Roads Group		1,167,874		5,036
Spark Infrastructure Group		2,915,690		5,871
Sydney Airport		1,647,513		8,978
Transurban Group		943,850		8,597
				34,304
Canada (11.7%)
Canadian Pacific Railway Ltd.		17,050		2,743
Enbridge, Inc. (a)		436,375		17,384
Fortis, Inc.		23,500		826
Inter Pipeline Ltd.		137,078		2,685
Pembina Pipeline Corp.		199,871		6,620
TransCanada Corp.		339,379		16,178
				46,436
China (5.5%)
ENN Energy Holdings Ltd. (b)		109,000		657
Guangdong Investment Ltd. (b)		5,124,000		7,062
Hopewell Highway Infrastructure Ltd. (b)		24,608,500		14,152
				21,871
France (6.3%)
Aeroports de Paris		17,170		2,771
Eutelsat Communications SA		44,621		1,140
Groupe Eurotunnel SE (a)		480,950		5,129
SES SA		141,901		3,326
Vinci SA		146,590		12,512
				24,878
Germany (0.3%)
Fraport AG Frankfurt Airport Services Worldwide		14,440		1,275
India (0.8%)
Azure Power Global Ltd. (c)		194,720		3,267
Italy (3.7%)
Atlantia SpA		262,972		7,401
Infrastrutture Wireless Italiane SpA (d)		416,340		2,365
Italgas SpA		478,478		2,417
Terna Rete Elettrica Nazionale SpA		501,880		2,709
				14,892
Japan (0.9%)
East Japan Railway Co.		39,000		3,726
Mexico (0.6%)
Promotora y Operadora de Infraestructura SAB de CV		213,418		2,549
Spain (13.0%)
Abertis Infraestructuras SA		453,709		8,405
Atlantica Yield PLC		820,069		17,517
EDP Renovaveis SA		144,390		1,148
Ferrovial SA		304,714		6,764
Red Electrica Corp., SA (a)		56,680		1,185
Saeta Yield SA		1,495,788		16,915
				51,934

	Shares		Value (000)
Switzerland (1.1%)
Flughafen Zurich AG (Registered)		17,275	$	4,241
United Kingdom (9.0%)
John Laing Group PLC (d)		3,332,220		13,150
National Grid PLC		1,006,369		12,476
Pennon Group PLC		276,311		2,971
Severn Trent PLC		110,820		3,149
United Utilities Group PLC		353,002		3,989
				35,735
United States (31.4%)
American Tower Corp. REIT		150,490		19,913
American Water Works Co., Inc.		51,820		4,039
Atmos Energy Corp.		59,102		4,903
Crown Castle International Corp. REIT		143,042		14,330
Edison International		115,360		9,020
Enbridge Energy Management LLC (c)		109,211		1,683
Eversource Energy		105,491		6,404
Kansas City Southern		2,000		209
Kinder Morgan, Inc.		530,500		10,164
NiSource, Inc.		76,718		1,946
Norfolk Southern Corp.		33,624		4,092
Pattern Energy Group, Inc.		130,159		3,103
PG&E Corp.		215,086		14,275
SBA Communications Corp. REIT (c)		42,630		5,751
Sempra Energy		105,086		11,849
Union Pacific Corp.		37,590		4,094
Williams Cos., Inc. (The)		307,733		9,317
				125,092
Total Common Stocks (Cost $299,475)				370,200
Short-Term Investments (8.2%)
Securities held as Collateral on Loaned Securities (0.2%)
Investment Company (0.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		753,766		754
	Face Amount (000)
Repurchase Agreements (0.1%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $91; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $93)	$	91		91
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $84; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $85)		84		84

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Infrastructure Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (cont'd)
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $60; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $61)	$	60	$	60
				235
Total Securities held as Collateral on Loaned Securities (Cost $989)				989
	Shares
Investment Company (8.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $31,932)		31,931,831		31,932
Total Short-Term Investments (Cost $32,921)				32,921
Total Investments (101.1%) (Cost $332,396) Including $11,298 of Securities Loaned (e)				403,121
Liabilities in Excess of Other Assets (–1.1%)				(4,423	)
Net Assets (100.0%)			$	398,698

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  All or a portion of this security was on loan at June 30, 2017.

(b)  Security trades on the Hong Kong exchange.

(c)  Non-income producing security.

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

(e)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $72,995,000 and the aggregate gross unrealized depreciation is approximately $2,270,000, resulting in net unrealized appreciation of approximately $70,725,000.

REIT  Real Estate Investment Trust.

Portfolio Composition*

Classification	Percentage of Total Investments
Oil & Gas Storage & Transportation		22.8	%
Electricity Transmission & Distribution		13.1
Toll Roads		12.8
Communications		11.6
PPA Contracted Renewables		10.4
Diversified		8.1
Other**		8.0
Short-Term Investment		7.9
Water		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, 2017.

**  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, 2017 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $299,710)	$	370,435
Investment in Securities of Affiliated Issuer, at Value (Cost $32,686)		32,686
Total Investments in Securities, at Value (Cost $332,396)		403,121
Foreign Currency, at Value (Cost $1,428)		1,429
Dividends Receivable		1,626
Receivable for Fund Shares Sold		230
Receivable for Investments Sold		131
Tax Reclaim Receivable		83
Receivable from Affiliate		24
Other Assets		81
Total Assets		406,725
Liabilities:
Payable for Investments Purchased		5,844
Collateral on Securities Loaned, at Value		989
Payable for Advisory Fees		593
Payable for Fund Shares Redeemed		295
Payable for Sub Transfer Agency Fees — Class A		88
Payable for Sub Transfer Agency Fees — Class L		3
Payable for Shareholder Services Fees — Class A		61
Payable for Distribution and Shareholder Services Fees — Class L		4
Payable for Distribution and Shareholder Services Fees — Class C		3
Payable for Directors' Fees and Expenses		50
Payable for Administration Fees		26
Payable for Custodian Fees		23
Payable for Professional Fees		21
Payable for Transfer Agency Fees — Class A		12
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		15
Total Liabilities		8,027
Net Assets	$	398,698
Net Assets Consist Of:
Paid-in-Capital	$	319,711
Accumulated Undistributed Net Investment Income		6,652
Accumulated Net Realized Gain		1,597
Unrealized Appreciation (Depreciation) on:
Investments		70,725
Foreign Currency Translations		13
Net Assets	$	398,698

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	82,848
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,428,854
Net Asset Value, Offering and Redemption Price Per Share	$	15.26
CLASS A:
Net Assets	$	298,634
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,638,108
Net Asset Value, Redemption Price Per Share	$	15.21
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.84
Maximum Offering Price Per Share	$	16.05
CLASS L:
Net Assets	$	5,755
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		380,765
Net Asset Value, Offering and Redemption Price Per Share	$	15.11
CLASS C:
Net Assets	$	3,168
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		211,953
Net Asset Value, Offering and Redemption Price Per Share	$	14.95
CLASS IS:
Net Assets	$	8,293
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		543,536
Net Asset Value, Offering and Redemption Price Per Share	$	15.26
(1) Including: Securities on Loan, at Value:	$	11,298

@  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, 2017 (unaudited)

Global Infrastructure Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $466 of Foreign Taxes Withheld)	$	7,996
Dividends from Security of Affiliated Issuer (Note G)		78
Income from Securities Loaned — Net		57
Total Investment Income		8,131
Expenses:
Advisory Fees (Note B)		1,574
Shareholder Services Fees — Class A (Note D)		355
Distribution and Shareholder Services Fees — Class L (Note D)		21
Distribution and Shareholder Services Fees — Class C (Note D)		11
Administration Fees (Note C)		148
Sub Transfer Agency Fees — Class I		8
Sub Transfer Agency Fees — Class A		112
Sub Transfer Agency Fees — Class L		3
Sub Transfer Agency Fees — Class C		—	@
Professional Fees		44
Custodian Fees (Note F)		40
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		32
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		25
Shareholder Reporting Fees		20
Directors' Fees and Expenses		4
Pricing Fees		3
Other Expenses		10
Total Expenses		2,415
Waiver of Advisory Fees (Note B)		(312	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(116	)
Reimbursement of Class Specific Expenses — Class L (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)		(22	)
Net Expenses		1,962
Net Investment Income		6,169
Realized Gain:
Investments Sold		6,157
Foreign Currency Transactions		56
Net Realized Gain		6,213
Change in Unrealized Appreciation (Depreciation):
Investments		19,133
Foreign Currency Translations		18
Net Change in Unrealized Appreciation (Depreciation)		19,151
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		25,364
Net Increase in Net Assets Resulting from Operations	$	31,533

@  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, 2017

Global Infrastructure Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	6,169		$	8,659
Net Realized Gain		6,213			8,648
Net Change in Unrealized Appreciation (Depreciation)		19,151			29,570
Net Increase in Net Assets Resulting from Operations		31,533			46,877
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(1,321	)
Net Realized Gain		—			(551	)
Class A:
Net Investment Income		—			(6,424	)
Net Realized Gain		—			(2,972	)
Class L:
Net Investment Income		—			(96	)
Net Realized Gain		—			(60	)
Class C:
Net Investment Income		—			(15	)
Net Realized Gain		—			(8	)
Class IS:
Net Investment Income		—			(144	)
Net Realized Gain		—			(60	)
Total Distributions		—			(11,651	)
Capital Share Transactions:(1)
Class I:
Subscribed		23,681			25,459
Distributions Reinvested		—			1,850
Redeemed		(5,896	)		(21,028	)
Class A:
Subscribed		18,289			14,084
Distributions Reinvested		—			9,192
Redeemed		(19,100	)		(41,210	)
Class L:
Subscribed		33			28
Distributions Reinvested		—			151
Redeemed		(267	)		(802	)
Class C:
Subscribed		2,282			493
Distributions Reinvested		—			23
Redeemed		(95	)		(261	)
Class IS:
Subscribed		2,876			4,333
Distributions Reinvested		—			203
Redeemed		(1,152	)		(1,019	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		20,651			(8,504	)
Total Increase in Net Assets		52,184			26,722
Net Assets:
Beginning of Period		346,514			319,792
End of Period (Including Accumulated Undistributed Net Investment Income of $6,652 and $483)	$	398,698		$	346,514

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Infrastructure Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,641			1,792
Shares Issued on Distributions Reinvested		—			132
Shares Redeemed		(405	)		(1,534	)
Net Increase in Class I Shares Outstanding		1,236			390
Class A:
Shares Subscribed		1,263			993
Shares Issued on Distributions Reinvested		—			659
Shares Redeemed		(1,319	)		(2,953	)
Net Decrease in Class A Shares Outstanding		(56	)		(1,301	)
Class L:
Shares Subscribed		3			2
Shares Issued on Distributions Reinvested		—			11
Shares Redeemed		(19	)		(58	)
Net Decrease in Class L Shares Outstanding		(16	)		(45	)
Class C:
Shares Subscribed		162			35
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(7	)		(22	)
Net Increase in Class C Shares Outstanding		155			15
Class IS:
Shares Subscribed		199			307
Shares Issued on Distributions Reinvested		—			15
Shares Redeemed		(78	)		(72	)
Net Increase in Class IS Shares Outstanding		121			250

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Infrastructure Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.02		$	12.59		$	15.41		$	14.26		$	12.91		$	11.50
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.27			0.40			0.40			0.28			0.26			0.27
Net Realized and Unrealized Gain (Loss)		0.97			1.55			(2.54	)		1.87			2.00			1.82
Total from Investment Operations		1.24			1.95			(2.14	)		2.15			2.26			2.09
Distributions from and/or in Excess of:
Net Investment Income		—			(0.37	)		(0.35	)		(0.22	)		(0.25	)		(0.26	)
Net Realized Gain		—			(0.15	)		(0.32	)		(0.78	)		(0.66	)		(0.42	)
Paid-in-Capital		—			—			(0.01	)		—			—			—
Total Distributions		—			(0.52	)		(0.68	)		(1.00	)		(0.91	)		(0.68	)
Net Asset Value, End of Period	$	15.26		$	14.02		$	12.59		$	15.41		$	14.26		$	12.91
Total Return (3)		8.84	%(7)		15.55	%		(13.90	)%		15.38	%		17.91	%		18.21	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	82,848		$	58,794		$	47,878		$	40,477		$	26,428		$	15,707
Ratio of Expenses to Average Net Assets (9)		0.85	%(4)(8)		0.85	%(4)		0.88	%(4)(5)		1.08	%(4)		1.12	%(4)		1.15	%(4)
Ratio of Net Investment Income to Average Net Assets (9)		3.68	%(4)(8)		2.85	%(4)		2.70	%(4)		1.82	%(4)		1.87	%(4)		2.18	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(8)		0.01	%		0.00	%(6)		0.00	%(6)		0.01	%		0.00	%(6)
Portfolio Turnover Rate		25	%(7)		48	%		48	%		40	%		30	%		33	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.04	%(8)		1.04	%		1.10	%		1.42	%		2.04	%		2.39	%
Net Investment Income to Average Net Assets		3.49	%(8)		2.66	%		2.48	%		1.48	%		0.95	%		0.94	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Infrastructure Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.99		$	12.56		$	15.38		$	14.25		$	12.90		$	11.50
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.23			0.36			0.39			0.24			0.26			0.24
Net Realized and Unrealized Gain (Loss)		0.99			1.55			(2.56	)		1.86			1.97			1.80
Total from Investment Operations		1.22			1.91			(2.17	)		2.10			2.23			2.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.33	)		(0.32	)		(0.19	)		(0.22	)		(0.22	)
Net Realized Gain		—			(0.15	)		(0.32	)		(0.78	)		(0.66	)		(0.42	)
Paid-in-Capital		—			—			(0.01	)		—			—			—
Total Distributions		—			(0.48	)		(0.65	)		(0.97	)		(0.88	)		(0.64	)
Net Asset Value, End of Period	$	15.21		$	13.99		$	12.56		$	15.38		$	14.25		$	12.90
Total Return (3)		8.72	%(8)		15.29	%		(14.08	)%		14.94	%		17.69	%		17.85	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	298,634		$	275,481		$	263,702		$	20,815		$	3,706		$	129
Ratio of Expenses to Average Net Assets (10)		1.10	%(4)(9)		1.10	%(4)		1.12	%(4)(6)		1.42	%(4)		1.37	%(4)(5)		1.40	%(4)
Ratio of Net Investment Income to Average Net Assets (10)		3.25	%(4)(9)		2.60	%(4)		2.67	%(4)		1.53	%(4)		1.81	%(4)		1.93	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.00	%(7)		0.00	%(7)		0.01	%		0.00	%(7)
Portfolio Turnover Rate		25	%(8)		48	%		48	%		40	%		30	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.36	%(9)		1.37	%		1.35	%		1.76	%		2.43	%		2.64	%
Net Investment Income to Average Net Assets		2.99	%(9)		2.33	%		2.44	%		1.19	%		0.75	%		0.69	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Infrastructure Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.94		$	12.52		$	15.34		$	14.22		$	12.90		$	11.50
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.19			0.28			0.30			0.14			0.16			0.18
Net Realized and Unrealized Gain (Loss)		0.98			1.54			(2.55	)		1.87			1.98			1.80
Total from Investment Operations		1.17			1.82			(2.25	)		2.01			2.14			1.98
Distributions from and/or in Excess of:
Net Investment Income		—			(0.25	)		(0.24	)		(0.11	)		(0.16	)		(0.16	)
Net Realized Gain		—			(0.15	)		(0.32	)		(0.78	)		(0.66	)		(0.42	)
Paid-in-Capital		—			—			(0.01	)		—			—			—
Total Distributions		—			(0.40	)		(0.57	)		(0.89	)		(0.82	)		(0.58	)
Net Asset Value, End of Period	$	15.11		$	13.94		$	12.52		$	15.34		$	14.22		$	12.90
Total Return (3)		8.39	%(8)		14.57	%		(14.64	)%		14.35	%		16.98	%		17.31	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,755		$	5,534		$	5,529		$	1,115		$	573		$	129
Ratio of Expenses to Average Net Assets (10)		1.67	%(4)(9)		1.67	%(4)		1.69	%(4)(6)		2.00	%(4)		1.93	%(4)(5)		1.90	%(4)
Ratio of Net Investment Income to Average Net Assets (10)		2.66	%(4)(9)		2.03	%(4)		2.06	%(4)		0.91	%(4)		1.16	%(4)		1.43	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		25	%(8)		48	%		48	%		40	%		30	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.93	%(9)		1.95	%		1.95	%		2.41	%		2.86	%		3.14	%
Net Investment Income to Average Net Assets		2.40	%(9)		1.75	%		1.80	%		0.50	%		0.23	%		0.19	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Infrastructure Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	13.81		$	12.47		$	15.87
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.22			0.26			0.17
Net Realized and Unrealized Gain (Loss)		0.92			1.52			(2.97	)
Total from Investment Operations		1.14			1.78			(2.80	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.29	)		(0.27	)
Net Realized Gain		—			(0.15	)		(0.32	)
Paid-in-Capital		—			—			(0.01	)
Total Distributions		—			(0.44	)		(0.60	)
Net Asset Value, End of Period	$	14.95		$	13.81		$	12.47
Total Return (4)		8.25	%(7)		14.35	%		(17.62	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,168		$	784		$	516
Ratio of Expenses to Average Net Assets (9)		1.96	%(5)(8)		1.96	%(5)		1.97	%(5)(8)
Ratio of Net Investment Income to Average Net Assets (9)		3.01	%(5)(8)		1.90	%(5)		1.81	%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.01	%		0.00	%(6)(8)
Portfolio Turnover Rate		25	%(7)		48	%		48	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.14	%(8)		2.69	%		2.34	%(8)
Net Investment Income to Average Net Assets		2.83	%(8)		1.17	%		1.44	%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Infrastructure Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	14.02		$	12.58		$	15.41		$	14.26		$	13.73
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.27			0.43			0.53			0.28			0.09
Net Realized and Unrealized Gain (Loss)		0.97			1.53			(2.68	)		1.87			1.20
Total from Investment Operations		1.24			1.96			(2.15	)		2.15			1.29
Distributions from and/or in Excess of:
Net Investment Income		—			(0.37	)		(0.35	)		(0.22	)		(0.25	)
Net Realized Gain		—			(0.15	)		(0.32	)		(0.78	)		(0.51	)
Paid-in-Capital		—			—			(0.01	)		—			—
Total Distributions		—			(0.52	)		(0.68	)		(1.00	)		(0.76	)
Net Asset Value, End of Period	$	15.26		$	14.02		$	12.58		$	15.41		$	14.26
Total Return (4)		8.84	%(9)		15.66	%		(13.96	)%		15.38	%		9.60	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,293		$	5,921		$	2,167		$	11		$	10
Ratio of Expenses to Average Net Assets (11)		0.83	%(5)(10)		0.83	%(5)		0.84	%(5)(7)		1.08	%(5)		1.07	%(5)(6)(10)
Ratio of Net Investment Income to Average Net Assets (11)		3.67	%(5)(10)		3.02	%(5)		3.91	%(5)		1.79	%(5)		2.13	%(5)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.00	%(8)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		25	%(9)		48	%		48	%		40	%		30	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.04	%(10)		1.08	%		1.41	%		18.56	%		7.27	%(10)
Net Investment Income (Loss) to Average Net Assets		3.46	%(10)		2.77	%		3.33	%		(15.69	)%		(4.07	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Infrastructure Portfolio. The Fund seeks to provide both capital appreciation and income.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Airports	$	17,265	$	—	$	—	$	17,265
Communications		46,825		—		—		46,825
Diversified		32,426		—		—		32,426
Electricity Transmission & Distribution		52,766		—		—		52,766
Oil & Gas Storage & Transportation		91,625		—		—		91,625
PPA Contracted Renewables		41,950		—		—		41,950
Railroads		14,864		—		—		14,864
Toll Roads		51,269		—		—		51,269
Water		21,210		—		—		21,210
Total Common Stocks		370,200		—		—		370,200
Short-Term Investments
Investment Companies		32,686		—		—		32,686
Repurchase Agreements		—		235		—		235
Total Short-Term Investments		32,686		235		—		32,921
Total Assets	$	402,886	$	235	$	—	$	403,121

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	11,298	(a)	$	—	$	(11,298	)(b)(c)	$	0

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

(b) The Fund received cash collateral of approximately $989,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $10,927,000 in the form of U.S. Government obligations, which the Fund 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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, 2017.

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	$	989	$	—	$	—	$	—	$	989
Total Borrowings	$	989	$	—	$	—	$	—	$	989
Gross amount of recognized liabilities for securities lending transactions									$	989

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 Fund 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 Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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. Effective July 1, 2017, the Adviser has agreed to increase its advisory fee and/or reimburse the Fund so that total annual portfolio operating expenses will not exceed 0.97% for Class I shares, 1.21% for Class A shares, 1.78% for Class L shares, 2.07% 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 Fund'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, 2017, approximately $312,000 of advisory fees were waived and approximately $119,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $103,307,000 and $87,761,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $22,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	29,957	$	66,319	$	63,590	$	78	$	32,686

During the six months ended June 30, 2017, the Fund 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 Fund.

The Fund 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

provisions of the Rule. For the six months ended June 30, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)
$	8,000	$	3,651	$	7,533	$	8,605	$	122

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 capital gain distributions from real estate investment trust, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	14	$	712	$	(726	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	552	$	2,613

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 51.5%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that while the Fund's 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 Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISGISAN
1859233 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Insight Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Insight Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,166.80	$	1,018.15	$	7.20	$	6.71		1.34	%
Global Insight Portfolio Class A		1,000.00		1,165.80		1,016.41		9.08		8.45		1.69
Global Insight Portfolio Class L		1,000.00		1,162.60		1,013.93		11.74		10.94		2.19
Global Insight Portfolio Class C		1,000.00		1,161.00		1,012.69		13.07		12.18		2.44

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Insight Portfolio

	Shares		Value (000)
Common Stocks (100.8%)
Brazil (6.0%)
JHSF Participacoes SA (a)		79,432	$	45
Ouro Fino Saude Animal Participacoes SA		19,245		183
Porto Seguro SA		42,559		393
				621
Canada (5.4%)
Agrium, Inc.		4,968		450
Dominion Diamond Corp.		8,070		102
				552
Denmark (8.5%)
Novo Nordisk A/S Series B		20,503		878
France (19.6%)
Christian Dior SE		3,823		1,093
Criteo SA ADR (a)		4,980		244
Edenred		18,233		476
JCDecaux SA		6,132		201
				2,014
Germany (4.2%)
ThyssenKrupp AG		10,589		301
Vapiano SE (a)(b)		4,902		128
				429
Hong Kong (0.8%)
L'Occitane International SA		36,750		84
Italy (2.0%)
Brunello Cucinelli SpA		3,366		89
Tamburi Investment Partners SpA		19,811		113
				202
New Zealand (0.7%)
Kathmandu Holdings Ltd.		51,561		77
Spain (0.3%)
Baron de Ley (a)		223		29
Switzerland (3.8%)
Nestle SA (Registered)		4,487		390
United Kingdom (14.0%)
BBA Aviation PLC		173,689		695
Clarkson PLC		4,642		153
IP Group PLC (a)		14,769		26
Just Eat PLC (a)		9,087		78
Whitbread PLC		9,373		484
				1,436
United States (35.5%)
Biogen, Inc. (a)		957		260
BWX Technologies, Inc.		4,121		201
Cars.com, Inc. (a)		835		22
Castlight Health, Inc., Class B (a)		2,770		12
Dril-Quip, Inc. (a)		3,974		194
Harley-Davidson, Inc.		10,601		573
Hewlett Packard Enterprise Co.		10,794		179
Mosaic Co. (The)		10,894		249
Potbelly Corp. (a)		5,068		58

	Shares		Value (000)
RenaissanceRe Holdings Ltd.		2,729	$	379
Terex Corp.		6,465		242
Time Warner, Inc.		4,980		500
United Technologies Corp.		3,193		390
Welbilt, Inc. (a)		20,496		386
				3,645
Total Investments (100.8%) (Cost $8,857) (c)				10,357
Liabilities in Excess of Other Assets (–0.8%)				(79	)
Net Assets (100.0%)			$	10,278

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,569,000 and the aggregate gross unrealized depreciation is approximately $69,000, resulting in net unrealized appreciation of approximately $1,500,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		26.9	%
Textiles, Apparel & Luxury Goods		11.4
Pharmaceuticals		10.2
Insurance		7.5
Media		6.8
Chemicals		6.7
Transportation Infrastructure		6.7
Hotels, Restaurants & Leisure		6.5
Machinery		6.1
Aerospace & Defense		5.7
Automobiles		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $8,857)	$	10,357
Foreign Currency, at Value (Cost $1)		1
Receivable for Investments Sold		51
Due from Adviser		18
Dividends Receivable		13
Tax Reclaim Receivable		6
Receivable from Affiliate		—	@
Other Assets		53
Total Assets		10,499
Liabilities:
Bank Overdraft		191
Payable for Professional Fees		29
Payable for Administration Fees		1
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
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		—	@
Total Liabilities		221
Net Assets	$	10,278
Net Assets Consist of:
Paid-in-Capital	$	8,051
Accumulated Undistributed Net Investment Income		27
Accumulated Net Realized Gain		700
Unrealized Appreciation (Depreciation) on:
Investments		1,500
Foreign Currency Translations		—	@
Net Assets	$	10,278

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	8,562
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		569,098
Net Asset Value, Offering and Redemption Price Per Share	$	15.04
CLASS A:
Net Assets	$	1,352
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		89,864
Net Asset Value, Redemption Price Per Share	$	15.05
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.83
Maximum Offering Price Per Share	$	15.88
CLASS L:
Net Assets	$	84
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,668
Net Asset Value, Offering and Redemption Price Per Share	$	14.80
CLASS C:
Net Assets	$	280
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,041
Net Asset Value, Offering and Redemption Price Per Share	$	14.71

@  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, 2017 (unaudited)

Global Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $10 of Foreign Taxes Withheld)	$	109
Dividends from Securities of Affiliated Issuer (Note G)		2
Income from Securities Loaned — Net		—	@
Total Investment Income		111
Expenses:
Advisory Fees (Note B)		52
Professional Fees		48
Registration Fees		21
Custodian Fees (Note F)		8
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
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
Directors' Fees and Expenses		2
Sub Transfer Agency Fees — Class I		1
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		6
Total Expenses		156
Waiver of Advisory Fees (Note B)		(52	)
Expenses Reimbursed by Adviser (Note B)		(27	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(2	)
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)		(1	)
Net Expenses		71
Net Investment Income		40
Realized Gain:
Investments Sold		736
Foreign Currency Transactions		1
Net Realized Gain		737
Change in Unrealized Appreciation (Depreciation):
Investments		829
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		829
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		1,566
Net Increase in Net Assets Resulting from Operations	$	1,606

@  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, 2017

Global Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	40		$	14
Net Realized Gain		737			88
Net Change in Unrealized Appreciation (Depreciation)		829			842
Net Increase in Net Assets Resulting from Operations		1,606			944
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(17	)
Net Realized Gain		—			(85	)
Class A:
Net Realized Gain		—			(6	)
Class L:
Net Realized Gain		—			(1	)
Class C:
Net Realized Gain		—			(1	)
Total Distributions		—			(110	)
Capital Share Transactions:(1)
Class I:
Subscribed		2,920			5,646
Distributions Reinvested		—			102
Redeemed		(3,462	)		(308	)
Class A:
Subscribed		949			958
Distributions Reinvested		—			6
Redeemed		(269	)		(901	)
Class L:
Subscribed		—			23
Distributions Reinvested		—			1
Redeemed		(—	@)		(48	)
Class C:
Subscribed		205			225
Distributions Reinvested		—			1
Redeemed		(55	)		(152	)
Net Increase in Net Assets Resulting from Capital Share Transactions		288			5,553
Total Increase in Net Assets		1,894			6,387
Net Assets:
Beginning of Period		8,384			1,997
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $27 and $(13), respectively)	$	10,278		$	8,384

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Insight Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		212			457
Shares Issued on Distributions Reinvested		—			8
Shares Redeemed		(238	)		(24	)
Net Increase (Decrease) in Class I Shares Outstanding		(26	)		441
Class A:
Shares Subscribed		67			85
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(19	)		(78	)
Net Increase in Class A Shares Outstanding		48			8
Class L:
Shares Subscribed		—			2
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(—	@@)		(5	)
Net Decrease in Class L Shares Outstanding		(—	@@)		(3	)
Class C:
Shares Subscribed		15			19
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(4	)		(13	)
Net Increase in Class C Shares Outstanding		11			6

@  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, 2017

Financial Highlights

Global Insight Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.89		$	10.07		$	11.55		$	13.42		$	11.99		$	10.07
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.06			0.06			0.07			0.20			0.30			0.31
Net Realized and Unrealized Gain (Loss)		2.09			2.94			(0.62	)		(0.56	)		3.32			2.53
Total from Investment Operations		2.15			3.00			(0.55	)		(0.36	)		3.62			2.84
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.18	)		(0.11	)		(0.45	)		(0.49	)
Net Realized Gain		—			(0.15	)		(0.75	)		(1.40	)		(1.74	)		(0.43	)
Total Distributions		—			(0.18	)		(0.93	)		(1.51	)		(2.19	)		(0.92	)
Net Asset Value, End of Period	$	15.04		$	12.89		$	10.07		$	11.55		$	13.42		$	11.99
Total Return (3)		16.68	%(6)		29.83	%		(5.02	)%		(2.65	)%		30.89	%		28.31	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,562		$	7,676		$	1,560		$	1,490		$	1,397		$	12
Ratio of Expenses to Average Net Assets (8)		1.34	%(4)(7)		1.34	%(4)		1.35	%(4)		1.35	%(4)		1.35	%(4)		1.35	%(4)
Ratio of Net Investment Income to Average Net Assets (8)		0.81	%(4)(7)		0.56	%(4)		0.58	%(4)		1.49	%(4)		2.17	%(4)		2.74	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
Portfolio Turnover Rate		48	%(6)		54	%		62	%		67	%		59	%		41	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.93	%(7)		7.58	%		10.84	%		10.82	%		14.22	%		16.10	%
Net Investment Loss to Average Net Assets		(0.78	)%(7)		(5.68	)%		(8.91	)%		(7.98	)%		(10.70	)%		(12.01	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Insight Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.91		$	10.10		$	11.58		$	13.45		$	11.99		$	10.07
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.04			(0.01	)		0.02			0.15			0.01			0.28
Net Realized and Unrealized Gain (Loss)		2.10			2.97			(0.61	)		(0.55	)		3.56			2.53
Total from Investment Operations		2.14			2.96			(0.59	)		(0.40	)		3.57			2.81
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.14	)		(0.07	)		(0.37	)		(0.46	)
Net Realized Gain		—			(0.15	)		(0.75	)		(1.40	)		(1.74	)		(0.43	)
Total Distributions		—			(0.15	)		(0.89	)		(1.47	)		(2.11	)		(0.89	)
Net Asset Value, End of Period	$	15.05		$	12.91		$	10.10		$	11.58		$	13.45		$	11.99
Total Return (3)		16.58	%(7)		29.34	%		(5.32	)%		(2.97	)%		30.52	%		28.04	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,352		$	535		$	335		$	199		$	189		$	1,151
Ratio of Expenses to Average Net Assets (9)		1.69	%(4)(8)		1.69	%(4)		1.70	%(4)		1.70	%(4)		1.60	%(4)(5)		1.60	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		0.56	%(4)(8)		(0.05	)%(4)		0.17	%(4)		1.14	%(4)		0.07	%(4)		2.49	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.01	%		0.00	%(6)		0.00	%(6)		0.01	%		0.00	%(6)
Portfolio Turnover Rate		48	%(7)		54	%		62	%		67	%		59	%		41	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.39	%(8)		8.39	%		11.74	%		12.14	%		13.62	%		16.35	%
Net Investment Loss to Average Net Assets		(1.14	)%(8)		(6.75	)%		(9.87	)%		(9.30	)%		(11.95	)%		(12.26	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Insight Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	12.73		$	10.01		$	11.49		$	13.39		$	11.98		$	10.07
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.01	)		(0.05	)		(0.03	)		0.08			0.12			0.23
Net Realized and Unrealized Gain (Loss)		2.08			2.92			(0.61	)		(0.54	)		3.37			2.51
Total from Investment Operations		2.07			2.87			(0.64	)		(0.46	)		3.49			2.74
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.09	)		(0.04	)		(0.34	)		(0.40	)
Net Realized Gain		—			(0.15	)		(0.75	)		(1.40	)		(1.74	)		(0.43	)
Total Distributions		—			(0.15	)		(0.84	)		(1.44	)		(2.08	)		(0.83	)
Net Asset Value, End of Period	$	14.80		$	12.73		$	10.01		$	11.49		$	13.39		$	11.98
Total Return (3)		16.26	%(7)		28.70	%		(5.87	)%		(3.43	)%		29.82	%		27.36	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	84		$	72		$	86		$	26		$	13		$	12
Ratio of Expenses to Average Net Assets (9)		2.19	%(4)(8)		2.19	%(4)		2.20	%(4)		2.20	%(4)		2.13	%(4)(5)		2.10	%(4)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		(0.14	)%(4)(8)		(0.43	)%(4)		(0.26	)%(4)		0.64	%(4)		0.93	%(4)		1.99	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.01	%		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		48	%(7)		54	%		62	%		67	%		59	%		41	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.87	%(8)		11.57	%		17.24	%		20.95	%		17.73	%		16.85	%
Net Investment Loss to Average Net Assets		(3.82	)%(8)		(9.81	)%		(15.30	)%		(18.11	)%		(14.67	)%		(12.76	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	12.67		$	9.99		$	12.10
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.01	)		(0.11	)		(0.07	)
Net Realized and Unrealized Gain (Loss)		2.05			2.94			(1.19	)
Total from Investment Operations		2.04			2.83			(1.26	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.10	)
Net Realized Gain		—			(0.15	)		(0.75	)
Total Distributions		—			(0.15	)		(0.85	)
Net Asset Value, End of Period	$	14.71		$	12.67		$	9.99
Total Return (4)		16.10	%(7)		28.49	%		(10.67	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	280		$	101		$	16
Ratio of Expenses to Average Net Assets (9)		2.44	%(5)(8)		2.44	%(5)		2.45	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(0.21	)%(5)(8)		(0.89	)%(5)		(0.94	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.01	%		0.00	%(6)(8)
Portfolio Turnover Rate		48	%(7)		54	%		62	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.93	%(8)		12.17	%		23.24	%(8)
Net Investment Loss to Average Net Assets		(2.70	)%(8)		(10.62	)%		(21.73	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Insight Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and (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.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Company 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, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	591	$	—	$	—	$	591
Automobiles		573		—		—		573
Beverages		29		—		—		29
Biotechnology		260		—		—		260
Capital Markets		139		—		—		139
Chemicals		699		—		—		699
Commercial Services & Supplies		476		—		—		476
Energy Equipment & Services		194		—		—		194
Food Products		390		—		—		390
Health Care Technology		12		—		—		12
Hotels, Restaurants & Leisure		670		—		—		670
Insurance		772		—		—		772
Internet Software & Services		344		—		—		344
Machinery		628		—		—		628
Marine		153		—		—		153
Media		701		—		—		701
Metals & Mining		403		—		—		403
Pharmaceuticals		1,061		—		—		1,061
Real Estate Management & Development		45		—		—		45
Specialty Retail		161		—		—		161
Tech Hardware, Storage & Peripherals		179		—		—		179
Textiles, Apparel & Luxury Goods		1,182		—		—		1,182
Transportation Infrastructure		695		—		—		695
Total Common Stocks		10,357		—		—		10,357
Total Assets	$	10,357	$	—	$	—	$	10,357

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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, 2017

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund has the right under the lending agreement to recover the securities from the borrower on demand.

At June 30, 2017, the Fund did not have any outstanding securities on loan.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $52,000 of advisory fees were waived and approximately $32,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $5,366,000 and $4,602,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Funds.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	286	$	4,866	$	5,152	$	2	$	—

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	101	$	9	$	110	$	54

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, 2016:

Distributions in Excess of Net Investment Income (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	11	$	(11	)	$	(—	@)

@ Amount is less than $500.

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	6	$	35

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 54,4%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's contractual management fee was higher than but close to its peer group average, the actual management fee was lower than its peer group average and the total expense ratio was higher than its peer group average. After discussion, the Board concluded that the Fund's (i) performance was competitive with its peer group average; (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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

Adviser and Administrator

Morgan Stanley Investment Management Inc.
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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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGISAN
1859507 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Opportunity Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	25
Privacy Notice	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Opportunity Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Global Opportunity Portfolio Class I	$	1,000.00	$	1,266.70	$	1,020.83	$	4.50	$	4.01		0.80	%
Global Opportunity Portfolio Class A		1,000.00		1,265.20		1,019.19		6.35		5.66		1.13
Global Opportunity Portfolio Class L		1,000.00		1,264.80		1,018.74		6.85		6.11		1.22
Global Opportunity Portfolio Class C		1,000.00		1,260.00		1,015.77		10.20		9.10		1.82
Global Opportunity Portfolio Class IS		1,000.00		1,266.80		1,021.27		3.99		3.56		0.71

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Opportunity Portfolio

	Shares		Value (000)
Common Stocks (89.4%)
Argentina (1.2%)
Globant SA (a)		314,211	$	13,649
Belgium (1.3%)
Anheuser-Busch InBev N.V.		136,315		15,057
China (19.5%)
Alibaba Group Holding Ltd. ADR (a)		165,632		23,338
China Resources Beer Holdings Co., Ltd. (b)		8,691,333		21,930
Foshan Haitian Flavouring & Food Co., Ltd., Class A		2,818,701		16,955
Jiangsu Hengrui Medicine Co., Ltd., Class A		2,924,027		21,820
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A		526,304		6,739
Suofeiya Home Collection Co., Ltd., Class A		2,642,071		15,978
TAL Education Group ADR		563,196		68,884
Tencent Holdings Ltd. (b)		1,272,400		45,502
				221,146
Denmark (4.1%)
DSV A/S		761,214		46,770
France (6.3%)
Christian Dior SE		100,479		28,731
Hermes International		86,967		42,975
				71,706
India (2.2%)
HDFC Bank Ltd.		974,184		25,103
Japan (5.2%)
Calbee, Inc.		742,700		29,153
Keyence Corp.		41,400		18,161
Nihon M&A Center, Inc.		309,200		11,299
				58,613
Korea, Republic of (0.8%)
Loen Entertainment, Inc.		118,426		9,046
South Africa (2.0%)
Naspers Ltd., Class N		114,863		22,345
United Kingdom (5.6%)
Burberry Group PLC		805,090		17,417
Fevertree Drinks PLC		871,056		19,343
Reckitt Benckiser Group PLC		257,229		26,079
				62,839
United States (41.2%)
Alphabet, Inc., Class C (a)		51,947		47,206
Amazon.com, Inc. (a)		81,341		78,738
EPAM Systems, Inc. (a)		622,023		52,306
Facebook, Inc., Class A (a)		728,382		109,971
Luxoft Holding, Inc. (a)		403,819		24,572
Mastercard, Inc., Class A		443,220		53,829
Priceline Group, Inc. (The) (a)		26,264		49,127
Visa, Inc., Class A		544,633		51,076
				466,825
Total Common Stocks (Cost $706,018)				1,013,099

	Shares		Value (000)
Preferred Stocks (1.3%)
United States (1.3%)
Airbnb, Inc. Series D (a)(c)(d)(e) (acquisition cost — $1,594; acquired 4/16/14)		39,153	$	4,217
Magic Leap Series C (a)(c)(d)(e) (acquisition cost — $3,175; acquired 12/22/15)		137,829		3,432
Uber Technologies Series G (a)(c)(d)(e) (acquisition cost — $8,232; acquired 12/3/15)		168,793		6,961
Total Preferred Stocks (Cost $13,001)				14,610
Participation Note (1.4%)
China (1.4%)
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/10/18 (a) (Cost $12,648)		1,230,704		15,759
Short-Term Investment (9.1%)
Investment Company (9.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $102,966)		102,966,083		102,966
Total Investments (101.2%) (Cost $834,633) (f)				1,146,434
Liabilities in Excess of Other Assets (–1.2%)				(13,599	)
Net Assets (100.0%)			$	1,132,835

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  At June 30, 2017, the Fund held fair valued securities valued at approximately $14,610,000, representing 1.3% 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 Company's Directors.

(d)  Security has been deemed illiquid at June 30, 2017.

(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 Fund 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, 2017, amounts to approximately $14,610,000 and represents 1.3% of net assets.

(f)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $313,072,000 and the aggregate gross unrealized depreciation is approximately $1,271,000, resulting in net unrealized appreciation of approximately $311,801,000.

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, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Opportunity Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		22.7	%
Internet Software & Services		19.7
Information Technology Services		15.8
Internet & Direct Marketing Retail		12.1
Short-Term Investment		9.0
Textiles, Apparel & Luxury Goods		7.8
Beverages		6.9
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, 2017 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $731,667)	$	1,043,468
Investment in Security of Affiliated Issuer, at Value (Cost $102,966)		102,966
Total Investments in Securities, at Value (Cost $834,633)		1,146,434
Foreign Currency, at Value (Cost $35)		35
Receivable for Fund Shares Sold		4,166
Dividends Receivable		164
Tax Reclaim Receivable		121
Receivable from Affiliate		45
Other Assets		160
Total Assets		1,151,125
Liabilities:
Payable for Investments Purchased		15,070
Payable for Advisory Fees		1,466
Payable for Fund Shares Redeemed		1,203
Payable for Shareholder Services Fees — Class A		106
Payable for Distribution and Shareholder Services Fees — Class L		9
Payable for Distribution and Shareholder Services Fees — Class C		47
Deferred Capital Gain Country Tax		86
Payable for Sub Transfer Agency Fees — Class I		22
Payable for Sub Transfer Agency Fees — Class A		46
Payable for Sub Transfer Agency Fees — Class L		8
Payable for Sub Transfer Agency Fees — Class C		5
Payable for Administration Fees		73
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		58
Payable for Transfer Agency Fees — Class L		8
Payable for Transfer Agency Fees — Class C		1
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Custodian Fees		32
Payable for Professional Fees		30
Other Liabilities		18
Total Liabilities		18,290
Net Assets	$	1,132,835
Net Assets Consist Of:
Paid-in-Capital	$	834,441
Accumulated Net Investment Loss		(1,194	)
Accumulated Net Realized Loss		(12,135	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $86 of Deferred Capital Gain Country Tax)		311,715
Foreign Currency Translations		8
Net Assets	$	1,132,835

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	514,133
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		26,337,127
Net Asset Value, Offering and Redemption Price Per Share	$	19.52
CLASS A:
Net Assets	$	523,551
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		27,570,690
Net Asset Value, Redemption Price Per Share	$	18.99
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.05
Maximum Offering Price Per Share	$	20.04
CLASS L:
Net Assets	$	35,826
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,909,240
Net Asset Value, Offering and Redemption Price Per Share	$	18.76
CLASS C:
Net Assets	$	58,676
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,169,821
Net Asset Value, Offering and Redemption Price Per Share	$	18.51
CLASS IS:
Net Assets	$	649
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		33,197
Net Asset Value, Offering and Redemption Price Per Share	$	19.56

@  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, 2017 (unaudited)

Global Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $263 of Foreign Taxes Withheld)	$	3,392
Dividends from Security of Affiliated Issuer (Note G)		135
Total Investment Income		3,527
Expenses:
Advisory Fees (Note B)		3,379
Shareholder Services Fees — Class A (Note D)		513
Distribution and Shareholder Services Fees — Class L (Note D)		125
Distribution and Shareholder Services Fees — Class C (Note D)		215
Sub Transfer Agency Fees — Class I		150
Sub Transfer Agency Fees — Class A		179
Sub Transfer Agency Fees — Class L		13
Sub Transfer Agency Fees — Class C		19
Administration Fees (Note C)		341
Transfer Agency Fees — Class I (Note E)		6
Transfer Agency Fees — Class A (Note E)		162
Transfer Agency Fees — Class L (Note E)		23
Transfer Agency Fees — Class C (Note E)		4
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		52
Professional Fees		52
Shareholder Reporting Fees		44
Registration Fees		40
Directors' Fees and Expenses		10
Pricing Fees		3
Other Expenses		13
Total Expenses		5,344
Waiver of Advisory Fees (Note B)		(864	)
Distribution Fees — Class L Shares Waived (Note D)		(75	)
Rebate from Morgan Stanley Affiliate (Note G)		(39	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		4,365
Net Investment Loss		(838	)
Realized Loss:
Investments Sold		(7,633	)
Foreign Currency Transactions		(178	)
Net Realized Loss		(7,811	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $86)		196,542
Foreign Currency Translations		8
Net Change in Unrealized Appreciation (Depreciation)		196,550
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		188,739
Net Increase in Net Assets Resulting from Operations	$	187,901

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(838	)	$	(3,975	)
Net Realized Gain (Loss)		(7,811	)		1,145
Net Change in Unrealized Appreciation (Depreciation)		196,550			4,481
Net Increase in Net Assets Resulting from Operations		187,901			1,651
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(16,271	)
Class A:
Net Realized Gain		—			(24,570	)
Class L:
Net Realized Gain		—			(2,200	)
Class C:
Net Realized Gain		—			(2,241	)
Class IS:
Net Realized Gain		—			(1	)
Total Distributions		—			(45,283	)
Capital Share Transactions:(1)
Class I:
Subscribed		231,243			211,096
Distributions Reinvested		—			16,238
Redeemed		(51,652	)		(193,977	)
Class A:
Subscribed		145,132			141,333
Distributions Reinvested		—			24,039
Redeemed		(53,157	)		(150,389	)
Class L:
Exchanged		—	@		14
Distributions Reinvested		—			2,026
Redeemed		(2,062	)		(4,432	)
Class C:
Subscribed		20,037			21,727
Distributions Reinvested		—			2,240
Redeemed		(4,405	)		(8,851	)
Class IS:
Subscribed		577			39
Distributions Reinvested		—			1
Redeemed		(15	)		(746	)
Net Increase in Net Assets Resulting from Capital Share Transactions		285,698			60,358
Total Increase in Net Assets		473,599			16,726
Net Assets:
Beginning of Period		659,236			642,510
End of Period (Including Accumulated Net Investment Loss of $(1,194) and $(356))	$	1,132,835		$	659,236

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Opportunity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		12,679			13,488
Shares Issued on Distributions Reinvested		—			1,084
Shares Redeemed		(2,901	)		(12,614	)
Net Increase in Class I Shares Outstanding		9,778			1,958
Class A:
Shares Subscribed		8,018			9,197
Shares Issued on Distributions Reinvested		—			1,646
Shares Redeemed		(3,098	)		(9,883	)
Net Increase in Class A Shares Outstanding		4,920			960
Class L:
Shares Exchanged		—	@@		1
Shares Issued on Distributions Reinvested		—			140
Shares Redeemed		(121	)		(293	)
Net Decrease in Class L Shares Outstanding		(121	)		(152	)
Class C:
Shares Subscribed		1,134			1,439
Shares Issued on Distributions Reinvested		—			156
Shares Redeemed		(266	)		(589	)
Net Increase in Class C Shares Outstanding		868			1,006
Class IS:
Shares Subscribed		33			3
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		(51	)
Net Increase (Decrease) in Class IS Shares Outstanding		32			(48	)

@  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, 2017

Financial Highlights

Global Opportunity Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	15.41		$	16.36		$	13.98		$	13.65		$	10.84		$	10.26
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.00	(3)		(0.05	)		(0.05	)		(0.06	)		(0.02	)		0.01
Net Realized and Unrealized Gain		4.11			0.18			2.64			1.26			4.21			1.01
Total from Investment Operations		4.11			0.13			2.59			1.20			4.19			1.02
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.08	)		(0.21	)		(0.87	)		(1.38	)		(0.44	)
Net Asset Value, End of Period	$	19.52		$	15.41		$	16.36		$	13.98		$	13.65		$	10.84
Total Return (4)		26.67	%(8)		1.05	%		18.50	%		9.04	%		40.12	%		9.99	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	514,133		$	255,187		$	238,920		$	11,037		$	7,293		$	5,069
Ratio of Expenses to Average Net Assets (10)		0.80	%(5)(9)		0.80	%(5)		0.98	%(5)(6)		1.17	%(5)		1.24	%(5)		1.25	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.05	%(5)(9)		(0.34	)%(5)		(0.33	)%(5)		(0.42	)%(5)		(0.21	)%(5)		0.06	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.01	%		0.01	%		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		19	%(8)		37	%		115	%		29	%		38	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.01	%(9)		1.07	%		1.20	%		2.47	%		3.36	%		2.57	%
Net Investment Loss to Average Net Assets		(0.16	)%(9)		(0.61	)%		(0.55	)%		(1.72	)%		(2.33	)%		(1.26	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	15.01		$	16.03		$	13.75		$	13.48		$	10.75		$	10.21
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.03	)		(0.11	)		(0.10	)		(0.11	)		(0.15	)		(0.02	)
Net Realized and Unrealized Gain		4.01			0.17			2.59			1.25			4.26			1.00
Total from Investment Operations		3.98			0.06			2.49			1.14			4.11			0.98
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.08	)		(0.21	)		(0.87	)		(1.38	)		(0.44	)
Net Asset Value, End of Period	$	18.99		$	15.01		$	16.03		$	13.75		$	13.48		$	10.75
Total Return (3)		26.52	%(8)		0.62	%		18.16	%		8.55	%		39.80	%		9.65	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	523,551		$	340,092		$	347,683		$	12,952		$	4,057		$	87
Ratio of Expenses to Average Net Assets (10)		1.13	%(4)(9)		1.17	%(4)		1.25	%(4)(5)		1.56	%(4)		1.59	%(4)(5)		1.50	%(4)
Ratio of Net Investment Loss to Average Net Assets (10)		(0.31	)%(4)(9)		(0.70	)%(4)		(0.64	)%(4)		(0.82	)%(4)		(1.15	)%(4)		(0.19	)%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.01	%		0.01	%		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		18	%(8)		37	%		115	%		29	%		38	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.34	%(9)		1.41	%		1.50	%		2.86	%		3.93	%		2.82	%
Net Investment Loss to Average Net Assets		(0.52	)%(9)		(0.94	)%		(0.89	)%		(2.12	)%		(3.49	)%		(1.51	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(5)  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.

(6)  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 share. Prior to January 23,2015, the maximum ratio was 1.60% for class A shares.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Opportunity Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.84		$	15.87		$	13.62		$	13.38		$	10.68		$	10.15
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.04	)		(0.12	)		(0.11	)		(0.12	)		(0.07	)		(0.03	)
Net Realized and Unrealized Gain		3.96			0.17			2.57			1.23			4.15			1.00
Total from Investment Operations		3.92			0.05			2.46			1.11			4.08			0.97
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.08	)		(0.21	)		(0.87	)		(1.38	)		(0.44	)
Net Asset Value, End of Period	$	18.76		$	14.84		$	15.87		$	13.62		$	13.38		$	10.68
Total Return (3)		26.48	%(8)		0.56	%		18.03	%		8.46	%		39.79	%		9.61	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	35,826		$	30,133		$	34,628		$	1,091		$	527		$	396
Ratio of Expenses to Average Net Assets (10)		1.22	%(4)(9)		1.25	%(4)		1.30	%(4)(5)		1.64	%(4)		1.58	%(4)(5)		1.55	%(4)
Ratio of Net Investment Loss to Average Net Assets (10)		(0.44	)%(4)(9)		(0.79	)%(4)		(0.70	)%(4)		(0.87	)%(4)		(0.57	)%(4)		(0.24	)%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.01	%		0.01	%		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		18	%(8)		37	%		115	%		29	%		38	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.89	%(9)		1.93	%		2.03	%		3.52	%		4.23	%		3.32	%
Net Investment Loss to Average Net Assets		(1.11	)%(9)		(1.47	)%		(1.43	)%		(2.75	)%		(3.22	)%		(2.01	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(5)  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.

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	14.69		$	15.80		$	15.25
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.08	)		(0.21	)		(0.15	)
Net Realized and Unrealized Gain		3.90			0.18			0.91
Total from Investment Operations		3.82			(0.03	)		0.76
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.08	)		(0.21	)
Net Asset Value, End of Period	$	18.51		$	14.69		$	15.80
Total Return (4)		26.00	%(6)		0.05	%		4.95	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	58,676		$	33,801		$	20,475
Ratio of Expenses to Average Net Assets (8)		1.82	%(5)(7)		1.84	%(5)		2.03	%(5)(7)
Ratio of Net Investment Loss to Average Net Assets (8)		(0.99	)%(5)(7)		(1.38	)%(5)		(1.40	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(7)		0.01	%		0.01	%(7)
Portfolio Turnover Rate		18	%(6)		37	%		115	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.03	%(7)		2.08	%		2.22	%(7)
Net Investment Loss to Average Net Assets		(1.20	)%(7)		(1.62	)%		(1.59	)%(7)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Opportunity Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	15.44		$	16.38		$	13.99		$	13.65		$	12.43
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.03			(0.06	)		(0.05	)		(0.06	)		(0.03	)
Net Realized and Unrealized Gain		4.09			0.20			2.65			1.27			2.27
Total from Investment Operations		4.12			0.14			2.60			1.21			2.24
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.08	)		(0.21	)		(0.87	)		(1.02	)
Net Asset Value, End of Period	$	19.56		$	15.44		$	16.38		$	13.99		$	13.65
Total Return (4)		26.68	%(9)		1.11	%		18.64	%		8.96	%		18.35	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	649		$	23		$	804		$	11		$	11
Ratio of Expenses to Average Net Assets (11)		0.71	%(5)(10)		0.71	%(5)		0.77	%(5)(7)		1.17	%(5)		1.18	%(5)(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		0.34	%(5)(10)		(0.41	)%(5)		(0.28	)%(5)		(0.42	)%(5)		(0.74	)%(5)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.01	%		0.01	%		0.00	%(8)(10)
Portfolio Turnover Rate		18	%(9)		37	%		115	%		29	%		38	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.46	%(10)		3.82	%		3.56	%		19.50	%		8.44	%(10)
Net Investment Loss to Average Net Assets		(0.41	)%(10)		(3.52	)%		(3.07	)%		(18.75	)%		(8.00	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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	$	—	$	25,103	$	—	$	25,103
Beverages		63,069		—		—		63,069
Diversified Consumer Services		68,884		—		—		68,884
Electronic Equipment, Instruments & Components		18,161		—		—		18,161
Food Products		46,108		—		—		46,108
Household Durables		15,978		—		—		15,978
Household Products		26,079		—		—		26,079
Information Technology Services		181,783		—		—		181,783
Internet & Direct Marketing Retail		127,865		—		—		127,865
Internet Software & Services		226,017		—		—		226,017
Media		31,391		—		—		31,391
Pharmaceuticals		21,820		—		—		21,820
Professional Services		11,299		—		—		11,299
Road & Rail		46,770		—		—		46,770
Software		13,649		—		—		13,649
Textiles, Apparel & Luxury Goods		89,123		—		—		89,123
Total Common Stocks		987,996		25,103		—		1,013,099

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	$	—	$	—	$	14,610	$	14,610
Participation Note		—		15,759		—		15,759
Short-Term Investment
Investment Company		102,966		—		—		102,966
Total Assets	$	1,090,962	$	40,862	$	14,610	$	1,146,434

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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 Stock (000)			Preferred Stocks (000)
Beginning Balance	$	—	†	$	15,545
Purchases		—			—
Sales		—			(138	)
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—	††		—
Change in unrealized appreciation (depreciation)		—			(884	)
Realized gains (losses)		—			87
Ending Balance	$	—		$	14,610
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	—		$	(822	)

†  Includes one security which is valued at zero.

††  Corporate action 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, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Electronic Equipment, Instuments & Components
Preferred Stock	$	3,432	Discounted Cash Flow	Weighted Average Cost of Capital		25.0	%	27.0	%		26.0	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/Revenue		12.0	x	20.8	x		12.0x		Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Internet & Direct Marketing Retail
Preferred Stocks	$	4,217	Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%	17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/Revenue		9.7	x	15.5	x		9.7x		Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
	$	6,961	Discounted Cash Flow	Weighted Average Cost of Capital		17.0	%	19.0	%		18.0	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/Revenue		2.1	x	8.3	x		2.2x		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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund

had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

As of June 30, 2017, the Fund did not have any outstanding purchased options.

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)	$	(357	)(a)

(a) 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 (Option Purchased)	$	31	(b)

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	58,151,000

5.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

6.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

7.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.58% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 one year from the date of the Fund'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, 2017, approximately $864,000 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 Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares. The Distributor has agreed to waive for at least one year from the date of the Portfolio's prospectus, the 12b-1 fees on Class L shares of the Portfolio to the extent it exceeds 0.30% of the average daily net assets of such shares on an annualized basis. For the six months ended June 30, 2017, this waiver amounted to approximately $75,000.

The Company 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 Fund 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 Fund 's average daily net assets attributable to Class C shares.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, Class L and Class C shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $348,982,000 and $146,958,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Liquidity Funds. Fund due to its investment in the For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $39,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	18,397	$	252,708	$	168,139	$	135	$	102,966

During the six months ended June 30, 2017, the Fund incurred less than $500 in brokerage commissions with

Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	45,283	$	3	$	2,247

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, 2016:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	3,628	$	889	$	(4,517	)

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. These also include non-specified ordinary losses incurred after December 31 but within the same taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	347	$	1,387

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 17.8%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period but better than its peer group average for the 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

30

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

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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGOSAN
1860044 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Quality Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Quality Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,154.50	$	1,019.84	$	5.34	$	5.01		1.00	%
Global Quality Portfolio Class A		1,000.00		1,152.00		1,018.10		7.20		6.76		1.35
Global Quality Portfolio Class L		1,000.00		1,148.70		1,015.67		9.80		9.20		1.84
Global Quality Portfolio Class C		1,000.00		1,147.10		1,014.38		11.18		10.49		2.10
Global Quality Portfolio Class IS		1,000.00		1,154.50		1,020.08		5.07		4.76		0.95

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Quality Portfolio

	Shares		Value (000)
Common Stocks (96.9%)
France (7.1%)
L'Oreal SA		1,676	$	349
Pernod Ricard SA		1,671		224
Sanofi		1,361		130
				703
Germany (5.1%)
Bayer AG (Registered)		1,469		190
SAP SE		2,978		311
				501
Hong Kong (1.1%)
AIA Group Ltd.		14,200		104
Netherlands (0.9%)
RELX N.V.		4,112		84
Switzerland (6.4%)
Nestle SA (Registered)		304		26
Novartis AG (Registered)		4,505		375
Roche Holding AG (Genusschein)		911		232
				633
United Kingdom (21.5%)
British American Tobacco PLC		3,097		211
Experian PLC		2,646		54
GlaxoSmithKline PLC		15,778		336
Prudential PLC		6,424		147
Reckitt Benckiser Group PLC		5,700		578
RELX PLC		7,343		159
Unilever PLC		11,542		625
				2,110
United States (54.8%)
Accenture PLC, Class A		3,495		432
Alphabet, Inc., Class A (a)		522		485
Altria Group, Inc.		3,899		290
Automatic Data Processing, Inc.		1,853		190
Coca-Cola Co.		3,846		173
Danaher Corp.		1,399		118
International Flavors & Fragrances, Inc.		542		73
Intuit, Inc.		463		61
Johnson & Johnson		1,587		210
Microsoft Corp.		7,254		500
Moody's Corp.		436		53
Nielsen Holdings PLC		4,023		156
NIKE, Inc., Class B		5,383		318
Philip Morris International, Inc.		3,783		444
Priceline Group, Inc. (The) (a)		133		249
Reynolds American, Inc.		5,845		380
Time Warner, Inc.		249		25
Twenty-First Century Fox, Inc., Class A		8,206		233
Twenty-First Century Fox, Inc., Class B		6,932		193
Visa, Inc., Class A		3,516		330

	Shares		Value (000)
Walt Disney Co. (The)		2,275	$	242
Zoetis, Inc.		3,787		236
				5,391
Total Common Stocks (Cost $7,754)				9,526
Short-Term Investment (2.2%)
Investment Company (2.2%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $220)		219,552		220
Total Investments (99.1%) (Cost $7,974) (b)				9,746
Other Assets in Excess of Liabilities (0.9%)				89
Net Assets (100.0%)			$	9,835

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,799,000 and the aggregate gross unrealized depreciation is approximately $27,000 resulting in net unrealized appreciation of approximately $1,772,000.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		22.1	%
Pharmaceuticals		17.5
Tobacco		13.6
Personal Products		10.0
Information Technology Services		9.8
Software		9.0
Media		7.1
Household Products		5.9
Internet Software & Services		5.0
Total Investments		100.0	%

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

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $7,754)	$	9,526
Investment in Security of Affiliated Issuer, at Value (Cost $220)		220
Total Investments in Securities, at Value (Cost $7,974)		9,746
Receivable for Investments Sold		49
Due from Adviser		30
Tax Reclaim Receivable		23
Dividends Receivable		18
Receivable from Affiliate		—	@
Other Assets		52
Total Assets		9,918
Liabilities:
Payable for Investments Purchased		49
Payable for Professional Fees		23
Payable for Custodian Fees		6
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Distribution and Shareholder Services Fees — Class C		1
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		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		2
Total Liabilities		83
Net Assets	$	9,835
Net Assets Consist of:
Paid-in-Capital	$	7,858
Accumulated Undistributed Net Investment Income		57
Accumulated Net Realized Gain		149
Unrealized Appreciation (Depreciation) on:
Investments		1,772
Foreign Currency Translations		(1	)
Net Assets	$	9,835

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	5,285
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		423,547
Net Asset Value, Offering and Redemption Price Per Share	$	12.48
CLASS A:
Net Assets	$	1,767
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		142,172
Net Asset Value, Redemption Price Per Share	$	12.43
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.69
Maximum Offering Price Per Share	$	13.12
CLASS L:
Net Assets	$	1,619
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		130,968
Net Asset Value, Offering and Redemption Price Per Share	$	12.36
CLASS C:
Net Assets	$	1,152
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		94,138
Net Asset Value, Offering and Redemption Price Per Share	$	12.24
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	$	12.48

@  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, 2017 (unaudited)

Global Quality Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $6 of Foreign Taxes Withheld)	$	115
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		115
Expenses:
Professional Fees		44
Advisory Fees (Note B)		37
Registration Fees		22
Shareholder Services Fees — Class A (Note D)		2
Distribution and Shareholder Services Fees — Class L (Note D)		7
Distribution and Shareholder Services Fees — Class C (Note D)		5
Custodian Fees (Note F)		13
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
Administration Fees (Note C)		4
Pricing Fees		3
Directors' Fees and Expenses		2
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		6
Total Expenses		154
Expenses Reimbursed by Adviser (Note B)		(54	)
Waiver of Advisory Fees (Note B)		(37	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class A (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		62
Net Investment Income		53
Realized Gain:
Investments Sold		327
Foreign Currency Transactions		—	@
Net Realized Gain		327
Change in Unrealized Appreciation (Depreciation):
Investments		922
Foreign Currency Translations		2
Net Change in Unrealized Appreciation (Depreciation)		924
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		1,251
Net Increase in Net Assets Resulting from Operations	$	1,304

@  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, 2017

Global Quality Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	53		$	142
Net Realized Gain		327			561
Net Change in Unrealized Appreciation (Depreciation)		924			(78	)
Net Increase in Net Assets Resulting from Operations		1,304			625
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(80	)
Net Realized Gain		—			(397	)
Class A:
Net Investment Income		—			(29	)
Net Realized Gain		—			(164	)
Class L:
Net Investment Income		—			(20	)
Net Realized Gain		—			(174	)
Class C:
Net Investment Income		—			(7	)
Net Realized Gain		—			(66	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(1	)
Total Distributions		—			(938	)
Capital Share Transactions:(1)
Class I:
Subscribed		828			1,322
Distributions Reinvested		—			281
Redeemed		(192	)		(6,116	)
Class A:
Subscribed		99			222
Distributions Reinvested		—			182
Redeemed		(769	)		(1,345	)
Class L:
Exchanged		—			13
Distributions Reinvested		—			184
Redeemed		(845	)		(733	)
Class C:
Subscribed		275			251
Distributions Reinvested		—			72
Redeemed		(64	)		(105	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(668	)		(5,772	)
Total Increase (Decrease) in Net Assets		636			(6,085	)
Net Assets:
Beginning of Period		9,199			15,284
End of Period (Including Accumulated Undistributed Net Investment Income of $57 and $4)	$	9,835		$	9,199

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Quality Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		70			114
Shares Issued on Distributions Reinvested		—			25
Shares Redeemed		(16	)		(516	)
Net Increase (Decrease) in Class I Shares Outstanding		54			(377	)
Class A:
Shares Subscribed		9			20
Shares Issued on Distributions Reinvested		—			16
Shares Redeemed		(69	)		(118	)
Net Decrease in Class A Shares Outstanding		(60	)		(82	)
Class L:
Shares Exchanged		—			1
Shares Issued on Distributions Reinvested		—			17
Shares Redeemed		(73	)		(65	)
Net Decrease in Class L Shares Outstanding		(73	)		(47	)
Class C:
Shares Subscribed		23			22
Shares Issued on Distributions Reinvested		—			7
Shares Redeemed		(6	)		(10	)
Net Increase in Class C Shares Outstanding		17			19

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Quality Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from August 30, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.81		$	11.43		$	11.34		$	11.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.09			0.17			0.15			0.17			(0.00	)(4)
Net Realized and Unrealized Gain		1.58			0.29			0.46			0.13			1.28
Total from Investment Operations		1.67			0.46			0.61			0.30			1.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.20	)		(0.18	)		(0.13	)		—
Net Realized Gain		—			(0.88	)		(0.34	)		(0.11	)		—
Total Distributions		—			(1.08	)		(0.52	)		(0.24	)		—
Net Asset Value, End of Period	$	12.48		$	10.81		$	11.43		$	11.34		$	11.28
Total Return (5)		15.45	%(9)		4.20	%		5.27	%		2.66	%		12.80	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,285		$	3,993		$	8,531		$	14,579		$	7,440
Ratio of Expenses to Average Net Assets (11)		1.00	%(6)(10)		0.99	%(6)		0.97	%(6)		1.11	%(6)(7)		1.19	%(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.56	%(6)(10)		1.46	%(6)		1.26	%(6)		1.49	%(6)		(0.12	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		18	%(9)		35	%		61	%		31	%		8	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.97	%(10)		2.45	%		2.21	%		2.34	%		4.86	%(10)
Net Investment Income (Loss) to Average Net Assets		(0.41	)%(10)		(0.00	)%(8)		0.02	%		0.26	%		(3.79	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Quality Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from August 30, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.79		$	11.40		$	11.32		$	11.27		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.06			0.11			0.11			0.12			(0.02	)
Net Realized and Unrealized Gain		1.58			0.32			0.45			0.14			1.29
Total from Investment Operations		1.64			0.43			0.56			0.26			1.27
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.14	)		(0.10	)		—
Net Realized Gain		—			(0.88	)		(0.34	)		(0.11	)		—
Total Distributions		—			(1.04	)		(0.48	)		(0.21	)		—
Net Asset Value, End of Period	$	12.43		$	10.79		$	11.40		$	11.32		$	11.27
Total Return (4)		15.20	%(8)		3.83	%		4.91	%		2.34	%		12.70	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,767		$	2,182		$	3,246		$	4,331		$	1,612
Ratio of Expenses to Average Net Assets (10)		1.35	%(5)(9)		1.33	%(5)		1.30	%(5)		1.40	%(5)(6)		1.54	%(5)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		1.05	%(5)(9)		0.98	%(5)		0.98	%(5)		1.03	%(5)		(0.45	)%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.01	%(9)
Portfolio Turnover Rate		18	%(8)		35	%		61	%		31	%		8	%(8)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.33	%(9)		2.85	%		2.52	%		2.62	%		5.00	%(9)
Net Investment Loss to Average Net Assets		(0.93	)%(9)		(0.54	)%		(0.24	)%		(0.19	)%		(3.91	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Quality Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from August 30, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.76		$	11.37		$	11.29		$	11.25		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.04			0.06			0.05			0.06			(0.03	)
Net Realized and Unrealized Gain		1.56			0.31			0.45			0.14			1.28
Total from Investment Operations		1.60			0.37			0.50			0.20			1.25
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.08	)		(0.05	)		—
Net Realized Gain		—			(0.88	)		(0.34	)		(0.11	)		—
Total Distributions		—			(0.98	)		(0.42	)		(0.16	)		—
Net Asset Value, End of Period	$	12.36		$	10.76		$	11.37		$	11.29		$	11.25
Total Return (4)		14.87	%(8)		3.31	%		4.49	%		1.74	%		12.50	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,619		$	2,194		$	2,848		$	2,723		$	962
Ratio of Expenses to Average Net Assets (10)		1.84	%(5)(9)		1.81	%(5)		1.81	%(5)		1.93	%(5)(6)		2.04	%(5)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.61	%(5)(9)		0.52	%(5)		0.46	%(5)		0.55	%(5)		(0.80	)%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.01	%(9)
Portfolio Turnover Rate		18	%(8)		35	%		61	%		31	%		8	%(8)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.81	%(9)		3.35	%		3.06	%		3.15	%		6.27	%(9)
Net Investment Loss to Average Net Assets		(1.36	)%(9)		(1.02	)%		(0.79	)%		(0.67	)%		(5.03	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Quality Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31,2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	10.67		$	11.30		$	11.77
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.03			0.02			(0.03	)
Net Realized and Unrealized Gain		1.54			0.32			0.02
Total from Investment Operations		1.57			0.34			(0.01	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.09	)		(0.12	)
Net Realized Gain		—			(0.88	)		(0.34	)
Total Distributions		—			(0.97	)		(0.46	)
Net Asset Value, End of Period	$	12.24		$	10.67		$	11.30
Total Return (4)		14.71	%(7)		3.06	%		(0.13	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,152		$	819		$	648
Ratio of Expenses to Average Net Assets (9)		2.10	%(5)(8)		2.10	%(5)		2.10	%(5)(8)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		0.44	%(5)(8)		0.17	%(5)		(0.39	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)(8)
Portfolio Turnover Rate		18	%(7)		35	%		61	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.16	%(8)		3.83	%		3.80	%(8)
Net Investment Loss to Average Net Assets		(1.62	)%(8)		(1.56	)%		(2.09	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Quality Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.81		$	11.43		$	11.34		$	11.28		$	10.28
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.09			0.16			0.16			0.17			(0.00	)(4)
Net Realized and Unrealized Gain		1.58			0.31			0.45			0.13			1.00
Total from Investment Operations		1.67			0.47			0.61			0.30			1.00
Distributions from and/or in Excess of:
Net Investment Income		—			(0.21	)		(0.18	)		(0.13	)		—
Net Realized Gain		—			(0.88	)		(0.34	)		(0.11	)		—
Total Distributions		—			(1.09	)		(0.52	)		(0.24	)		—
Net Asset Value, End of Period	$	12.48		$	10.81		$	11.43		$	11.34		$	11.28
Total Return (5)		15.45	%(9)		4.17	%		5.38	%		2.67	%		9.73	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	11		$	11		$	11		$	11
Ratio of Expenses to Average Net Assets (11)		0.95	%(6)(10)		0.95	%(6)		0.95	%(6)		1.10	%(6)(7)		1.15	%(6)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.59	%(6)(10)		1.35	%(6)		1.31	%(6)		1.51	%(6)		(0.10	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)(10)
Portfolio Turnover Rate		18	%(9)		35	%		61	%		31	%		8	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		17.40	%(10)		19.36	%		16.35	%		19.72	%		9.57	%(10)
Net Investment Loss to Average Net Assets		(14.86	)%(10)		(17.06	)%		(14.09	)%		(17.11	)%		(8.52	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Quality Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	397	$	—	$	—	$	397
Capital Markets		53		—		—		53
Chemicals		73		—		—		73
Food Products		26		—		—		26
Health Care Equipment & Supplies		118		—		—		118
Household Products		578		—		—		578
Information Technology Services		952		—		—		952
Insurance		251		—		—		251
Internet & Direct Marketing Retail		249		—		—		249
Internet Software & Services		485		—		—		485
Media		693		—		—		693
Personal Products		974		—		—		974
Pharmaceuticals		1,709		—		—		1,709
Professional Services		453		—		—		453
Software		872		—		—		872
Textiles, Apparel & Luxury Goods		318		—		—		318
Tobacco		1,325		—		—		1,325
Total Common Stocks		9,526		—		—		9,526
Short-Term Investment
Investment Company		220		—		—		220
Total Assets	$	9,746	$	—	$	—	$	9,746

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $37,000 of advisory fees were waived and approximately $55,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other

assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $1,671,000 and $2,507,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2017 (000)
$	46	$	1,752	$	1,578	$	—	@	$	220

@ Amount is less than $500.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	281	$	655	$	237	$	522

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, 2016:

Accumulated Undistributed Net Investment Income (000)			Distribution in Excess of Net Realized Gain (000)		Paid-in- Capital (000)
$	(9	)	$	9	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	4	$	36

Qualified late year losses are capital losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	—	@

@ Amount is less than $500.

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 66.6%.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was better than its peer group average for the one- and three-year periods and the period since the end of August 2013, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

©2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGQSAN
1858084 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Real Estate Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Global Real Estate Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,035.30	$	1,019.59	$	5.30	$	5.26		1.05	%
Global Real Estate Portfolio Class A		1,000.00		1,032.70		1,017.85		7.06		7.00		1.40
Global Real Estate Portfolio Class L		1,000.00		1,031.00		1,015.37		9.57		9.49		1.90
Global Real Estate Portfolio Class C		1,000.00		1,029.60		1,014.13		10.82		10.74		2.15
Global Real Estate Portfolio Class IS		1,000.00		1,035.30		1,019.98		4.90		4.86		0.97

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Global Real Estate Portfolio

	Shares		Value (000)
Common Stocks (98.6%)
Australia (4.7%)
Dexus REIT		647,634	$	4,719
Goodman Group REIT		1,625,214		9,831
GPT Group REIT		2,080,949		7,661
Investa Office Fund REIT		600,991		2,028
Mirvac Group REIT		2,246,208		3,677
Scentre Group REIT		4,932,717		15,355
Stockland REIT		1,571,736		5,291
Vicinity Centres REIT		2,117,476		4,182
Westfield Corp. REIT		2,119,456		13,081
				65,825
Austria (0.3%)
Atrium European Real Estate Ltd.		360,574		1,610
BUWOG AG (a)		104,176		2,993
				4,603
Canada (1.7%)
Boardwalk REIT		88,601		3,249
Crombie Real Estate Investment Trust REIT		201,407		2,179
Extendicare, Inc.		112,787		900
First Capital Realty, Inc.		365,032		5,562
H&R Real Estate Investment Trust REIT		151,983		2,581
RioCan Real Estate Investment Trust REIT		421,031		7,815
Smart Real Estate Investment Trust REIT		58,065		1,438
				23,724
China (0.3%)
China Overseas Land & Investment Ltd. (b)		798,000		2,336
China Resources Land Ltd. (b)		360,000		1,049
China Vanke Co., Ltd. H Shares (b)		406,400		1,150
				4,535
Finland (0.2%)
Citycon Oyj		1,214,504		3,188
France (3.5%)
Fonciere Des Regions REIT		28,633		2,656
Gecina SA REIT		48,521		7,612
ICADE REIT		66,092		5,548
Klepierre REIT		221,151		9,064
Mercialys SA REIT		131,896		2,580
Unibail-Rodamco SE REIT		84,394		21,269
				48,729
Germany (1.8%)
ADO Properties SA (c)		48,880		2,068
Deutsche Wohnen AG		221,893		8,487
LEG Immobilien AG		21,919		2,061
Vonovia SE		329,337		13,077
				25,693
Hong Kong (10.5%)
Champion REIT		1,372,000		873
Cheung Kong Property Holdings Ltd.		2,651,000		20,763
Hang Lung Properties Ltd.		215,000		537
Henderson Land Development Co., Ltd.		903,762		5,041

	Shares		Value (000)
Hongkong Land Holdings Ltd.		3,285,600	$	24,182
Hysan Development Co., Ltd.		2,502,014		11,937
Link REIT		2,163,275		16,459
New World Development Co., Ltd.		6,682,758		8,483
Sino Land Co., Ltd.		773,004		1,267
Sun Hung Kai Properties Ltd.		2,106,367		30,945
Swire Properties Ltd.		5,431,200		17,913
Wharf Holdings Ltd. (The)		1,023,763		8,484
				146,884
Ireland (0.8%)
Green REIT PLC		3,315,382		5,388
Hibernia REIT PLC		3,227,657		5,069
				10,457
Japan (9.9%)
Activia Properties, Inc. REIT		991		4,234
Advance Residence Investment Corp. REIT		1,533		3,810
Daiwa Office Investment Corp. REIT		170		857
GLP J-REIT		2,938		3,163
Hulic Co., Ltd.		495,200		5,050
Hulic REIT, Inc.		817		1,275
Invincible Investment Corp. REIT		9,242		3,969
Japan Hotel REIT Investment Corp. REIT		2,730		1,930
Japan Prime Realty Investment Corp. REIT		98		339
Japan Real Estate Investment Corp. REIT		1,350		6,709
Japan Rental Housing Investments, Inc. REIT		530		391
Japan Retail Fund Investment Corp. REIT		2,427		4,477
Kenedix Office Investment Corp. REIT		222		1,184
Mitsubishi Estate Co., Ltd.		1,580,300		29,414
Mitsui Fudosan Co., Ltd.		1,259,300		30,012
Mori Hills Investment Corp. REIT		1,151		1,414
Mori Trust Sogo Reit, Inc. REIT		220		355
Nippon Accommodations Fund, Inc. REIT		97		405
Nippon Building Fund, Inc. REIT		1,805		9,212
Nippon Prologis, Inc. REIT		1,522		3,240
Nomura Real Estate Master Fund, Inc. REIT		5,210		7,120
Orix, Inc. J-REIT		1,725		2,544
Sumitomo Realty & Development Co., Ltd.		378,000		11,645
United Urban Investment Corp. REIT		3,628		5,177
				137,926
Malta (0.0%)
BGP Holdings PLC (a)(d)(e)		12,867,024		206
Netherlands (0.7%)
Eurocommercial Properties N.V. CVA REIT		162,544		6,495
Vastned Retail N.V. REIT		15,443		646
Wereldhave N.V. REIT		40,414		1,982
				9,123
Norway (0.4%)
Entra ASA (c)		415,232		5,172
Norwegian Property ASA		700,861		865
				6,037

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	Shares		Value (000)
Singapore (1.3%)
Ascendas Real Estate Investment Trust REIT		1,277,200	$	2,421
CapitaLand Commercial Trust Ltd. REIT		3,252,800		3,922
CapitaLand Ltd.		549,200		1,396
CapitaLand Mall Trust REIT		1,910,400		2,741
EC World Real Estate Investment Trust Unit REIT		582,900		343
Global Logistic Properties Ltd.		549,900		1,142
Keppel REIT		2,621,822		2,180
Mapletree Commercial Trust REIT		547,300		634
Suntec REIT		998,800		1,357
UOL Group Ltd.		239,776		1,331
				17,467
Spain (0.7%)
Hispania Activos Inmobiliarios SAU REIT		149,436		2,471
Inmobiliaria Colonial SA		292,834		2,551
Merlin Properties Socimi SA REIT		426,383		5,386
				10,408
Sweden (0.7%)
Atrium Ljungberg AB, Class B		124,101		2,070
Castellum AB		230,810		3,389
Hufvudstaden AB, Class A		246,361		4,085
				9,544
Switzerland (0.6%)
PSP Swiss Property AG (Registered)		81,610		7,626
Swiss Prime Site AG (Registered) (a)		9,301		845
				8,471
United Kingdom (5.7%)
British Land Co., PLC REIT		2,039,308		16,083
Capital & Regional PLC REIT		1,664,988		1,220
Derwent London PLC REIT		310,883		10,746
Great Portland Estates PLC REIT		1,245,409		9,684
Hammerson PLC REIT		738,282		5,524
Intu Properties PLC REIT		899,613		3,153
Land Securities Group PLC REIT		1,498,803		19,775
LXB Retail Properties PLC (a)		3,172,353		1,307
Segro PLC REIT		510,734		3,254
St. Modwen Properties PLC		790,958		3,697
Unite Group PLC REIT		192,364		1,626
Urban & Civic PLC		1,089,628		3,733
				79,802
United States (54.8%)
Alexandria Real Estate Equities, Inc. REIT		61,828		7,448
American Homes 4 Rent, Class A REIT		167,332		3,777
Apartment Investment & Management Co., Class A REIT		180,442		7,754
AvalonBay Communities, Inc. REIT		86,632		16,648
Blackstone Mortgage Trust, Inc., Class A REIT		120,434		3,806
Boston Properties, Inc. REIT		342,693		42,158
Brixmor Property Group, Inc. REIT		304,594		5,446
Camden Property Trust REIT		261,016		22,320
CBL & Associates Properties, Inc. REIT		37,032		312
Chesapeake Lodging Trust REIT		411,204		10,062

	Shares		Value (000)
Colony Starwood Homes REIT		268,240	$	9,203
Columbia Property Trust, Inc. REIT		171,842		3,846
Corporate Office Properties Trust REIT		89,683		3,142
Cousins Properties, Inc. REIT		460,718		4,050
CubeSmart REIT		139,746		3,360
DCT Industrial Trust, Inc. REIT		154,136		8,237
DDR Corp. REIT		273,960		2,485
Digital Realty Trust, Inc. REIT		89,758		10,138
Douglas Emmett, Inc. REIT		99,096		3,786
Duke Realty Corp. REIT		170,570		4,767
Education Realty Trust, Inc. REIT		35,847		1,389
Equity Lifestyle Properties, Inc. REIT		30,877		2,666
Equity Residential REIT		527,102		34,699
Essex Property Trust, Inc. REIT		65,515		16,855
Exeter Industrial Value Fund, LP REIT (See Note A-4) (a)(d)(e)(f)		1,860,000		459
Federal Realty Investment Trust REIT		22,872		2,891
Gaming and Leisure Properties, Inc. REIT		161,818		6,096
GGP, Inc. REIT		1,797,650		42,353
HCP, Inc. REIT		154,264		4,930
Healthcare Realty Trust, Inc. REIT		429,706		14,674
Healthcare Trust of America, Inc., Class A REIT		217,163		6,756
Hilton Worldwide Holdings, Inc.		133,147		8,235
Host Hotels & Resorts, Inc. REIT		1,072,664		19,598
Hudson Pacific Properties, Inc. REIT		79,175		2,707
Invitation Homes, Inc. REIT		11,960		259
Kilroy Realty Corp. REIT		117,222		8,809
Kimco Realty Corp. REIT		40,704		747
LaSalle Hotel Properties REIT		749,016		22,321
Liberty Property Trust REIT		76,925		3,132
Life Storage, Inc. REIT		113,667		8,423
Macerich Co. (The) REIT		278,406		16,164
Mack-Cali Realty Corp. REIT		330,298		8,964
MedEquities Realty Trust, Inc. REIT		263,722		3,328
Monogram Residential Trust, Inc. REIT		205,680		1,997
National Retail Properties, Inc. REIT		160,938		6,293
Paramount Group, Inc. REIT		966,215		15,459
Pennsylvania Real Estate Investment Trust REIT		262,492		2,971
ProLogis, Inc. REIT		394,327		23,123
Public Storage REIT		217,064		45,264
QTS Realty Trust, Inc., Class A REIT		181,009		9,472
Regency Centers Corp. REIT		491,837		30,809
Rexford Industrial Realty, Inc. REIT		224,995		6,174
Simon Property Group, Inc. REIT		635,906		102,864
SL Green Realty Corp. REIT		32,840		3,474
Spirit Realty Capital, Inc. REIT		146,980		1,089
Starwood Property Trust, Inc. REIT		151,780		3,398
Tanger Factory Outlet Centers, Inc. REIT		258,262		6,710
Taubman Centers, Inc. REIT		48,354		2,880
Ventas, Inc. REIT		284,876		19,793
VEREIT, Inc. REIT		987,732		8,040

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	Shares		Value (000)
United States (cont'd)
Vornado Realty Trust REIT		577,081	$	54,188
Welltower, Inc. REIT		166,195		12,440
				765,638
Total Common Stocks (Cost $1,100,595)				1,378,260
Short-Term Investment (0.8%)
Investment Company (0.8%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $11,047)		11,047,463		11,047
Total Investments (99.4%) (Cost $1,111,642) (g)				1,389,307
Other Assets in Excess of Liabilities (0.6%)				7,749
Net Assets (100.0%)			$	1,397,056

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

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

(d)  At June 30, 2017, the Fund held fair valued securities valued at approximately $665,000, representing 0.1% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Company's Directors.

(e)  Security has been deemed illiquid at June 30, 2017.

(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 $0. At June 30, 2017, this security had an aggregate market value of approximately $459,000, representing less than 0.05% of net assets.

(g)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $294,453,000 and the aggregate gross unrealized depreciation is approximately $16,788,000, resulting in net unrealized appreciation of approximately $277,665,000.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Diversified		29.7	%
Retail		25.6
Other*		19.2
Office		13.9
Residential		11.6
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.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,100,595)	$	1,378,260
Investment in Security of Affiliated Issuer, at Value (Cost $11,047)		11,047
Total Investments in Securities, at Value (Cost $1,111,642)		1,389,307
Foreign Currency, at Value (Cost $2,432)		2,444
Receivable for Investments Sold		7,510
Dividends Receivable		4,711
Receivable for Fund Shares Sold		3,012
Tax Reclaim Receivable		438
Receivable from Affiliate		6
Other Assets		170
Total Assets		1,407,598
Liabilities:
Payable for Investments Purchased		5,899
Payable for Advisory Fees		3,075
Payable for Fund Shares Redeemed		1,028
Payable for Sub Transfer Agency Fees — Class I		156
Payable for Sub Transfer Agency Fees — Class A		49
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Custodian Fees		97
Payable for Administration Fees		93
Payable for Professional Fees		41
Payable for Shareholder Services Fees — Class A		4
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		1
Other Liabilities		96
Total Liabilities		10,542
Net Assets	$	1,397,056
Net Assets Consist Of:
Paid-in-Capital	$	1,112,982
Net Investment Loss		(6,822	)
Accumulated Net Realized Gain		13,200
Unrealized Appreciation (Depreciation) on:
Investments		277,665
Foreign Currency Translations		31
Net Assets	$	1,397,056

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	414,062
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		37,175,046
Net Asset Value, Offering and Redemption Price Per Share	$	11.14
CLASS A:
Net Assets	$	20,403
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,843,995
Net Asset Value, Redemption Price Per Share	$	11.06
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.61
Maximum Offering Price Per Share	$	11.67
CLASS L:
Net Assets	$	1,308
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		119,214
Net Asset Value, Offering and Redemption Price Per Share	$	10.97
CLASS C:
Net Assets	$	312
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		28,928
Net Asset Value, Offering and Redemption Price Per Share	$	10.80
CLASS IS:
Net Assets	$	960,971
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		86,245,105
Net Asset Value, Offering and Redemption Price Per Share	$	11.14

@  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, 2017 (unaudited)

Global Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,117 of Foreign Taxes Withheld)	$	29,179
Dividends from Security of Affiliated Issuer (Note G)		30
Total Investment Income		29,209
Expenses:
Advisory Fees (Note B)		6,864
Administration Fees (Note C)		646
Sub Transfer Agency Fees — Class I		265
Sub Transfer Agency Fees — Class A		57
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Custodian Fees (Note F)		113
Shareholder Reporting Fees		60
Shareholder Services Fees — Class A (Note D)		47
Distribution and Shareholder Services Fees — Class L (Note D)		5
Distribution and Shareholder Services Fees — Class C (Note D)		2
Professional Fees		51
Registration Fees		38
Directors' Fees and Expenses		23
Transfer Agency Fees — Class I (Note E)		8
Transfer Agency Fees — Class A (Note E)		6
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		7
Pricing Fees		8
Other Expenses		25
Expenses Before Non Operating Expenses		8,227
Bank Overdraft Expense		16
Total Expenses		8,243
Reimbursement of Class Specific Expenses — Class I (Note B)		(95	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(28	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(9	)
Net Expenses		8,110
Net Investment Income		21,099
Realized Gain (Loss):
Investments Sold		57,546
Foreign Currency Transactions		(40	)
Net Realized Gain		57,506
Change in Unrealized Appreciation (Depreciation):
Investments		(21,174	)
Foreign Currency Translations		93
Net Change in Unrealized Appreciation (Depreciation)		(21,081	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		36,425
Net Increase in Net Assets Resulting from Operations	$	57,524

@  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, 2017

Global Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	21,099		$	41,130
Net Realized Gain		57,506			20,091
Net Change in Unrealized Appreciation (Depreciation)		(21,081	)		12,821
Net Increase in Net Assets Resulting from Operations		57,524			74,042
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(14,704	)
Net Realized Gain		—			(1,849	)
Paid-in-Capital		—			(725	)
Class A:
Net Investment Income		—			(2,970	)
Net Realized Gain		—			(429	)
Paid-in-Capital		—			(168	)
Class L:
Net Investment Income		—			(27	)
Net Realized Gain		—			(6	)
Paid-in-Capital		—			(2	)
Class C:
Net Investment Income		—			(7	)
Net Realized Gain		—			(1	)
Paid-in-Capital		—			(1	)
Class IS:
Net Investment Income		—			(40,319	)
Net Realized Gain		—			(4,880	)
Paid-in-Capital		—			(1,912	)
Total Distributions		—			(68,000	)
Capital Share Transactions:(1)
Class I:
Subscribed		44,662			114,459
Distributions Reinvested		—			15,837
Redeemed		(118,063	)		(862,678	)
Class A:
Subscribed		3,901			94,427
Distributions Reinvested		—			3,558
Redeemed		(77,979	)		(138,133	)
Class L:
Subscribed		2			—
Distributions Reinvested		—			35
Redeemed		(221	)		(3,106	)
Class C:
Subscribed		13			115
Distributions Reinvested		—			8
Redeemed		(15	)		(5	)
Class IS:
Subscribed		61,340			791,778
Distributions Reinvested		—			40,976
Redeemed		(395,914	)		(587,231	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(482,274	)		(529,960	)
Total Decrease in Net Assets		(424,750	)		(523,918	)
Net Assets:
Beginning of Period		1,821,806			2,345,724
End of Period (Including Net Investment Loss and Distributions in Excess of Net Investment Income of $(6,822) and $(27,921), respectively)	$	1,397,056		$	1,821,806

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Global Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		4,057			10,334
Shares Issued on Distributions Reinvested		—			1,491
Shares Redeemed		(10,716	)		(78,399	)
Net Decrease in Class I Shares Outstanding		(6,659	)		(66,574	)
Class A:
Shares Subscribed		355			8,746
Shares Issued on Distributions Reinvested		—			337
Shares Redeemed		(7,170	)		(13,041	)
Net Decrease in Class A Shares Outstanding		(6,815	)		(3,958	)
Class L:
Shares Subscribed		—	@@		—
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(20	)		(289	)
Net Decrease in Class L Shares Outstanding		(20	)		(286	)
Class C:
Shares Subscribed		1			10
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(1	)		(—	@@)
Net Increase (Decrease) in Class C Shares Outstanding		(—	@@)		11
Class IS:
Shares Subscribed		5,599			72,096
Shares Issued on Distributions Reinvested		—			3,858
Shares Redeemed		(36,011	)		(53,032	)
Net Increase (Decrease) in Class IS Shares Outstanding		(30,412	)		22,922

@@  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, 2017

Financial Highlights

Global Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	10.76		$	10.80		$	11.10		$	9.91		$	9.77		$	7.77
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.14			0.21			0.18			0.20			0.18			0.17
Net Realized and Unrealized Gain (Loss)		0.24			0.15			(0.28	)		1.19			0.16			2.17
Total from Investment Operations		0.38			0.36			(0.10	)		1.39			0.34			2.34
Distributions from and/or in Excess of:
Net Investment Income		—			(0.34	)		(0.20	)		(0.20	)		(0.20	)		(0.34	)
Net Realized Gain		—			(0.04	)		—			—			—			—
Paid-in-Capital		—			(0.02	)		—			—			—			—
Total Distributions		—			(0.40	)		(0.20	)		(0.20	)		(0.20	)		(0.34	)
Net Asset Value, End of Period	$	11.14		$	10.76		$	10.80		$	11.10		$	9.91		$	9.77
Total Return (3)		3.53	%(6)		3.42	%		(0.94	)%		14.08	%		3.55	%		30.19	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	414,062		$	471,790		$	1,192,624		$	1,828,656		$	1,793,614		$	1,880,999
Ratio of Expenses to Average Net Assets (8)		1.05	%(4)(7)		1.04	%(4)		1.05	%(4)		1.05	%(4)		1.02	%(4)		1.02	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.05	%(4)(7)		N/A			1.05	%(4)		N/A			1.02	%(4)		N/A
Ratio of Net Investment Income to Average Net Assets (8)		2.56	%(4)(7)		1.88	%(4)		1.65	%(4)		1.85	%(4)		1.77	%(4)		2.42	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
Portfolio Turnover Rate		17	%(6)		26	%		29	%		32	%		33	%		29	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.09	%(7)		1.04	%		1.05	%		1.05	%		N/A			N/A
Net Investment Income to Average Net Assets		2.52	%(7)		1.88	%		1.65	%		1.85	%		N/A			N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	10.71		$	10.74		$	11.05		$	9.86		$	9.72		$	7.73
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.10			0.17			0.16			0.17			0.15			0.15
Net Realized and Unrealized Gain (Loss)		0.25			0.16			(0.30	)		1.19			0.15			2.16
Total from Investment Operations		0.35			0.33			(0.14	)		1.36			0.30			2.31
Distributions from and/or in Excess of:
Net Investment Income		—			(0.30	)		(0.17	)		(0.17	)		(0.16	)		(0.32	)
Net Realized Gain		—			(0.04	)		—			—			—			—
Paid-in-Capital		—			(0.02	)		—			—			—			—
Total Distributions		—			(0.36	)		(0.17	)		(0.17	)		(0.16	)		(0.32	)
Net Asset Value, End of Period	$	11.06		$	10.71		$	10.74		$	11.05		$	9.86		$	9.72
Total Return (3)		3.27	%(7)		3.12	%		(1.25	)%		13.88	%		3.18	%		29.93	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	20,403		$	92,730		$	135,517		$	105,766		$	96,046		$	171,413
Ratio of Expenses to Average Net Assets (9)		1.40	%(4)(8)		1.35	%(4)		1.34	%(4)		1.31	%(4)		1.30	%(4)(5)		1.27	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.40	%(4)(8)		N/A			1.34	%(4)		N/A			1.30	%(4)(5)		N/A
Ratio of Net Investment Income to Average Net Assets (9)		1.76	%(4)(8)		1.51	%(4)		1.47	%(4)		1.60	%(4)		1.43	%(4)		2.17	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		17	%(7)		26	%		29	%		32	%		33	%		29	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.55	%(8)		1.36	%		N/A			N/A			1.32	%		N/A
Net Investment Income to Average Net Assets		1.61	%(8)		1.50	%		N/A			N/A			1.41	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	10.64		$	10.61		$	10.91		$	9.74		$	9.59		$	7.63
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.09			0.12			0.12			0.12			0.10			0.10
Net Realized and Unrealized Gain (Loss)		0.24			0.16			(0.31	)		1.17			0.16			2.13
Total from Investment Operations		0.33			0.28			(0.19	)		1.29			0.26			2.23
Distributions from and/or in Excess of:
Net Investment Income		—			(0.19	)		(0.11	)		(0.12	)		(0.11	)		(0.27	)
Net Realized Gain		—			(0.04	)		—			—			—			—
Paid-in-Capital		—			(0.02	)		—			—			—			—
Total Distributions		—			(0.25	)		(0.11	)		(0.12	)		(0.11	)		(0.27	)
Net Asset Value, End of Period	$	10.97		$	10.64		$	10.61		$	10.91		$	9.74		$	9.59
Total Return (3)		3.10	%(7)		2.65	%		(1.71	)%		13.27	%		2.77	%		29.26	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,308		$	1,483		$	4,509		$	4,755		$	5,844		$	7,050
Ratio of Expenses to Average Net Assets (9)		1.90	%(4)(8)		1.82	%(4)		1.78	%(4)		1.79	%(4)		1.77	%(4)(5)		1.77	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.90	%(4)(8)		N/A			1.77	%(4)		N/A			1.77	%(4)(5)		N/A
Ratio of Net Investment Income to Average Net Assets (9)		1.72	%(4)(8)		1.07	%(4)		1.12	%(4)		1.08	%(4)		0.98	%(4)		1.67	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		17	%(7)		26	%		29	%		32	%		33	%		29	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.90	%(8)		1.82	%		N/A			N/A			N/A			N/A
Net Investment Income to Average Net Assets		1.72	%(8)		1.07	%		N/A			N/A			N/A			N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	10.49		$	10.56		$	11.23
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.08			0.08			0.07
Net Realized and Unrealized Gain (Loss)		0.23			0.16			(0.60	)
Total from Investment Operations		0.31			0.24			(0.53	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.25	)		(0.14	)
Net Realized Gain		—			(0.04	)		—
Paid-in-Capital		—			(0.02	)		—
Total Distributions		—			(0.31	)		(0.14	)
Net Asset Value, End of Period	$	10.80		$	10.49		$	10.56
Total Return (4)		2.96	%(7)		2.31	%		(4.71	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	312		$	305		$	191
Ratio of Expenses to Average Net Assets (9)		2.15	%(5)(8)		2.15	%(5)		2.15	%(5)(8)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.15	%(5)(8)		N/A			2.15	%(5)(8)
Ratio of Net Investment Income to Average Net Assets (9)		1.52	%(5)(8)		0.75	%(5)		1.01	%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)(8)
Portfolio Turnover Rate		17	%(7)		26	%		29	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.61	%(8)		2.86	%		3.25	%(8)
Net Investment Income (Loss) to Average Net Assets		1.06	%(8)		0.04	%		(0.09	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Global Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.76		$	10.81		$	11.11		$	9.91		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.15			0.22			0.20			0.22			0.08
Net Realized and Unrealized Gain (Loss)		0.23			0.15			(0.29	)		1.19			0.02
Total from Investment Operations		0.38			0.37			(0.09	)		1.41			0.10
Distributions from and/or in Excess of:
Net Investment Income		—			(0.36	)		(0.21	)		(0.21	)		(0.20	)
Net Realized Gain		—			(0.04	)		—			—			—
Paid-in-Capital		—			(0.02	)		—			—			—
Total Distributions		—			(0.42	)		(0.21	)		(0.21	)		(0.20	)
Net Asset Value, End of Period	$	11.14		$	10.76		$	10.81		$	11.11		$	9.91
Total Return (4)		3.53	%(8)		3.45	%		(0.84	)%		14.27	%		1.08	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	960,971		$	1,255,498		$	1,012,883		$	586,511		$	206,757
Ratio of Expenses to Average Net Assets (10)		0.97	%(5)(9)		0.96	%(5)		0.97	%(5)		0.96	%(5)		0.96	%(5)(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.97	%(5)(9)		N/A			0.97	%(5)		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (10)		2.66	%(5)(9)		2.01	%(5)		1.78	%(5)		2.01	%(5)		2.88	%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		17	%(8)		26	%		29	%		32	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.97	%		N/A			0.96	%		0.97	%(9)
Net Investment Income to Average Net Assets		N/A			2.00	%		N/A			2.01	%		2.87	%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been 0.01% higher and the Ratio of Net Investment Income to Average Net Assets would have been 0.01% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Global Real Estate Portfolio. The Fund seeks to provide current income and capital appreciation. The Fund has capital subscription commitments to an investee company for this same purpose, the details of which are disclosed in the Unfunded Commitments note.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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 Fund 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 Fund.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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	$	413,152	$	—	$	—	$	413,152
Health Care		62,821		—		—		62,821
Industrial		64,060		—		459		64,519
Lodging/Resorts		62,146		—		—		62,146
Mixed Industrial/Office		9,486		—		—		9,486
Office		193,273		—		—		193,273
Residential		160,269		—		206		160,475
Retail		355,341		—		—		355,341
Self Storage		57,047		—		—		57,047
Total Common Stocks		1,377,595		—		665		1,378,260
Short-Term Investment
Investment Company		11,047		—		—		11,047
Total Assets	$	1,388,642	$	—	$	665	$	1,389,307

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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	$	952
Purchases		58
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		(116	)
Change in unrealized appreciation (depreciation)		(229	)
Realized gains (losses)		—
Ending Balance	$	665
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(229	)

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, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Industrial
Common Stock	$	459	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and Significant Market Changes between last Capital Statement and Valuation Date	Adjusted Capital Balance
Residential
Common Stock	$	206	Market Transaction Method	Transaction Valuation	$	0.02		$	0.02		$	0.02		Increase
				Discount for Lack of Marketability		50.0	%		50.0	%		50.0	%	Decrease

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund 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 Fund and Exeter Industrial Value Fund LP, the Fund 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, 2017, Exeter Industrial Value Fund LP has drawn down approximately $1,860,000 which represents 93.0% of the commitment.

5.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 Fund 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 billion			Over $2 billion
	0.85	%		0.80	%

For the six months ended June 30, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.85% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $124,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $273,056,000 and $728,614,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $9,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	5,762	$	212,273	$	206,988	$	30	$	11,047

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:						2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	58,027	$	7,165	$	2,808	$	42,001	$	—

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, REIT adjustments 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, 2016:

Distributions in Excess of Net Investment Income (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	6,124	$	(6,122	)	$	(2	)

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

During the year ended December 31, 2016, the Fund utilized capital loss carryforwards for U.S. federal income tax purposes of approximately $5,549,000.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	4,815	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 23.5%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was better than its peer group average for the one- and five-year periods but below its peer group average for the three-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were higher than but close to its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRESAN
1860548 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Growth Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Growth Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Growth Portfolio Class I	$	1,000.00	$	1,276.80	$	1,021.72	$	3.50	$	3.11		0.62	%
Growth Portfolio Class A		1,000.00		1,275.20		1,020.38		5.02		4.46		0.89
Growth Portfolio Class L		1,000.00		1,271.70		1,017.70		8.05		7.15		1.43
Growth Portfolio Class C		1,000.00		1,270.30		1,016.61		9.29		8.25		1.65
Growth Portfolio Class IS		1,000.00		1,277.50		1,022.17		2.99		2.66		0.53

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Growth Portfolio

	Shares		Value (000)
Common Stocks (91.2%)
Automobiles (1.5%)
Tesla, Inc. (a)(b)		153,812	$	55,620
Biotechnology (1.1%)
Alnylam Pharmaceuticals, Inc. (a)		270,978		21,613
Intrexon Corp. (a)(b)		399,616		9,627
Juno Therapeutics, Inc. (a)(b)		370,683		11,080
				42,320
Capital Markets (3.6%)
S&P Global, Inc.		927,928		135,468
Health Care Equipment & Supplies (6.4%)
DexCom, Inc. (a)		776,930		56,832
Intuitive Surgical, Inc. (a)		198,716		185,873
				242,705
Health Care Technology (6.4%)
athenahealth, Inc. (a)		1,020,868		143,483
Veeva Systems, Inc., Class A (a)		1,647,203		100,990
				244,473
Hotels, Restaurants & Leisure (4.9%)
Starbucks Corp.		3,191,833		186,116
Information Technology Services (7.3%)
Mastercard, Inc., Class A		1,409,439		171,176
Visa, Inc., Class A		1,145,760		107,450
				278,626
Internet & Direct Marketing Retail (14.4%)
Amazon.com, Inc. (a)		332,321		321,687
Netflix, Inc. (a)		244,727		36,565
Priceline Group, Inc. (The) (a)		101,146		189,195
				547,447
Internet Software & Services (20.3%)
Alibaba Group Holding Ltd. ADR (China) (a)		493,944		69,597
Alphabet, Inc., Class C (a)		263,890		239,805
Facebook, Inc., Class A (a)		2,151,214		324,790
Tencent Holdings Ltd. (China) (c)		1,770,100		63,300
Twitter, Inc. (a)		4,133,868		73,872
				771,364
Life Sciences Tools & Services (4.9%)
Illumina, Inc. (a)		1,064,319		184,680
Semiconductors & Semiconductor Equipment (3.1%)
NVIDIA Corp.		814,015		117,674
Software (17.3%)
Activision Blizzard, Inc.		1,654,592		95,255
Salesforce.com, Inc. (a)		2,135,877		184,967
ServiceNow, Inc. (a)		1,790,892		189,834
Snap, Inc., Class A (a)(b)		674,273		11,982
Workday, Inc., Class A (a)		1,832,910		177,792
				659,830
Total Common Stocks (Cost $1,861,324)				3,466,323

	Shares		Value (000)
Preferred Stocks (3.7%)
Electronic Equipment, Instruments & Components (0.6%)
Magic Leap Series C (a)(d)(e)(f) (acquisition cost — $18,812; acquired 12/22/15)		816,725	$	20,336
Internet & Direct Marketing Retail (3.0%)
Airbnb, Inc. Series D (a)(d)(e)(f) (acquisition cost — $20,638; acquired 4/16/14)		506,928		54,596
Flipkart Online Services Pvt Ltd. Series F (a)(d)(e)(f) (acquisition cost — $15,000; acquired 8/18/14)		207,900		14,711
Uber Technologies Series G (a)(d)(e)(f) (acquisition cost — $54,173; acquired 12/3/15)		1,110,729		45,807
				115,114
Internet Software & Services (0.1%)
Dropbox, Inc. Series C (a)(d)(e)(f) (acquisition cost — $7,182; acquired 1/30/14)		375,979		3,245
Total Preferred Stocks (Cost $115,805)				138,695
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY November 2017 @ CNY 7.40, Royal Bank of Scotland (Cost $1,836)		546,729		338
	Shares
Short-Term Investments (5.7%)
Securities held as Collateral on Loaned Securities (0.8%)
Investment Company (0.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		24,180,780		24,181
	Face Amount (000)
Repurchase Agreements (0.2%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $2,932; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $2,990)	$	2,932		2,932
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $2,684; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $2,738)		2,683		2,683

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Growth Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (cont'd)
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $1,917; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $1,956)	$	1,917	$	1,917
				7,532
Total Securities held as Collateral on Loaned Securities (Cost $31,713)				31,713
	Shares
Investment Company (4.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $186,576)		186,576,161		186,576
Total Short-Term Investments (Cost $218,289)				218,289
Total Investments (100.6%) (Cost $2,197,254) Including $77,573 of Securities Loaned (g)				3,823,645
Liabilities in Excess of Other Assets (–0.6%)				(21,352	)
Net Assets (100.0%)			$	3,802,293

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2017.

(c)  Security trades on the Hong Kong exchange.

(d)  Security has been deemed illiquid at June 30, 2017.

(e)  At June 30, 2017, the Fund held fair valued securities valued at approximately $138,695,000, representing 3.7% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Company'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 Fund 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, 2017, amounts to approximately $138,695,000 and represents 3.7% of net assets.

(g)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,725,851,000 and the aggregate gross unrealized depreciation is approximately $99,460,000, resulting in net unrealized appreciation of approximately $1,626,391,000.

ADR  —  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		24.5	%
Internet Software & Services		20.4
Internet & Direct Marketing Retail		17.5
Software		17.4
Information Technology Services		7.4
Health Care Technology		6.4
Health Care Equipment & Supplies		6.4
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

**  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, 2017 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $1,986,497)	$	3,612,888
Investment in Security of Affiliated Issuer, at Value (Cost $210,757)		210,757
Total Investments in Securities, at Value (Cost $2,197,254)		3,823,645
Receivable for Investments Sold		42,599
Receivable for Fund Shares Sold		2,274
Dividends Receivable		679
Tax Reclaim Receivable		493
Receivable from Affiliate		138
Other Assets		276
Total Assets		3,870,104
Liabilities:
Collateral on Securities Loaned, at Value		31,713
Payable for Investments Purchased		27,249
Payable for Advisory Fees		3,810
Payable for Fund Shares Redeemed		3,052
Payable for Sub Transfer Agency Fees — Class I		120
Payable for Sub Transfer Agency Fees — Class A		458
Payable for Sub Transfer Agency Fees — Class L		46
Payable for Sub Transfer Agency Fees — Class C		5
Payable for Shareholder Services Fees — Class A		357
Payable for Distribution and Shareholder Services Fees — Class L		55
Payable for Distribution and Shareholder Services Fees — Class C		20
Due to Broker		290
Payable for Administration Fees		252
Payable for Directors' Fees and Expenses		122
Payable for Transfer Agency Fees — Class I		7
Payable for Transfer Agency Fees — Class A		44
Payable for Transfer Agency Fees — Class L		4
Payable for Transfer Agency Fees — Class C		1
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Custodian Fees		34
Payable for Professional Fees		34
Other Liabilities		138
Total Liabilities		67,811
Net Assets	$	3,802,293
Net Assets Consist Of:
Paid-in-Capital	$	1,919,923
Accumulated Net Investment Loss		(8,972	)
Accumulated Net Realized Gain		264,951
Unrealized Appreciation (Depreciation) on:
Investments		1,626,391
Net Assets	$	3,802,293

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	1,003,010
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		22,325,945
Net Asset Value, Offering and Redemption Price Per Share	$	44.93
CLASS A:
Net Assets	$	1,706,598
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		39,398,192
Net Asset Value, Redemption Price Per Share	$	43.32
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	2.40
Maximum Offering Price Per Share	$	45.72
CLASS L:
Net Assets	$	86,462
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,066,482
Net Asset Value, Offering and Redemption Price Per Share	$	41.84
CLASS C:
Net Assets	$	24,928
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		598,085
Net Asset Value, Offering and Redemption Price Per Share	$	41.68
CLASS IS:
Net Assets	$	981,295
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		21,748,822
Net Asset Value, Offering and Redemption Price Per Share	$	45.12
(1) Including: Securities on Loan, at Value:	$	77,573

@  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, 2017 (unaudited)

Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	3,937
Income from Securities Loaned — Net		1,561
Dividends from Security of Affiliated Issuer (Note G)		340
Total Investment Income		5,838
Expenses:
Advisory Fees (Note B)		7,536
Shareholder Services Fees — Class A (Note D)		1,964
Distribution and Shareholder Services Fees — Class L (Note D)		308
Distribution and Shareholder Services Fees — Class C (Note D)		101
Administration Fees (Note C)		1,383
Sub Transfer Agency Fees — Class I		343
Sub Transfer Agency Fees — Class A		728
Sub Transfer Agency Fees — Class L		52
Sub Transfer Agency Fees — Class C		9
Transfer Agency Fees — Class I (Note E)		26
Transfer Agency Fees — Class A (Note E)		124
Transfer Agency Fees — Class L (Note E)		10
Transfer Agency Fees — Class C (Note E)		3
Transfer Agency Fees — Class IS (Note E)		2
Shareholder Reporting Fees		140
Custodian Fees (Note F)		49
Professional Fees		49
Directors' Fees and Expenses		43
Registration Fees		42
Pricing Fees		2
Other Expenses		29
Expenses Before Non Operating Expenses		12,943
Bank Overdraft Expense		2
Total Expenses		12,945
Rebate from Morgan Stanley Affiliate (Note G)		(95	)
Net Expenses		12,850
Net Investment Loss		(7,012	)
Realized Gain (Loss):
Investments Sold		188,899
Foreign Currency Transactions		(—	@)
Net Realized Gain		188,899
Change in Unrealized Appreciation (Depreciation):
Investments		638,678
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		827,577
Net Increase in Net Assets Resulting from Operations	$	820,565

@  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, 2017

Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(7,012	)	$	(3,375	)
Net Realized Gain		188,899			267,238
Net Change in Unrealized Appreciation (Depreciation)		638,678			(327,432	)
Net Increase (Decrease) in Net Assets Resulting from Operations		820,565			(63,569	)
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(93,975	)
Class A:
Net Realized Gain		—			(177,189	)
Class L:
Net Realized Gain		—			(9,653	)
Class C:
Net Realized Gain		—			(2,102	)
Class IS:
Net Realized Gain		—			(108,125	)
Total Distributions		—			(391,044	)
Capital Share Transactions:(1)
Class I:
Subscribed		233,337			245,890
Distributions Reinvested		—			90,086
Redeemed		(152,921	)		(373,817	)
Class A:
Subscribed		76,294			129,312
Distributions Reinvested		—			171,522
Redeemed		(119,257	)		(348,180	)
Class L:
Exchanged		35			179
Distributions Reinvested		—			9,458
Redeemed		(7,347	)		(12,432	)
Class C:
Subscribed		6,614			8,747
Distributions Reinvested		—			1,791
Redeemed		(2,874	)		(5,168	)
Class IS:
Subscribed		57,124			115,188
Distributions Reinvested		—			103,631
Redeemed		(178,858	)		(241,921	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(87,853	)		(105,714	)
Total Increase (Decrease) in Net Assets		732,712			(560,327	)
Net Assets:
Beginning of Period		3,069,581			3,629,908
End of Period (Including Accumulated Net Investment Loss of $(8,972) and $(1,960))	$	3,802,293		$	3,069,581

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		5,409			6,488
Shares Issued on Distributions Reinvested		—			2,487
Shares Redeemed		(3,738	)		(10,000	)
Net Increase (Decrease) in Class I Shares Outstanding		1,671			(1,025	)
Class A:
Shares Subscribed		1,858			3,580
Shares Issued on Distributions Reinvested		—			4,892
Shares Redeemed		(2,989	)		(9,425	)
Net Decrease in Class A Shares Outstanding		(1,131	)		(953	)
Class L:
Shares Exchanged		—	@@		5
Shares Issued on Distributions Reinvested		—			278
Shares Redeemed		(193	)		(348	)
Net Decrease in Class L Shares Outstanding		(193	)		(65	)
Class C:
Shares Subscribed		166			246
Shares Issued on Distributions Reinvested		—			53
Shares Redeemed		(74	)		(145	)
Net Increase in Class C Shares Outstanding		92			154
Class IS:
Shares Subscribed		1,391			3,101
Shares Issued on Distributions Reinvested		—			2,849
Shares Redeemed		(4,414	)		(6,336	)
Net Decrease in Class IS Shares Outstanding		(3,023	)		(386	)

@@  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, 2017

Financial Highlights

Growth Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	35.19		$	40.44		$	38.86		$	38.38		$	27.05		$	23.46
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.06	)		0.01			(0.07	)		(0.03	)		0.02			0.16
Net Realized and Unrealized Gain (Loss)		9.80			(0.79	)		4.70			2.43			13.02			3.52
Total from Investment Operations		9.74			(0.78	)		4.63			2.40			13.04			3.68
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.00	)(3)		(0.13	)		(0.05	)
Net Realized Gain		—			(4.47	)		(3.05	)		(1.92	)		(1.58	)		(0.04	)
Total Distributions		—			(4.47	)		(3.05	)		(1.92	)		(1.71	)		(0.09	)
Net Asset Value, End of Period	$	44.93		$	35.19		$	40.44		$	38.86		$	38.38		$	27.05
Total Return (4)		27.68	%(8)		(1.91	)%		11.91	%		6.42	%		48.60	%		15.66	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,003,010		$	726,787		$	876,660		$	794,648		$	989,649		$	661,073
Ratio of Expenses to Average Net Assets (10)		0.62	%(5)(9)		0.63	%(5)		0.61	%(5)		0.69	%(5)(6)		0.70	%(5)		0.72	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.62	%(5)(9)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.28	)%(5)(9)		0.02	%(5)		(0.18	)%(5)		(0.08	)%(5)		0.08	%(5)		0.59	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.01	%		0.01	%		0.00	%(7)
Portfolio Turnover Rate		18	%(8)		39	%		34	%		44	%		31	%		49	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.63	%		N/A			N/A			0.71	%		N/A
Net Investment Income to Average Net Assets		N/A			0.02	%		N/A			N/A			0.07	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Growth Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	33.97		$	39.31		$	37.98		$	37.61		$	26.53		$	23.03
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.11	)		(0.10	)		(0.21	)		(0.13	)		(0.06	)		0.09
Net Realized and Unrealized Gain (Loss)		9.46			(0.77	)		4.59			2.42			12.78			3.45
Total from Investment Operations		9.35			(0.87	)		4.38			2.29			12.72			3.54
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			—			(0.06	)		—
Net Realized Gain		—			(4.47	)		(3.05	)		(1.92	)		(1.58	)		(0.04	)
Total Distributions		—			(4.47	)		(3.05	)		(1.92	)		(1.64	)		(0.04	)
Net Asset Value, End of Period	$	43.32		$	33.97		$	39.31		$	37.98		$	37.61		$	26.53
Total Return (3)		27.52	%(7)		(2.21	)%		11.53	%		6.25	%		48.22	%		15.36	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,706,598		$	1,376,836		$	1,630,538		$	1,549,756		$	205,286		$	138,416
Ratio of Expenses to Average Net Assets (9)		0.89	%(4)(8)		0.92	%(4)		0.96	%(4)		0.83	%(4)(5)		0.95	%(4)(5)		0.97	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.89	%(4)(8)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		(0.55	)%(4)(8)		(0.26	)%(4)		(0.52	)%(4)		(0.34	)%(4)		(0.18	)%(4)		0.34	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.01	%		0.00	%(6)
Portfolio Turnover Rate		18	%(7)		39	%		34	%		44	%		31	%		49	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.92	%		0.96	%		N/A			0.96	%		N/A
Net Investment Loss to Average Net Assets		N/A			(0.26	)%		(0.52	)%		N/A			(0.19	)%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Loss to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(5)  Effective April 7, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio 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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Growth Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from April 27, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	32.90		$	38.41		$	37.40		$	37.26		$	26.43		$	27.60
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		(0.21	)		(0.29	)		(0.44	)		(0.31	)		(0.38	)		0.03
Net Realized and Unrealized Gain (Loss)		9.15			(0.75	)		4.50			2.38			12.84			(1.16	)
Total from Investment Operations		8.94			(1.04	)		4.06			2.07			12.46			(1.13	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.01	)		(0.05	)		(0.00	)(4)
Net Realized Gain		—			(4.47	)		(3.05	)		(1.92	)		(1.58	)		(0.04	)
Total Distributions		—			(4.47	)		(3.05	)		(1.93	)		(1.63	)		(0.04	)
Net Asset Value, End of Period	$	41.84		$	32.90		$	38.41		$	37.40		$	37.26		$	26.43
Total Return (5)		27.17	%(9)		(2.72	)%		10.85	%		5.72	%		47.44	%		(4.10	)%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	86,462		$	74,324		$	89,277		$	89,854		$	528		$	10
Ratio of Expenses to Average Net Assets (11)		1.43	%(6)(10)		1.45	%(6)		1.55	%(6)		1.29	%(6)(7)		1.60	%(6)(7)		1.51	%(6)(10)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.43	%(6)(10)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		(1.09	)%(6)(10)		(0.79	)%(6)		(1.11	)%(6)		(0.82	)%(6)		(1.09	)%(6)		0.20	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%		0.00	%(8)(10)
Portfolio Turnover Rate		18	%(9)		39	%		34	%		44	%		31	%		49	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.45	%		1.57	%		N/A			1.72	%		N/A
Net Investment Loss to Average Net Assets		N/A			(0.79	)%		(1.13	)%		N/A			(1.21	)%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Loss to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Growth Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	32.81		$	38.40		$	40.33
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.25	)		(0.38	)		(0.35	)
Net Realized and Unrealized Gain (Loss)		9.12			(0.74	)		1.47
Total from Investment Operations		8.87			(1.12	)		1.12
Distributions from and/or in Excess of:
Net Realized Gain		—			(4.47	)		(3.05	)
Net Asset Value, End of Period	$	41.68		$	32.81		$	38.40
Total Return (4)		27.03	%(7)		(2.93	)%		2.71	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	24,928		$	16,613		$	13,544
Ratio of Expenses to Average Net Assets (9)		1.65	%(5)(8)		1.70	%(5)		1.62	%(5)(8)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.65	%(5)(8)		N/A			N/A
Ratio of Net Investment Loss to Average Net Assets (9)		(1.32	)%(5)(8)		(1.04	)%(5)		(1.29	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)(8)
Portfolio Turnover Rate		18	%(7)		39	%		34	%
(9) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:

Expense to Average Net Assets	N/A	1.70	%	N/A
Net Investment Loss to Average Net Assets	N/A	(1.04	)%	N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Loss to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Growth Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	35.32		$	40.54		$	38.92		$	38.40		$	34.45
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		(0.04	)		0.05			(0.04	)		(0.05	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		9.84			(0.80	)		4.71			2.50			5.55
Total from Investment Operations		9.80			(0.75	)		4.67			2.45			5.53
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.01	)		—
Net Realized Gain		—			(4.47	)		(3.05	)		(1.92	)		(1.58	)
Total Distributions		—			(4.47	)		(3.05	)		(1.93	)		(1.58	)
Net Asset Value, End of Period	$	45.12		$	35.32		$	40.54		$	38.92		$	38.40
Total Return (4)		27.75	%(8)		(1.83	)%		11.97	%		6.60	%		16.20	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	981,295		$	875,021		$	1,019,889		$	964,465		$	11
Ratio of Expenses to Average Net Assets (10)		0.53	%(5)(9)		0.54	%(5)		0.54	%(5)		0.54	%(5)(6)		0.60	%(5)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.53	%(5)(9)		N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.20	)%(5)(9)		0.12	%(5)		(0.10	)%(5)		(0.12	)%(5)		(0.16	)%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.00	%(7)		0.00	%(7)		0.01	%		0.01	%(9)
Portfolio Turnover Rate		18	%(8)		39	%		34	%		44	%		31	%(8)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.54	%		N/A			0.55	%		5.60	%(9)
Net Investment Income (Loss) to Average Net Assets		N/A			0.12	%		N/A			(0.13	)%		(5.16	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Growth Portfolio. The Fund seeks long-term capital appreciation by investing primarily in growth oriented equity securities of large capitalization companies.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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.)

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Automobiles	$	55,620	$	—	$	—	$	55,620
Biotechnology		42,320		—		—		42,320
Capital Markets		135,468		—		—		135,468
Health Care Equipment & Supplies		242,705		—		—		242,705
Health Care Technology		244,473		—		—		244,473
Hotels, Restaurants & Leisure		186,116		—		—		186,116
Information Technology Services		278,626		—		—		278,626
Internet & Direct Marketing Retail		547,447		—		—		547,447
Internet Software & Services		771,364		—		—		771,364
Life Sciences Tools & Services		184,681		—		—		184,681
Semiconductors & Semiconductor Equipment		117,674		—		—		117,674
Software		659,830		—		—		659,830
Total Common Stocks		3,466,323		—		—		3,466,323

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	$	—	$	—	$	138,695	$	138,695
Call Option Purchased		—		338		—		338
Short-Term Investments
Investment Company		210,757		—		—		210,757
Repurchase Agreements		—		7,532		—		7,532
Total Short-Term Investments		210,757		7,532		—		218,289
Total Assets	$	3,677,080	$	7,870	$	138,695	$	3,823,645

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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.

	Preferred Stocks (000)
Beginning Balance	$	139,530
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(835	)
Realized gains (losses)		—
Ending Balance	$	138,695
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(835	)

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Electronic Equipment, Instuments & Components
Preferred Stock	$	20,336	Discounted Cash Flow	Weighted Average Cost of Capital		25.0	%		27.0	%		26.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		12.0	x		20.8	x		12.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet & Direct Marketing Retail
Preferred Stocks	$	54,596	Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%		17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		9.7	x		15.5	x		9.7	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	14,711	Market Transaction Method	Pending Private Placement	$	88.11		$	88.11		$	88.11		Increase
				Proposed Secondary Transaction	$	61.68		$	61.68		$	61.68		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		17.5	%		19.5	%		18.5	%	Decrease
				Perpetual Growth Rate		3.5	%		4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.1	x		2.8	x		2.4	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	45,807	Discounted Cash Flow	Weighted Average Cost of Capital		17.0	%		19.0	%		18.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.1	x		8.3	x		2.2	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet Software & Services
Preferred Stock	$	3,245	Market Transaction Method	Pending Transactions	$	8.15		$	9.05		$	8.60		Increase
			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		2.8	x		7.6	x		5.5	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency

exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	338	(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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)	$	(1,674	)(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 (Options Purchased)	Investments $(1,351)(c)

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

At June 30, 2017, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Assets(d) Liabilities(d) Derivatives	(000)			(000)
Option Purchased	$	338	(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 Fund 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 Fund 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 Fund 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 Fund 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 Fund'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, 2017.

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	$	338	$	—	$	(290	)	$	48

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	454,936,000

6.  Securities Lending: The Fund 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 Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund 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, 2017.

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)
$	77,573	(e)	$	—	$	(77,573	)(f)(g)	$	0

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

(f) The Fund received cash collateral of approximately $31,713,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $47,640,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	31,713	$	—	$	—	$	—	$	31,713
Total Borrowings	$	31,713	$	—	$	—	$	—	$	31,713
Gross amount of recognized liabilities for securities lending transactions									$	31,713

7.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.43% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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, 1.65% 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 Fund'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 for the six months ended June 30, 2017.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

The Company 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 Fund 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 Fund'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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $608,217,000 and $855,239,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $95,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	240,982	$	687,007	$	717,232	$	340	$	210,757

During the six months ended June 30, 2017, the Fund incurred approximately $18,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, remains subject to examination by taxing authorities.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	391,044	$	5,086	$	256,809

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, net operating loss and basis adjustments on partnerships, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	2,086	$	5,897	$	(7,983	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	88,015

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to

January 1, 2017 for U.S. Federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	1,794	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 58.9%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods but better than 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

32

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWSAN
1859497 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Insight Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Insight Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,080.30	$	1,019.74	$	5.26	$	5.11		1.02	%
Insight Portfolio Class A		1,000.00		1,078.50		1,018.15		6.91		6.71		1.34
Insight Portfolio Class L		1,000.00		1,075.20		1,015.52		9.62		9.35		1.87
Insight Portfolio Class C		1,000.00		1,074.10		1,014.33		10.85		10.54		2.11

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Insight Portfolio

	Shares		Value (000)
Common Stocks (83.2%)
Aerospace & Defense (6.9%)
BWX Technologies, Inc.		18,686	$	911
United Technologies Corp.		17,467		2,133
				3,044
Automobiles (4.2%)
Harley-Davidson, Inc.		34,029		1,838
Beverages (0.0%)
Big Rock Brewery, Inc. (Canada) (a)		1,928		12
Biotechnology (3.5%)
Biogen, Inc. (a)		5,755		1,562
Chemicals (8.1%)
Agrium, Inc. (Canada)		23,560		2,135
Mosaic Co. (The)		64,039		1,462
				3,597
Commercial Services & Supplies (2.2%)
Copart, Inc. (a)		30,620		973
Diversified Financial Services (6.0%)
Berkshire Hathaway, Inc., Class B (a)		4,299		728
Leucadia National Corp.		74,220		1,942
				2,670
Energy Equipment & Services (1.4%)
Dril-Quip, Inc. (a)		12,813		625
Food Products (1.2%)
Lamb Weston Holdings, Inc.		12,091		533
Health Care Equipment & Supplies (2.7%)
Intuitive Surgical, Inc. (a)		1,279		1,196
Health Care Technology (0.1%)
Castlight Health, Inc., Class B (a)		6,713		28
Hotels, Restaurants & Leisure (1.6%)
Habit Restaurants, Inc. (The) (a)		3,844		61
Potbelly Corp. (a)		54,145		623
Wingstop, Inc.		718		22
				706
Insurance (2.0%)
Progressive Corp. (The)		20,089		886
Internet Software & Services (4.7%)
Cars.com, Inc. (a)		26,957		718
Criteo SA ADR (France) (a)		23,811		1,168
Twitter, Inc. (a)		9,494		169
				2,055
Leisure Products (1.0%)
Vista Outdoor, Inc. (a)		20,322		457
Machinery (8.0%)
Manitowoc Co., Inc. (The) (a)		33,414		201
Terex Corp.		25,144		943
Welbilt, Inc. (a)		127,832		2,409
				3,553

	Shares		Value (000)
Media (10.5%)
News Corp., Class A		34,942	$	479
TEGNA, Inc.		71,656		1,032
Time Warner, Inc.		31,209		3,134
				4,645
Metals & Mining (0.8%)
Dominion Diamond Corp. (Canada)		27,852		350
Multi-Line Retail (2.6%)
Dillard's, Inc., Class A (b)		20,207		1,166
Pharmaceuticals (6.7%)
Novo Nordisk A/S Series B (Denmark)		69,161		2,962
Specialty Retail (0.4%)
Container Store Group, Inc. (The) (a)		31,745		188
Tech Hardware, Storage & Peripherals (1.8%)
Hewlett Packard Enterprise Co.		47,220		783
Trading Companies & Distributors (2.5%)
Fastenal Co.		25,492		1,110
Transportation Infrastructure (4.3%)
BBA Aviation PLC (United Kingdom)		469,707		1,881
Total Common Stocks (Cost $34,315)				36,820
Short-Term Investments (20.6%)
Securities held as Collateral on Loaned Securities (2.6%)
Investment Company (2.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		884,790		885
	Face Amount (000)
Repurchase Agreements (0.6%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $107; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $109)	$	107		107
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $98; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $100)		98		98
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $70; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $72)		70		70
				275
Total Securities held as Collateral on Loaned Securities (Cost $1,160)				1,160

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Insight Portfolio

	Shares		Value (000)
Investment Company (18.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $7,954)		7,954,259	$	7,954
Total Short-Term Investments (Cost $9,114)				9,114
Total Investments (103.8%) (Cost $43,429) Including $1,102 of Securities Loaned (c)				45,934
Liabilities in Excess of Other Assets (-3.8%)				(1,682	)
Net Assets (100.0%)			$	44,252

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2017.

(c)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $3,231,000 and the aggregate gross unrealized depreciation is approximately $726,000, resulting in net unrealized appreciation of approximately $2,505,000.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		36.5	%
Short-Term Investment		17.8
Media		10.4
Chemicals		8.0
Machinery		7.9
Aerospace & Defense		6.8
Pharmaceuticals		6.6
Diversified Financial 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, 2017.

**  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, 2017 (unaudited)

Insight Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $34,590)	$	37,095
Investment in Security of Affiliated Issuer, at Value (Cost $8,839)		8,839
Total Investments in Securities, at Value (Cost $43,429)		45,934
Foreign Currency, at Value (Cost $41)		41
Receivable for Fund Shares Sold		114
Dividends Receivable		26
Tax Reclaim Receivable		5
Receivable from Affiliate		4
Other Assets		68
Total Assets		46,192
Liabilities:
Collateral on Securities Loaned, at Value		1,160
Payable for Investments Purchased		697
Payable for Advisory Fees		36
Payable for Professional Fees		19
Payable for Fund Shares Redeemed		15
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		5
Payable for Administration Fees		3
Payable for Custodian Fees		1
Payable for Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
Other Liabilities		1
Total Liabilities		1,940
Net Assets	$	44,252
Net Assets Consist of:
Paid-in-Capital	$	39,789
Accumulated Undistributed Net Investment Income		51
Accumulated Net Realized Gain		1,907
Unrealized Appreciation (Depreciation) on:
Investments		2,505
Foreign Currency Translations		—	@
Net Assets	$	44,252

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Insight Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	24,968
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,600,579
Net Asset Value, Offering and Redemption Price Per Share	$	15.60
CLASS A:
Net Assets	$	13,096
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		843,513
Net Asset Value, Redemption Price Per Share	$	15.53
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.86
Maximum Offering Price Per Share	$	16.39
CLASS L:
Net Assets	$	168
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,065
Net Asset Value, Offering and Redemption Price Per Share	$	15.15
CLASS C:
Net Assets	$	6,020
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		399,540
Net Asset Value, Offering and Redemption Price Per Share	$	15.07
(1) Including: Securities on Loan, at Value:	$	1,102

@  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, 2017 (unaudited)

Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $13 of Foreign Taxes Withheld)	$	256
Dividends from Security of Affiliated Issuer (Note G)		15
Income from Securities Loaned — Net		—	@
Total Investment Income		271
Expenses:
Advisory Fees (Note B)		137
Professional Fees		44
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)		23
Registration Fees		24
Administration Fees (Note C)		14
Sub Transfer Agency Fees — Class I		4
Sub Transfer Agency Fees — Class A		3
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		1
Custodian Fees (Note F)		6
Shareholder Reporting Fees		6
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Directors' Fees and Expenses		2
Pricing Fees		1
Other Expenses		6
Total Expenses		290
Waiver of Advisory Fees (Note B)		(59	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(5	)
Net Expenses		220
Net Investment Income		51
Realized Gain:
Investments Sold		1,749
Foreign Currency Transactions		9
Net Realized Gain		1,758
Change in Unrealized Appreciation (Depreciation):
Investments		742
Foreign Currency Translations		—	@
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		2,500
Net Increase in Net Assets Resulting from Operations	$	2,551

@  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, 2017

Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	51		$	5
Net Realized Gain		1,758			519
Net Change in Unrealized Appreciation (Depreciation)		742			1,941
Net Increase in Net Assets Resulting from Operations		2,551			2,465
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(6	)
Net Realized Gain		—			(212	)
Class A:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(116	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(3	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(44	)
Total Distributions		—			(381	)
Capital Share Transactions:(1)
Class I:
Subscribed		16,620			10,923
Distributions Reinvested		—			217
Redeemed		(6,575	)		(995	)
Class A:
Subscribed		11,451			6908
Distributions Reinvested		—			116
Redeemed		(6,585	)		(528	)
Class L:
Exchanged		6			49
Distributions Reinvested		—			2
Redeemed		—			(17	)
Class C:
Subscribed		3,228			3,158
Distributions Reinvested		—			44
Redeemed		(878	)		(55	)
Net Increase in Net Assets Resulting from Capital Share Transactions		17,267			19,822
Total Increase in Net Assets		19,818			21,906
Net Assets:
Beginning of Period		24,434			2,528
End of Period (Including Accumulated Undistributed Net Investment Income of $51 and $—@)	$	44,252		$	24,434

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Insight Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,102			821
Shares Issued on Distributions Reinvested		—			15
Shares Redeemed		(442	)		(73	)
Net Increase in Class I Shares Outstanding		660			763
Class A:
Shares Subscribed		768			509
Shares Issued on Distributions Reinvested		—			8
Shares Redeemed		(436	)		(41	)
Net Increase in Class A Shares Outstanding		332			476
Class L:
Shares Exchanged		—	@@		4
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(1	)
Net Increase in Class L Shares Outstanding		—	@@		3
Class C:
Shares Subscribed		221			234
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(60	)		(4	)
Net Increase in Class C Shares Outstanding		161			233

@  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, 2017

Financial Highlights

Insight Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.44		$	11.21		$	13.65		$	15.40		$	11.86		$	10.06
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.04			0.03			0.10			0.06			0.18			0.17
Net Realized and Unrealized Gain (Loss)		1.12			3.46			(0.82	)		0.87			4.52			2.59
Total from Investment Operations		1.16			3.49			(0.72	)		0.93			4.70			2.76
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.10	)		(0.04	)		(0.16	)		(0.14	)
Net Realized Gain		—			(0.25	)		(1.62	)		(2.64	)		(1.00	)		(0.82	)
Total Distributions		—			(0.26	)		(1.72	)		(2.68	)		(1.16	)		(0.96	)
Net Asset Value, End of Period	$	15.60		$	14.44		$	11.21		$	13.65		$	15.40		$	11.86
Total Return (3)		8.03	%(5)		31.14	%		(5.58	)%		6.66	%		40.20	%		27.47	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	24,968		$	13,578		$	1,981		$	1,968		$	1,859		$	12
Ratio of Expenses to Average Net Assets (7)		1.02	%(4)(6)		1.03	%(4)		1.04	%(4)		1.04	%(4)		1.04	%(4)		1.04	%(4)
Ratio of Net Investment Income to Average Net Assets (7)		0.54	%(4)(6)		0.25	%(4)		0.78	%(4)		0.44	%(4)		1.25	%(4)		1.47	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%(6)		0.02	%		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		91	%(5)		42	%		55	%		82	%		51	%		62	%
(7) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.45	%(6)		2.93	%		7.50	%		7.69	%		10.83	%		11.61	%
Net Investment Income (Loss) to Average Net Assets		0.11	%(6)		(1.65	)%		(5.68	)%		(6.21	)%		(8.54	)%		(9.10	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Not Annualized.

(6)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Insight Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.40		$	11.21		$	13.66		$	15.43		$	11.86		$	10.06
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.02			(0.02	)		0.05			0.01			0.07			0.14
Net Realized and Unrealized Gain (Loss)		1.11			3.46			(0.82	)		0.87			4.58			2.59
Total from Investment Operations		1.13			3.44			(0.77	)		0.88			4.65			2.73
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(3)		(0.06	)		(0.01	)		(0.08	)		(0.11	)
Net Realized Gain		—			(0.25	)		(1.62	)		(2.64	)		(1.00	)		(0.82	)
Total Distributions		—			(0.25	)		(1.68	)		(2.65	)		(1.08	)		(0.93	)
Net Asset Value, End of Period	$	15.53		$	14.40		$	11.21		$	13.66		$	15.43		$	11.86
Total Return (4)		7.85	%(7)		30.74	%		(5.97	)%		6.41	%		39.73	%		27.21	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	13,096		$	7,365		$	399		$	230		$	209		$	1,144
Ratio of Expenses to Average Net Assets (9)		1.34	%(5)(8)		1.38	%(5)		1.39	%(5)		1.39	%(5)		1.30	%(5)(6)		1.29	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		0.26	%(5)(8)		(0.15	)%(5)		0.42	%(5)		0.09	%(5)		0.50	%(5)		1.22	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%(8)		0.02	%		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		91	%(7)		42	%		55	%		82	%		51	%		62	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.72	%(8)		3.28	%		8.32	%		8.91	%		13.79	%		11.86	%
Net Investment Loss to Average Net Assets		(0.12	)%(8)		(2.05	)%		(6.51	)%		(7.43	)%		(11.99	)%		(9.35	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Insight Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.09		$	11.02		$	13.50		$	15.35		$	11.85		$	10.06
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.02	)		(0.06	)		(0.01	)		(0.06	)		0.08			0.08
Net Realized and Unrealized Gain (Loss)		1.08			3.38			(0.82	)		0.86			4.49			2.58
Total from Investment Operations		1.06			3.32			(0.83	)		0.80			4.57			2.66
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(3)		(0.03	)		(0.01	)		(0.07	)		(0.05	)
Net Realized Gain		—			(0.25	)		(1.62	)		(2.64	)		(1.00	)		(0.82	)
Total Distributions		—			(0.25	)		(1.65	)		(2.65	)		(1.07	)		(0.87	)
Net Asset Value, End of Period	$	15.15		$	14.09		$	11.02		$	13.50		$	15.35		$	11.85
Total Return (4)		7.52	%(7)		30.18	%		(6.49	)%		5.83	%		39.13	%		26.52	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	168		$	150		$	90		$	47		$	115		$	12
Ratio of Expenses to Average Net Assets (9)		1.87	%(5)(8)		1.88	%(5)		1.89	%(5)		1.89	%(5)		1.84	%(5)(6)		1.79	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		(0.33	)%(5)(8)		(0.52	)%(5)		(0.09	)%(5)		(0.41	)%(5)		0.54	%(5)		0.72	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%(8)		0.02	%		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		91	%(7)		42	%		55	%		82	%		51	%		62	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.35	%(8)		5.57	%		10.04	%		10.64	%		12.31	%		12.36	%
Net Investment Loss to Average Net Assets		(1.81	)%(8)		(4.21	)%		(8.24	)%		(9.16	)%		(9.93	)%		(9.85	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	14.03		$	11.00		$	13.47
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.04	)		(0.12	)		(0.08	)
Net Realized and Unrealized Gain (Loss)		1.08			3.40			(0.74	)
Total from Investment Operations		1.04			3.28			(0.82	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(4)		(0.03	)
Net Realized Gain		—			(0.25	)		(1.62	)
Total Distributions		—			(0.25	)		(1.65	)
Net Asset Value, End of Period	$	15.07		$	14.03		$	11.00
Total Return (5)		7.41	%(7)		29.87	%		(6.42	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6,020		$	3,341		$	58
Ratio of Expenses to Average Net Assets (9)		2.11	%(6)(8)		2.13	%(6)		2.14	%(6)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(0.54	)%(6)(8)		(0.91	)%(6)		(0.91	)%(6)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%(8)		0.02	%		0.01	%(8)
Portfolio Turnover Rate		91	%(7)		42	%		55	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.48	%(8)		4.23	%		12.97	%(8)
Net Investment Loss to Average Net Assets		(0.91	)%(8)		(3.01	)%		(11.74	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Insight Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and (6) investments in mutual funds, including the Morgan

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

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

The Company 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

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	$	3,044	$	—	$	—	$	3,044
Automobiles		1,838		—		—		1,838
Beverages		12		—		—		12
Biotechnology		1,562		—		—		1,562
Chemicals		3,597		—		—		3,597
Commercial Services & Supplies		973		—		—		973
Diversified Financial Services		2,670		—		—		2,670
Energy Equipment & Services		625		—		—		625
Food Products		533		—		—		533
Health Care Equipment & Supplies		1,196		—		—		1,196
Health Care Technology		28		—		—		28
Hotels, Restaurants & Leisure		706		—		—		706
Insurance		886		—		—		886
Internet Software & Services		2,055		—		—		2,055
Leisure Products		457		—		—		457
Machinery		3,553		—		—		3,553
Media		4,645		—		—		4,645
Metals & Mining		350		—		—		350
Multi-Line Retail		1,166		—		—		1,166
Pharmaceuticals		2,962		—		—		2,962
Specialty Retail		188		—		—		188
Tech Hardware, Storage & Peripherals		783		—		—		783
Trading Companies & Distributors		1,110		—		—		1,110
Transportation Infrastructure		1,881		—		—		1,881
Total Common Stocks		36,820		—		—		36,820
Short-Term Investments
Investment Company		8,839		—		—		8,839
Repurchase Agreements		—		275		—		275
Total Short-Term Investments		8,839		275		—		9,114
Total Assets	$	45,659	$	275	$	—	$	45,934

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	1,102	(a)	$	—	$	(1,102	)(b)(c)	$	0

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

(b) The Fund received cash collateral of approximately $1,160,000, 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, 2017

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

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	1,160	$	—	$	—	$	—	$	1,160
Total Borrowings	$	1,160	$	—	$	—	$	—	$	1,160
Gross amount of recognized liabilities for securities lending transactions									$	1,160

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.43% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $59,000 of advisory fees were waived and approximately $6,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $40,829,000 and $26,819,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $5,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	3,769	$	28,244	$	23,174	$	15	$	8,839

During the six months ended June 30, 2017, the Fund incurred approximately $2,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	257	$	124	$	127	$	223

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, 2016:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(2	)	$	2	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	118	$	53

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 28.9%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's contractual management fee and total expense ratio were higher than its peer group averages, its actual management fee was lower than its peer group average. After discussion, the Board concluded that the Fund's (i) performance was competitive with its peer group average; (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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIINSGTSAN
1858557 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Advantage Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

International Advantage Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,272.90	$	1,019.89	$	5.58	$	4.96		0.99	%
International Advantage Portfolio Class A		1,000.00		1,270.70		1,018.25		7.43		6.61		1.32
International Advantage Portfolio Class L		1,000.00		1,266.70		1,015.67		10.34		9.20		1.84
International Advantage Portfolio Class C		1,000.00		1,265.70		1,014.43		11.74		10.44		2.09

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

International Advantage Portfolio

	Shares		Value (000)
Common Stocks (93.5%)
Australia (5.8%)
Brookfield Infrastructure Partners LP		98,432	$	4,027
CSL Ltd.		32,620		3,460
				7,487
Belgium (2.6%)
Anheuser-Busch InBev N.V.		30,579		3,378
Canada (2.1%)
Brookfield Asset Management, Inc., Class A		68,443		2,684
Trisura Group Ltd. (a)(b)		334		5
				2,689
China (15.4%)
Alibaba Group Holding Ltd. ADR (b)		28,697		4,043
Foshan Haitian Flavouring & Food Co., Ltd., Class A		326,773		1,966
Jiangsu Hengrui Medicine Co., Ltd., Class A		258,666		1,930
Suofeiya Home Collection Co., Ltd., Class A		295,424		1,787
TAL Education Group ADR		43,124		5,274
Tencent Holdings Ltd. (c)		140,700		5,032
				20,032
Denmark (4.7%)
DSV A/S		99,961		6,142
France (15.4%)
Christian Dior SE		21,472		6,140
Danone SA		39,411		2,963
Hermes International		16,198		8,004
Pernod Ricard SA		21,762		2,914
				20,021
Hong Kong (1.5%)
AIA Group Ltd.		256,500		1,874
Italy (1.8%)
Moncler SpA		101,768		2,383
Japan (9.7%)
Calbee, Inc.		134,800		5,291
Keyence Corp.		9,700		4,255
Nihon M&A Center, Inc.		84,600		3,092
				12,638
Switzerland (8.7%)
Chocoladefabriken Lindt & Spruengli AG (Registered)		69		4,810
Kuehne & Nagel International AG (Registered)		18,125		3,024
Nestle SA (Registered)		40,234		3,502
				11,336
United Kingdom (16.0%)
Burberry Group PLC		144,203		3,119
Diageo PLC		92,933		2,746
Fevertree Drinks PLC		136,980		3,042
Reckitt Benckiser Group PLC		63,953		6,484
Rightmove PLC		95,893		5,308
				20,699

	Shares			Value (000)
United States (9.8%)
EPAM Systems, Inc. (b)		76,952		$	6,471
Priceline Group, Inc. (The) (b)		3,318			6,206
					12,677
Total Common Stocks (Cost $106,710)					121,356
Participation Note (0.2%)
China (0.2%)
Suofeiya Home Collection Co., Ltd., Equity Linked Notes, expires 11/20/20 (b) (Cost $247)		46,200			279
Short-Term Investments (7.0%)
Securities held as Collateral on Loaned Securities (0.0%)
Investment Company (0.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		1,231			1
	Face Amount (000)
Repurchase Agreements (0.0%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $1; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $1)	$	1			1
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $—@; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $—@)		—	@		—	@
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $—@; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $—@)		—	@		—	@
					1
Total Securities held as Collateral on Loaned Securities (Cost $2)					2
	Shares
Investment Company (7.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $9,026)		9,025,909			9,026
Total Short-Term Investments (Cost $9,028)					9,028
Total Investments (100.7%) (Cost $115,985) Including $2 of Securities Loaned (d)					130,663
Liabilities in Excess of Other Assets (–0.7%)					(901	)
Net Assets (100.0%)				$	129,762

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

International Advantage Portfolio

(a)  All or a portion of this security was on loan at June 30, 2017.

(b)  Non-income producing security.

(c)  Security trades on the Hong Kong exchange.

(d)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $15,171,000 and the aggregate gross unrealized depreciation is approximately $493,000, resulting in net unrealized appreciation of approximately $14,678,000.

@  Value is less than $500.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		33.7	%
Textiles, Apparel & Luxury Goods		15.0
Food Products		14.2
Internet Software & Services		11.0
Beverages		9.2
Short-Term Investment		6.9
Household Products		5.0
Information Technology 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, 2017.

**  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, 2017 (unaudited)

International Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $106,958)	$	121,636
Investment in Security of Affiliated Issuer, at Value (Cost $9,027)		9,027
Total Investments in Securities, at Value (Cost $115,985)		130,663
Foreign Currency, at Value (Cost $29)		29
Cash		42
Receivable for Fund Shares Sold		685
Tax Reclaim Receivable		48
Receivable from Affiliate		5
Receivable for Investments Sold		—	@
Other Assets		72
Total Assets		131,544
Liabilities:
Payable for Investments Purchased		1,537
Payable for Advisory Fees		160
Payable for Professional Fees		31
Payable for Fund Shares Redeemed		30
Payable for Shareholder Services Fees — Class A		6
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		3
Payable for Administration Fees		8
Payable for Custodian Fees		3
Collateral on Securities Loaned, at Value		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		2
Total Liabilities		1,782
Net Assets	$	129,762
Net Assets Consist Of:
Paid-in-Capital	$	112,277
Accumulated Net Investment Income		197
Accumulated Net Realized Gain		2,608
Unrealized Appreciation (Depreciation) on:
Investments		14,678
Foreign Currency Translations		2
Net Assets	$	129,762

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	96,640
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		6,375,740
Net Asset Value, Offering and Redemption Price Per Share	$	15.16
CLASS A:
Net Assets	$	29,762
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,975,457
Net Asset Value, Redemption Price Per Share	$	15.07
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.84
Maximum Offering Price Per Share	$	15.91
CLASS L:
Net Assets	$	95
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		6,384
Net Asset Value, Offering and Redemption Price Per Share	$	14.82
CLASS C:
Net Assets	$	3,265
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		221,808
Net Asset Value, Offering and Redemption Price Per Share	$	14.72
(1) Including: Securities on Loan, at Value:	$	2

@  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, 2017 (unaudited)

International Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $66 of Foreign Taxes Withheld)	$	608
Dividends from Security of Affiliated Issuer (Note G)		16
Income from Securities Loaned — Net		3
Total Investment Income		627
Expenses:
Advisory Fees (Note B)		308
Professional Fees		46
Administration Fees (Note C)		31
Shareholder Services Fees — Class A (Note D)		21
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		9
Registration Fees		23
Sub Transfer Agency Fees — Class I		13
Sub Transfer Agency Fees — Class A		6
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		1
Custodian Fees (Note F)		16
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
Pricing Fees		3
Directors' Fees and Expenses		2
Other Expenses		11
Total Expenses		502
Waiver of Advisory Fees (Note B)		(61	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(15	)
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)		(5	)
Net Expenses		419
Net Investment Income		208
Realized Gain (Loss):
Investments Sold		2,518
Foreign Currency Transactions		(2	)
Net Realized Gain		2,516
Change in Unrealized Appreciation (Depreciation):
Investments		14,167
Foreign Currency Translations		3
Net Change in Unrealized Appreciation (Depreciation)		14,170
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		16,686
Net Increase in Net Assets Resulting from Operations	$	16,894

@  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, 2017

International Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	208		$	10
Net Realized Gain		2,516			575
Net Change in Unrealized Appreciation (Depreciation)		14,170			181
Net Increase in Net Assets Resulting from Operations		16,894			766
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(272	)
Class A:
Net Realized Gain		—			(182	)
Class L:
Net Realized Gain		—			(1	)
Class C:
Net Realized Gain		—			(17	)
Total Distributions		—			(472	)
Capital Share Transactions:(1)
Class I:
Subscribed		61,076			30,034
Distributions Reinvested		—			272
Redeemed		(6,982	)		(3,133	)
Class A:
Subscribed		18,734			12,448
Distributions Reinvested		—			182
Redeemed		(3,528	)		(4,830	)
Class L:
Exchanged		—			51
Distributions Reinvested		—			1
Redeemed		—			(193	)
Class C:
Subscribed		1,981			975
Distributions Reinvested		—			17
Redeemed		(160	)		(159	)
Net Increase in Net Assets Resulting from Capital Share Transactions		71,121			35,665
Redemption Fees		2			1
Total Increase in Net Assets		88,017			35,960
Net Assets:
Beginning of Period		41,745			5,785
End of Period (Including Accumulated Net Investment Income and Accumulated Net Investment Loss of $197 and $(11), respectively)	$	129,762		$	41,745
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		4,391			2,536
Shares Issued on Distributions Reinvested		—			23
Shares Redeemed		(515	)		(259	)
Net Increase in Class I Shares Outstanding		3,876			2,300
Class A:
Shares Subscribed		1,326			1,045
Shares Issued on Distributions Reinvested		—			16
Shares Redeemed		(263	)		(400	)
Net Increase in Class A Shares Outstanding		1,063			661
Class L:
Shares Exchanged		—			4
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(16	)
Net Decrease in Class L Shares Outstanding		—			(12	)
Class C:
Shares Subscribed		143			83
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(13	)		(13	)
Net Increase in Class C Shares Outstanding		130			71

@@  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, 2017

Financial Highlights

International Advantage Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.91		$	11.80		$	12.36		$	12.36		$	11.60		$	9.65
Income from Investment Operations:
Net Investment Income (2)		0.04			0.02			0.10			0.13			0.13			0.12
Net Realized and Unrealized Gain		3.21			0.29			1.18			0.20			1.32			1.93
Total from Investment Operations		3.25			0.31			1.28			0.33			1.45			2.05
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.10	)		(0.07	)		(0.12	)		(0.10	)
Net Realized Gain		—			(0.20	)		(1.74	)		(0.26	)		(0.57	)		—
Total Distributions		—			(0.20	)		(1.84	)		(0.33	)		(0.69	)		(0.10	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)		—			—
Net Asset Value, End of Period	$	15.16		$	11.91		$	11.80		$	12.36		$	12.36		$	11.60
Total Return (4)		27.29	%(8)		2.47	%		10.23	%		2.58	%		12.72	%		21.27	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	96,640		$	29,781		$	2,361		$	3,387		$	2,637		$	1,421
Ratio of Expenses to Average Net Assets (10)		0.99	%(5)(9)		0.99	%(5)		1.16	%(5)(6)		1.24	%(5)		1.24	%(5)		1.24	%(5)
Ratio of Net Investment Income to Average Net Assets (10)		0.64	%(5)(9)		0.20	%(5)		0.76	%(5)		1.05	%(5)		1.04	%(5)		1.08	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.01	%		0.00	%(7)		0.01	%		0.00	%(7)		0.01	%
Portfolio Turnover Rate		27	%(8)		23	%		96	%		30	%		49	%		40	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.21	%(9)		2.26	%		4.82	%		5.47	%		6.30	%		8.89	%
Net Investment Income (Loss) to Average Net Assets		0.42	%(9)		(1.07	)%		(2.90	)%		(3.18	)%		(4.02	)%		(6.57	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Advantage Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.86		$	11.79		$	12.37		$	12.38		$	11.60		$	9.65
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.02			(0.00	)(3)		0.01			0.09			0.04			0.09
Net Realized and Unrealized Gain		3.19			0.27			1.23			0.19			1.38			1.94
Total from Investment Operations		3.21			0.27			1.24			0.28			1.42			2.03
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.08	)		(0.03	)		(0.07	)		(0.08	)
Net Realized Gain		—			(0.20	)		(1.74	)		(0.26	)		(0.57	)		—
Total Distributions		—			(0.20	)		(1.82	)		(0.29	)		(0.64	)		(0.08	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)		—			—
Net Asset Value, End of Period	$	15.07		$	11.86		$	11.79		$	12.37		$	12.38		$	11.60
Total Return (4)		27.07	%(9)		2.13	%		9.92	%		2.21	%		12.43	%		20.99	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	29,762		$	10,822		$	2,966		$	889		$	248		$	116
Ratio of Expenses to Average Net Assets (11)		1.32	%(5)(10)		1.34	%(5)		1.46	%(5)(7)		1.59	%(5)		1.55	%(5)(6)		1.49	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		0.31	%(5)(10)		(0.04	)%(5)		0.09	%(5)		0.70	%(5)		0.29	%(5)		0.83	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.00	%(8)		0.01	%		0.00	%(8)		0.01	%
Portfolio Turnover Rate		27	%(9)		23	%		96	%		30	%		49	%		40	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.49	%(10)		2.55	%		5.77	%		6.03	%		6.89	%		9.14	%
Net Investment Income (Loss) to Average Net Assets		0.14	%(10)		(1.25	)%		(4.22	)%		(3.74	)%		(5.05	)%		(6.82	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Advantage Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.70		$	11.69		$	12.31		$	12.36		$	11.60		$	9.65
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.02	)		(0.06	)		(0.04	)		0.02			0.02			0.04
Net Realized and Unrealized Gain		3.14			0.27			1.20			0.20			1.34			1.93
Total from Investment Operations		3.12			0.21			1.16			0.22			1.36			1.97
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.04	)		(0.01	)		(0.03	)		(0.02	)
Net Realized Gain		—			(0.20	)		(1.74	)		(0.26	)		(0.57	)		—
Total Distributions		—			(0.20	)		(1.78	)		(0.27	)		(0.60	)		(0.02	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)		—			—
Net Asset Value, End of Period	$	14.82		$	11.70		$	11.69		$	12.31		$	12.36		$	11.60
Total Return (4)		26.67	%(9)		1.64	%		9.34	%		1.69	%		11.88	%		20.43	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	95		$	75		$	211		$	148		$	123		$	116
Ratio of Expenses to Average Net Assets (11)		1.84	%(5)(10)		1.84	%(5)		1.97	%(5)(7)		2.09	%(5)		2.03	%(5)(6)		1.99	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		(0.31	)%(5)(10)		(0.52	)%(5)		(0.31	)%(5)		0.20	%(5)		0.18	%(5)		0.33	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.00	%(8)		0.01	%		0.00	%(8)		0.01	%
Portfolio Turnover Rate		27	%(9)		23	%		96	%		30	%		49	%		40	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.15	%(10)		3.96	%		6.87	%		7.42	%		7.43	%		9.64	%
Net Investment Loss to Average Net Assets		(2.62	)%(10)		(2.64	)%		(5.21	)%		(5.13	)%		(5.22	)%		(7.32	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	11.63		$	11.66		$	13.80
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.03	)		(0.11	)		(0.08	)
Net Realized and Unrealized Gain (Loss)		3.12			0.28			(0.26	)
Total from Investment Operations		3.09			0.17			(0.34	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.06	)
Net Realized Gain		—			(0.20	)		(1.74	)
Total Distributions		—			(0.20	)		(1.80	)
Redemption Fees		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	14.72		$	11.63		$	11.66
Total Return (5)		26.57	%(9)		1.38	%		(2.63	)%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,265		$	1,067		$	247
Ratio of Expenses to Average Net Assets (11)		2.09	%(6)(10)		2.09	%(6)		2.11	%(6)(7)(10)
Ratio of Net Investment Loss to Average Net Assets (11)		(0.48	)%(6)(10)		(0.91	)%(6)		(0.94	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.01	%		0.00	%(8)
Portfolio Turnover Rate		27	%(9)		23	%		96	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.35	%(10)		3.60	%		9.11	%(10)
Net Investment Loss to Average Net Assets		(0.74	)%(10)		(2.42	)%		(7.94	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the International Advantage Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	12,080	$	—	$	—	$	12,080
Biotechnology		3,460		—		—		3,460
Capital Markets		2,684		—		—		2,684
Diversified Consumer Services		5,274		—		—		5,274
Electric Utilities		4,027		—		—		4,027
Electronic Equipment, Instruments & Components		4,255		—		—		4,255
Food Products		18,532		—		—		18,532
Household Durables		1,787		—		—		1,787
Household Products		6,484		—		—		6,484
Information Technology Services		6,471		—		—		6,471
Insurance		1,879		—		—		1,879
Internet & Direct Marketing Retail		6,206		—		—		6,206
Internet Software & Services		14,383		—		—		14,383
Marine		3,024		—		—		3,024
Pharmaceuticals		1,930		—		—		1,930
Professional Services		3,092		—		—		3,092
Road & Rail		6,142		—		—		6,142
Textiles, Apparel & Luxury Goods		19,646		—		—		19,646
Total Common Stocks		121,356		—		—		121,356
Participation Note		—		279		—		279
Short-Term Investments
Investment Company		9,027		—		—		9,027
Repurchase Agreements		—		1		—		1
Total Short-Term Investments		9,027		1		—		9,028
Total Assets	$	130,383	$	280	$	—	$	130,663

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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.

As of June 30, 2017, the Fund did not have any outstanding purchased options.

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)	$	(13	)(a)

(a) 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 (Option Purchased)	$	2	(b)

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	2,187,000

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Fund 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, 2017.

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)
$	2	(c)	$	—	$	(2	)(d)(e)	$	0

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

(d) The Fund received cash collateral of approximately $2,000, 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	2	$	—	$	—	$	—	$	2
Total Borrowings	$	2	$	—	$	—	$	—	$	2
Gross amount of recognized liabilities for securities lending transactions									$	2

7.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

8.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.63% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual fund 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 Fund'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, 2017, approximately $61,000 of advisory fees were waived and approximately $17,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $85,709,000 and $20,030,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $5,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	1,586	$	64,212	$	56,771	$	16	$	9,027

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	326	$	146	$	229	$	545

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 distribution redesignations, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Net Investment Loss (000)			Accumulated Undistributed Net Realized Gain (000)		Paid-in- Capital (000)
$	(21	)	$	21	$	—

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	14	$	135

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. These also include non-specified ordinary losses incurred after December 31 but within the same taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	10	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 55.2%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIASAN
1859479 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Equity Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

International Equity Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
International Equity Portfolio Class I	$	1,000.00	$	1,166.70	$	1,020.08	$	5.10	$	4.76		0.95	%
International Equity Portfolio Class A		1,000.00		1,164.60		1,018.35		6.98		6.51		1.30
International Equity Portfolio Class L		1,000.00		1,161.50		1,015.87		9.65		9.00		1.80
International Equity Portfolio Class C		1,000.00		1,160.00		1,014.63		10.98		10.24		2.05
International Equity Portfolio Class IS		1,000.00		1,166.70		1,020.33		4.84		4.51		0.90

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

International Equity Portfolio

	Shares		Value (000)
Common Stocks (98.1%)
Canada (2.6%)
Barrick Gold Corp.		5,599,896	$	89,085
Turquoise Hill Resources Ltd. (a)		7,212,767		19,189
				108,274
China (3.1%)
China Petroleum & Chemical Corp. H Shares (b)		35,344,000		27,569
Tencent Holdings Ltd. (b)		2,942,900		105,240
				132,809
France (14.3%)
AXA SA		1,681,596		45,999
L'Oreal SA		826,652		172,215
Pernod Ricard SA (c)		1,093,389		146,423
Publicis Groupe SA		524,927		39,156
Safran SA		536,868		49,202
Sanofi		1,164,258		111,381
Total SA		841,082		41,581
				605,957
Germany (7.5%)
Bayer AG (Registered)		987,508		127,676
Continental AG		189,449		40,885
HeidelbergCement AG		242,026		23,400
SAP SE		1,209,249		126,305
				318,266
Hong Kong (1.7%)
AIA Group Ltd.		9,645,200		70,479
Ireland (1.2%)
Bank of Ireland (a)		87,285,404		22,929
CRH PLC		850,569		30,092
				53,021
Japan (16.2%)
FANUC Corp.		404,300		77,840
Hitachi Ltd.		6,559,000		40,202
Japan Tobacco, Inc.		285,100		10,005
Keyence Corp.		128,300		56,282
Komatsu Ltd.		1,800,500		45,695
Mitsubishi Estate Co., Ltd.		1,195,500		22,252
Mizuho Financial Group, Inc.		17,936,700		32,756
NGK Spark Plug Co., Ltd.		1,994,700		42,368
Nitto Denko Corp.		673,800		55,354
Shiseido Co., Ltd.		3,135,200		111,331
Sompo Holdings, Inc.		693,800		26,765
Sumitomo Mitsui Financial Group, Inc.		2,058,551		80,146
Sumitomo Mitsui Trust Holdings, Inc.		128,499		4,592
Toyota Motor Corp.		900,300		47,170
USS Co., Ltd.		1,482,100		29,425
				682,183
Korea, Republic of (1.9%)
LG Household & Health Care Ltd.		52,475		45,589
NCSoft Corp.		100,734		33,412
				79,001

	Shares		Value (000)
Netherlands (8.6%)
Heineken N.V.		934,793	$	90,891
RELX N.V.		3,566,788		73,329
Unilever N.V. CVA		3,617,970		199,671
				363,891
Portugal (0.6%)
Galp Energia SGPS SA		1,599,256		24,211
Sweden (1.2%)
Nordea Bank AB		3,862,485		49,148
Switzerland (10.7%)
Nestle SA (Registered)		1,267,767		110,330
Novartis AG (Registered)		1,981,846		164,930
Roche Holding AG (Genusschein)		474,758		120,905
Swisscom AG (Registered)		56,003		27,023
Zurich Insurance Group AG		92,223		26,843
				450,031
United Kingdom (28.5%)
Admiral Group PLC		880,037		22,959
Aviva PLC		7,495,339		51,350
British American Tobacco PLC		2,885,837		196,728
BT Group PLC		18,426,413		70,738
Bunzl PLC		2,472,616		73,684
Experian PLC		2,840,288		58,265
GlaxoSmithKline PLC		7,631,464		162,562
Imperial Brands PLC		739,683		33,223
Man Group PLC		16,517,990		33,303
Meggitt PLC		6,099,383		37,886
Prudential PLC		4,616,486		105,884
Reckitt Benckiser Group PLC		2,003,391		203,109
RELX PLC		3,237,139		69,989
Travis Perkins PLC		786,765		14,910
Wolseley PLC		1,085,657		66,642
				1,201,232
Total Common Stocks (Cost $3,051,128)				4,138,503
Short-Term Investments (1.7%)
Securities held as Collateral on Loaned Securities (0.0%)
Investment Company (0.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		860,887		861
	Face Amount (000)
Repurchase Agreements (0.0%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $104; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $106)	$	104		104
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $96; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $97)		96		96

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

International Equity Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (cont'd)
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $68; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $70)	$	68	$	68
				268
Total Securities held as Collateral on Loaned Securities (Cost $1,129)				1,129
	Shares
Investment Company (1.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $71,594)		71,594,290		71,594
Total Short-Term Investments (Cost $72,723)				72,723
Total Investments (99.8%) (Cost $3,123,851) Including $146,812 of Securities Loaned (d)(e)				4,211,226
Other Assets in Excess of Liabilities (0.2%)				7,740
Net Assets (100.0%)			$	4,218,966

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(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, 2017.

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

(e)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,156,601,000 and the aggregate gross unrealized depreciation is approximately $69,226,000, resulting in net unrealized appreciation of approximately $1,087,375,000.

CVA  Certificaten Van Aandelen.

Foreign Currency Forward Exchange Contract:

The Fund had the following foreign currency forward exchange contract open at June 30, 2017:

Counterparty	Contract to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (000)
Commonwealth Bank of Australia	JPY	26,163,000	$	235,561	7/31/17	$	2,696

JPY  —  Japanese Yen

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		51.5	%
Pharmaceuticals		16.3
Personal Products		12.6
Insurance		8.3
Tobacco		5.7
Beverages		5.6
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

**  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 $2,696,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $3,051,396)	$	4,138,771
Investment in Security of Affiliated Issuer, at Value (Cost $72,455)		72,455
Total Investments in Securities, at Value (Cost $3,123,851)		4,211,226
Foreign Currency, at Value (Cost $4,210)		4,223
Tax Reclaim Receivable		7,904
Dividends Receivable		5,033
Receivable for Investments Sold		3,023
Unrealized Appreciation on Foreign Currency Forward Exchange Contract		2,696
Receivable for Fund Shares Sold		1,264
Receivable from Affiliate		42
Other Assets		355
Total Assets		4,235,766
Liabilities:
Payable for Advisory Fees		8,214
Payable for Investments Purchased		3,030
Payable for Fund Shares Redeemed		2,820
Collateral on Securities Loaned, at Value		1,129
Payable for Sub Transfer Agency Fees — Class I		199
Payable for Sub Transfer Agency Fees — Class A		210
Payable for Sub Transfer Agency Fees — Class L		7
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		281
Payable for Shareholder Services Fees — Class A		263
Payable for Distribution and Shareholder Services Fees — Class L		4
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Directors' Fees and Expenses		256
Payable for Custodian Fees		195
Payable for Professional Fees		41
Payable for Transfer Agency Fees — Class I		5
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		143
Total Liabilities		16,800
Net Assets	$	4,218,966
Net Assets Consist Of:
Paid-in-Capital	$	3,221,277
Accumulated Undistributed Net Investment Income		74,589
Accumulated Net Realized Loss		(167,268	)
Unrealized Appreciation (Depreciation) on:
Investments		1,087,375
Foreign Currency Forward Exchange Contracts		2,696
Foreign Currency Translations		297
Net Assets	$	4,218,966

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	1,785,667
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		104,534,598
Net Asset Value, Offering and Redemption Price Per Share	$	17.08
CLASS A:
Net Assets	$	1,254,278
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		74,469,163
Net Asset Value, Redemption Price Per Share	$	16.84
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.93
Maximum Offering Price Per Share	$	17.77
CLASS L:
Net Assets	$	7,157
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		426,995
Net Asset Value, Offering and Redemption Price Per Share	$	16.76
CLASS C:
Net Assets	$	547
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		32,960
Net Asset Value, Offering and Redemption Price Per Share	$	16.60
CLASS IS:
Net Assets	$	1,171,317
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		68,564,631
Net Asset Value, Offering and Redemption Price Per Share	$	17.08
(1) Including: Securities on Loan, at Value:	$	146,812

@  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, 2017 (unaudited)

International Equity Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $6,755 of Foreign Taxes Withheld)	$	66,000
Income from Securities Loaned — Net		465
Dividends from Security of Affiliated Issuer (Note G)		174
Total Investment Income		66,639
Expenses:
Advisory Fees (Note B)		16,366
Administration Fees (Note C)		1,637
Sub Transfer Agency Fees — Class I		693
Sub Transfer Agency Fees — Class A		890
Sub Transfer Agency Fees — Class L		8
Sub Transfer Agency Fees — Class C		—	@
Shareholder Services Fees — Class A (Note D)		1,508
Distribution and Shareholder Services Fees — Class L (Note D)		27
Distribution and Shareholder Services Fees — Class C (Note D)		2
Custodian Fees (Note F)		298
Shareholder Reporting Fees		61
Registration Fees		54
Professional Fees		50
Directors' Fees and Expenses		48
Transfer Agency Fees — Class I (Note E)		13
Transfer Agency Fees — Class A (Note E)		9
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		35
Total Expenses		21,708
Reimbursement of Class Specific Expenses — Class I (Note B)		(326	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(36	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(4	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(56	)
Net Expenses		21,285
Net Investment Income		45,354
Realized Gain (Loss):
Investments Sold		72,575
Foreign Currency Forward Exchange Contracts		(10,975	)
Foreign Currency Transactions		439
Net Realized Gain		62,039
Change in Unrealized Appreciation (Depreciation):
Investments		519,685
Foreign Currency Forward Exchange Contracts		5,002
Foreign Currency Translations		702
Net Change in Unrealized Appreciation (Depreciation)		525,389
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		587,428
Net Increase in Net Assets Resulting from Operations	$	632,782

@  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, 2017

International Equity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	45,354		$	75,131
Net Realized Gain (Loss)		62,039			(120,744	)
Net Change in Unrealized Appreciation (Depreciation)		525,389			(46,498	)
Net Increase (Decrease) in Net Assets Resulting from Operations		632,782			(92,111	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(18,324	)
Class A:
Net Investment Income		—			(8,374	)
Class L:
Net Investment Income		—			(11	)
Class C:
Net Investment Income		—			(1	)
Class IS:
Net Investment Income		—			(11,726	)
Total Distributions		—			(38,436	)
Capital Share Transactions:(1)
Class I:
Subscribed		88,140			292,344
Distributions Reinvested		—			17,125
Redeemed		(295,932	)		(590,802	)
Class A:
Subscribed		37,492			325,847
Distributions Reinvested		—			8,356
Redeemed		(144,927	)		(489,120	)
Class L:
Exchanged		94			243
Distributions Reinvested		—			10
Redeemed		(1,041	)		(2,032	)
Class C:
Subscribed		124			508
Distributions Reinvested		—			1
Redeemed		(119	)		(403	)
Class IS:
Subscribed		54,147			345,619
Distributions Reinvested		—			11,091
Redeemed		(113,987	)		(151,013	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(376,009	)		(232,226	)
Redemption Fees		10			16
Total Increase (Decrease) in Net Assets		256,783			(362,757	)
Net Assets:
Beginning of Period		3,962,183			4,324,940
End of Period (Including Accumulated Undistributed Net Investment Income of $74,589 and $29,235)	$	4,218,966		$	3,962,183

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

International Equity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		5,585			19,900
Shares Issued on Distributions Reinvested		—			1,182
Shares Redeemed		(18,506	)		(40,979	)
Net Decrease in Class I Shares Outstanding		(12,921	)		(19,897	)
Class A:
Shares Subscribed		2,356			23,324
Shares Issued on Distributions Reinvested		—			584
Shares Redeemed		(9,266	)		(34,381	)
Net Decrease in Class A Shares Outstanding		(6,910	)		(10,473	)
Class L:
Shares Exchanged		6			17
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(65	)		(141	)
Net Decrease in Class L Shares Outstanding		(59	)		(123	)
Class C:
Shares Subscribed		8			36
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(8	)		(28	)
Net Increase (Decrease) in Class C Shares Outstanding		(—	@@)		8
Class IS:
Shares Subscribed		3,333			24,017
Shares Issued on Distributions Reinvested		—			765
Shares Redeemed		(7,052	)		(10,253	)
Net Increase (Decrease) in Class IS Shares Outstanding		(3,719	)		14,529

@@  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, 2017

Financial Highlights

International Equity Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.64		$	15.10		$	15.47		$	16.98		$	14.35		$	12.25
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.18			0.27			0.30			0.39			0.32			0.31
Net Realized and Unrealized Gain (Loss)		2.26			(0.57	)		(0.23	)		(1.42	)		2.59			2.09
Total from Investment Operations		2.44			(0.30	)		0.07			(1.03	)		2.91			2.40
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.44	)		(0.48	)		(0.28	)		(0.30	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	17.08		$	14.64		$	15.10		$	15.47		$	16.98		$	14.35
Total Return (4)		16.67	%(7)		(2.00	)%		0.36	%		(6.08	)%		20.39	%		19.60	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,785,667		$	1,719,699		$	2,073,782		$	2,620,040		$	3,694,164		$	3,631,307
Ratio of Expenses to Average Net Assets (9)		0.95	%(5)(8)		0.95	%(5)		0.95	%(5)		0.95	%(5)		0.94	%(5)		0.95	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			0.95	%(5)		0.95	%(5)		0.95	%(5)		0.95	%(5)		N/A
Ratio of Net Investment Income to Average Net Assets (9)		2.31	%(5)(8)		1.86	%(5)		1.85	%(5)		2.33	%(5)		2.04	%(5)		2.31	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		11	%(7)		33	%		29	%		29	%		29	%		23	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.99	%(8)		0.98	%		1.01	%		1.04	%		0.99	%		0.97	%
Net Investment Income to Average Net Assets		2.27	%(8)		1.83	%		1.79	%		2.24	%		1.99	%		2.29	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Equity Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.46		$	14.91		$	15.28		$	16.78		$	14.18		$	12.11
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.15			0.23			0.24			0.31			0.25			0.27
Net Realized and Unrealized Gain (Loss)		2.23			(0.58	)		(0.23	)		(1.38	)		2.59			2.07
Total from Investment Operations		2.38			(0.35	)		0.01			(1.07	)		2.84			2.34
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.38	)		(0.43	)		(0.24	)		(0.27	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	16.84		$	14.46		$	14.91		$	15.28		$	16.78		$	14.18
Total Return (4)		16.46	%(8)		(2.33	)%		(0.02	)%		(6.43	)%		20.13	%		19.31	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,254,278		$	1,176,835		$	1,369,566		$	1,576,475		$	1,508,564		$	1,012,956
Ratio of Expenses to Average Net Assets (10)		1.30	%(5)(9)		1.29	%(5)		1.30	%(5)		1.30	%(5)		1.22	%(5)(6)		1.20	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.29	%(5)		1.30	%(5)		1.30	%(5)		1.22	%(5)(6)		N/A
Ratio of Net Investment Income to Average Net Assets (10)		1.95	%(5)(9)		1.60	%(5)		1.48	%(5)		1.89	%(5)		1.60	%(5)		2.06	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.01	%		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		11	%(8)		33	%		29	%		29	%		29	%		23	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.31	%(9)		1.30	%		1.32	%		1.34	%		1.25	%		1.22	%
Net Investment Income to Average Net Assets		1.94	%(9)		1.59	%		1.46	%		1.85	%		1.57	%		2.04	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Equity Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from June 14, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	14.43		$	14.87		$	15.23		$	16.71		$	14.12		$	12.36
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.11			0.16			0.15			0.24			0.19			(0.07	)
Net Realized and Unrealized Gain (Loss)		2.22			(0.58	)		(0.21	)		(1.39	)		2.55			2.11
Total from Investment Operations		2.33			(0.42	)		(0.06	)		(1.15	)		2.74			2.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.30	)		(0.33	)		(0.15	)		(0.28	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	16.76		$	14.43		$	14.87		$	15.23		$	16.71		$	14.12
Total Return (5)		16.15	%(9)		(2.82	)%		(0.47	)%		(6.91	)%		19.49	%		16.53	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,157		$	7,008		$	9,053		$	9,763		$	12,072		$	11,982
Ratio of Expenses to Average Net Assets (11)		1.80	%(6)(10)		1.80	%(6)		1.80	%(6)		1.80	%(6)		1.72	%(6)(7)		1.70	%(6)(10)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.80	%(6)		1.80	%(6)		1.80	%(6)		1.73	%(6)(7)		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.47	%(6)(10)		1.09	%(6)		0.97	%(6)		1.48	%(6)		1.24	%(6)		(0.91	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)(10)
Portfolio Turnover Rate		11	%(9)		33	%		29	%		29	%		29	%		23	%(9)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.92	%(10)		1.93	%		1.89	%		1.89	%		1.78	%		1.70	%(10)
Net Investment Income (Loss) to Average Net Assets		1.35	%(10)		0.96	%		0.88	%		1.38	%		1.18	%		(0.91	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Equity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	14.31		$	14.77		$	16.70
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.08			0.14			(0.03	)
Net Realized and Unrealized Gain (Loss)		2.21			(0.58	)		(1.53	)
Total from Investment Operations		2.29			(0.44	)		(1.56	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.37	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	16.60		$	14.31		$	14.77
Total Return (5)		16.00	%(8)		(3.01	)%		(9.41	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	547		$	476		$	372
Ratio of Expenses to Average Net Assets (10)		2.05	%(6)(9)		2.05	%(6)		2.05	%(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			2.05	%(6)		2.05	%(6)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.98	%(6)(9)		0.95	%(6)		(0.27	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		11	%(8)		33	%		29	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.48	%(9)		2.40	%		2.75	%(9)
Net Investment Income (Loss) to Average Net Assets		0.55	%(9)		0.60	%		(0.97	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Equity Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	14.64		$	15.10		$	15.47		$	16.98		$	16.08
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.19			0.29			0.30			0.40			(0.01	)
Net Realized and Unrealized Gain (Loss)		2.25			(0.59	)		(0.23	)		(1.43	)		1.19
Total from Investment Operations		2.44			(0.30	)		0.07			(1.03	)		1.18
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.44	)		(0.48	)		(0.28	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	17.08		$	14.64		$	15.10		$	15.47		$	16.98
Total Return (5)		16.67	%(9)		(1.95	)%		0.40	%		(6.07	)%		7.42	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,171,317		$	1,058,165		$	872,167		$	715,262		$	285,253
Ratio of Expenses to Average Net Assets (11)		0.90	%(6)(10)		0.91	%(6)		0.91	%(6)		0.91	%(6)		0.91	%(6)(7)(10)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			0.91	%(6)		0.91	%(6)		0.91	%(6)		0.91	%(6)(7)(10)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		2.35	%(6)(10)		1.96	%(6)		1.84	%(6)		2.36	%(6)		(0.29	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)(10)
Portfolio Turnover Rate		11	%(9)		33	%		29	%		29	%		29	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.91	%		0.91	%		0.91	%		0.91	%(10)
Net Investment Income (Loss) to Average Net Assets		N/A			1.96	%		1.84	%		2.36	%		(0.29	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the International Equity Portfolio. The Fund seeks long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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; (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; and (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.

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

The Company 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund's investments as of June 30, 2017.

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	$	87,088	$	—	$	—	$	87,088
Auto Components		83,253		—		—		83,253
Automobiles		47,170		—		—		47,170
Banks		189,571		—		—		189,571
Beverages		237,314		—		—		237,314
Capital Markets		33,303		—		—		33,303
Chemicals		55,354		—		—		55,354
Construction Materials		53,492		—		—		53,492
Diversified Telecommunication Services		97,761		—		—		97,761
Electronic Equipment, Instruments & Components		96,484		—		—		96,484
Food Products		110,330		—		—		110,330
Household Products		203,109		—		—		203,109
Insurance		350,279		—		—		350,279
Internet Software & Services		105,240		—		—		105,240
Machinery		123,535		—		—		123,535
Media		39,156		—		—		39,156
Metals & Mining		108,274		—		—		108,274
Oil, Gas & Consumable Fuels		93,361		—		—		93,361
Personal Products		528,806		—		—		528,806
Pharmaceuticals		687,454		—		—		687,454
Professional Services		201,583		—		—		201,583
Real Estate Management & Development		22,252		—		—		22,252
Software		159,717		—		—		159,717
Specialty Retail		29,425		—		—		29,425
Tobacco		239,956		—		—		239,956
Trading Companies & Distributors		155,236		—		—		155,236
Total Common Stocks		4,138,503		—		—		4,138,503
Short-Term Investments
Investment Company		72,455		—		—		72,455
Repurchase Agreements		—		268		—		268
Total Short-Term Investments		72,455		268		—		72,723
Foreign Currency Forward Exchange Contract		—		2,696		—		2,696
Total Assets	$	4,210,958	$	2,964	$	—	$	4,213,922

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

period end. Similarly, the Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser and/or Sub-Advisers seek to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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 Fund uses

derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	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	$	2,696

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(10,975	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	5,002

At June 30, 2017, the Fund'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	$	2,696	$	—

(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 Fund 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 Fund 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 Fund 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 Fund'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, 2017.

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	$	2,696	$	—	$	—	$	2,696

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	211,925,000

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	146,812	(b)	$	—	$	(146,812	)(c)(d)	$	0

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

(c) The Fund received cash collateral of approximately $1,129,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $153,508,000 in the form of U.S. Government obligations, which the Fund 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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, 2017.

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	$	1,129	$	—	$	—	$	—	$	1,129
Total Borrowings	$	1,129	$	—	$	—	$	—	$	1,129
Gross amount of recognized liabilities for securities lending transactions									$	1,129

7.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.80% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $367,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $445,939,000 and $780,440,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $56,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	77,597	$	508,143	$	513,285	$	174	$	72,455

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	38,436	$	—	$	121,703	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations

which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

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

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies and an expired capital loss carryforward, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(16,774	)	$	26,775	$	(10,001	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	27,240	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term of approximately $11,439,000 and long-term capital losses of approximately $177,592,000 that do not have an expiration date.

In addition, at December 31, 2016, the Fund had available for federal income tax purposes unused capital losses which will expire on the indicated dates:

Amount (000)		Expiration*
$	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.

During the year ended December 31, 2016, capital loss carryforwards of approximately $10,001,000 expired for federal income tax purposes.

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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 41.9%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods but better than 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that while the Fund's contractual management fee and total expense ratio were higher than but close to its peer group averages, its actual management fee was lower than its peer group average. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIESAN
1858573 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Opportunity Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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	25
Privacy Notice	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

International Opportunity Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
International Opportunity Portfolio Class I	$	1,000.00	$	1,300.70	$	1,019.89	$	5.65	$	4.96		0.99	%
International Opportunity Portfolio Class A		1,000.00		1,298.90		1,018.70		7.01		6.16		1.23
International Opportunity Portfolio Class L		1,000.00		1,295.10		1,015.67		10.47		9.20		1.84
International Opportunity Portfolio Class C		1,000.00		1,293.30		1,014.88		11.37		9.99		2.00
International Opportunity Portfolio Class IS		1,000.00		1,300.50		1,020.18		5.30		4.66		0.93

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

International Opportunity Portfolio

	Shares		Value (000)
Common Stocks (93.0%)
Argentina (1.9%)
Globant SA (a)		98,452	$	4,277
Belgium (1.7%)
Anheuser-Busch InBev N.V.		35,314		3,901
Canada (1.3%)
Brookfield Asset Management, Inc., Class A		75,912		2,977
Trisura Group Ltd. (a)(b)		371		6
				2,983
China (26.9%)
Alibaba Group Holding Ltd. ADR (a)		51,265		7,223
China Lodging Group Ltd. ADR (a)		73,726		5,948
China Resources Beer Holdings Co., Ltd. (c)		1,786,666		4,508
Foshan Haitian Flavouring & Food Co., Ltd., Class A		751,390		4,520
Jiangsu Hengrui Medicine Co., Ltd., Class A		711,717		5,311
Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Class A		196,909		2,522
Suofeiya Home Collection Co., Ltd., Class A		966,606		5,846
TAL Education Group ADR		129,975		15,897
Tencent Holdings Ltd. (c)		292,000		10,442
				62,217
Denmark (4.5%)
DSV A/S		169,782		10,431
France (7.5%)
Christian Dior SE		26,456		7,565
Hermes International		19,763		9,766
				17,331
Germany (1.6%)
Adidas AG		19,381		3,713
India (3.4%)
HDFC Bank Ltd.		302,480		7,794
Italy (1.9%)
Moncler SpA		187,013		4,379
Japan (7.0%)
Calbee, Inc.		180,700		7,093
Keyence Corp.		10,300		4,519
Nihon M&A Center, Inc.		125,100		4,571
				16,183
Korea, Republic of (0.9%)
Loen Entertainment, Inc.		28,573		2,183
South Africa (2.0%)
Naspers Ltd., Class N		23,618		4,594
Sweden (3.6%)
RaySearch Laboratories AB (a)		166,163		4,645
Vitrolife AB		60,084		3,772
				8,417

	Shares			Value (000)
Switzerland (3.3%)
Chocoladefabriken Lindt & Spruengli AG (Registered)		64		$	4,462
Nestle SA (Registered)		35,496			3,089
					7,551
United Kingdom (13.4%)
Burberry Group PLC		257,054			5,561
Fevertree Drinks PLC		386,409			8,581
Just Eat PLC (a)		551,432			4,704
Reckitt Benckiser Group PLC		73,261			7,427
Rightmove PLC		82,900			4,589
					30,862
United States (12.1%)
EPAM Systems, Inc. (a)		158,155			13,299
Luxoft Holding, Inc. (a)		78,305			4,765
Priceline Group, Inc. (The) (a)		5,317			9,946
					28,010
Total Common Stocks (Cost $186,584)					214,826
Participation Notes (1.6%)
China (1.6%)
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/10/18 (a)		151,200			1,936
Suofeiya Home Collection Co., Ltd., Equity Linked Notes, expires 11/20/20 (a)		296,200			1,792
Total Participation Notes (Cost $3,141)					3,728
Short-Term Investments (6.6%)
Securities held as Collateral on Loaned Securities (0.0%)
Investment Company (0.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		4,757			5
	Face Amount (000)
Repurchase Agreements (0.0%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $1; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $1)	$	1			1
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $—@; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $1)		—	@		—	@
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $—@; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $—@)		—	@		—	@
					1
Total Securities held as Collateral on Loaned Securities (Cost $6)					6

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

International Opportunity Portfolio

	Shares		Value (000)
Investment Company (6.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $15,301)		15,300,885	$	15,301
Total Short-Term Investments (Cost $15,307)				15,307
Total Investments (101.2%) (Cost $205,032) Including $6 of Securities Loaned (d)				233,861
Liabilities in Excess of Other Assets (–1.2%)				(2,751	)
Net Assets (100.0%)			$	231,110

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2017.

(c)  Security trades on the Hong Kong exchange.

(d)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $29,470,000 and the aggregate gross unrealized depreciation is approximately $641,000, resulting in net unrealized appreciation of approximately $28,829,000.

@  Amount is less than $500.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		36.8	%
Textiles, Apparel & Luxury Goods		13.3
Internet Software & Services		11.5
Beverages		9.2
Food Products		8.2
Information Technology Services		7.7
Diversified Consumer Services		6.8
Short-Term Investment		6.5
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2017.

**  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, 2017 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $189,726)	$	218,555
Investment in Security of Affiliated Issuer, at Value (Cost $15,306)		15,306
Total Investments in Securities, at Value (Cost $205,032)		233,861
Foreign Currency, at Value (Cost $70)		70
Cash		1
Receivable for Fund Shares Sold		1,444
Dividends Receivable		51
Tax Reclaim Receivable		44
Receivable from Affiliate		9
Receivable for Investments Sold		1
Other Assets		103
Total Assets		235,584
Liabilities:
Payable for Investments Purchased		3,441
Payable for Fund Shares Redeemed		553
Payable for Advisory Fees		291
Deferred Capital Gain Country Tax		102
Payable for Professional Fees		30
Payable for Shareholder Services Fees — Class A		14
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		8
Payable for Administration Fees		14
Collateral on Securities Loaned, at Value		6
Payable for Custodian Fees		5
Payable for Sub Transfer Agency Fees — Class I		4
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		4
Total Liabilities		4,474
Net Assets	$	231,110
Net Assets Consist Of:
Paid-in-Capital	$	199,154
Accumulated Undistributed Net Investment Income		42
Accumulated Net Realized Gain		3,185
Unrealized Appreciation (Depreciation) on:
Investments (Net of $102 of Deferred Capital Gain Country Tax)		28,727
Foreign Currency Translations		2
Net Assets	$	231,110

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	144,368
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		7,434,376
Net Asset Value, Offering and Redemption Price Per Share	$	19.42
CLASS A:
Net Assets	$	72,790
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,788,675
Net Asset Value, Redemption Price Per Share	$	19.21
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.06
Maximum Offering Price Per Share	$	20.27
CLASS L:
Net Assets	$	312
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,644
Net Asset Value, Offering and Redemption Price Per Share	$	18.74
CLASS C:
Net Assets	$	10,568
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		567,865
Net Asset Value, Offering and Redemption Price Per Share	$	18.61
CLASS IS:
Net Assets	$	3,072
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		158,119
Net Asset Value, Offering and Redemption Price Per Share	$	19.43
(1) Including: Securities on Loan, at Value:	$	6

@  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, 2017 (unaudited)

International Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $65 of Foreign Taxes Withheld)	$	727
Dividends from Security of Affiliated Issuer (Note G)		27
Income from Securities Loaned — Net		5
Total Investment Income		759
Expenses:
Advisory Fees (Note B)		501
Shareholder Services Fees — Class A (Note D)		38
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		24
Administration Fees (Note C)		50
Professional Fees		49
Sub Transfer Agency Fees — Class I		25
Sub Transfer Agency Fees — Class A		7
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		1
Registration Fees		24
Custodian Fees (Note F)		16
Transfer Agency Fees — Class I (Note E)		7
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		8
Directors' Fees and Expenses		3
Pricing Fees		3
Other Expenses		13
Total Expenses		774
Waiver of Advisory Fees (Note B)		(76	)
Rebate from Morgan Stanley Affiliate (Note G)		(8	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(6	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		682
Net Investment Income		77
Realized Gain (Loss):
Investments Sold		2,985
Foreign Currency Transactions		(55	)
Net Realized Gain		2,930
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $102)		26,101
Foreign Currency Translations		4
Net Change in Unrealized Appreciation (Depreciation)		26,105
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		29,035
Net Increase in Net Assets Resulting from Operations	$	29,112

@  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, 2017

International Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	77		$	(222	)
Net Realized Gain		2,930			952
Net Change in Unrealized Appreciation (Depreciation)		26,105			(174	)
Net Increase in Net Assets Resulting from Operations		29,112			556
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(10	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(10	)
Capital Share Transactions:(1)
Class I:
Subscribed		71,497			38,010
Distributions Reinvested		—			10
Redeemed		(10,747	)		(28,192	)
Class A:
Subscribed		58,490			11,094
Redeemed		(3,813	)		(8,975	)
Class L:
Exchanged		42			146
Redeemed		(14	)		(190	)
Class C:
Subscribed		7,965			722
Redeemed		(297	)		(604	)
Class IS:
Subscribed		1,754			1,008
Redeemed		(167	)		—
Net Increase in Net Assets Resulting from Capital Share Transactions		124,710			13,029
Redemption Fees		8			3
Total Increase in Net Assets		153,830			13,578
Net Assets:
Beginning of Period		77,280			63,702
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $42 and $(35), respectively)	$	231,110		$	77,280

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

International Opportunity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		3,877			2,611
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(623	)		(1,900	)
Net Increase in Class I Shares Outstanding		3,254			712
Class A:
Shares Subscribed		3,215			764
Shares Redeemed		(219	)		(609	)
Net Increase in Class A Shares Outstanding		2,996			155
Class L:
Shares Exchanged		2			10
Shares Redeemed		(1	)		(13	)
Net Increase (Decrease) in Class L Shares Outstanding		1			(3	)
Class C:
Shares Subscribed		456			50
Shares Redeemed		(18	)		(42	)
Net Increase in Class C Shares Outstanding		438			8
Class IS:
Shares Subscribed		98			68
Shares Redeemed		(9	)		—
Net Increase in Class IS Shares Outstanding		89			68

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Opportunity Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.93		$	15.03		$	13.92		$	13.77		$	11.19		$	10.26
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.02			(0.03	)		(0.00	)(3)		0.08			0.10			0.08
Net Realized and Unrealized Gain (Loss)		4.47			(0.07	)		1.58			0.36			2.85			0.92
Total from Investment Operations		4.49			(0.10	)		1.58			0.44			2.95			1.00
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(3)		(0.03	)		(0.01	)		(0.09	)		(0.07	)
Net Realized Gain		—			—			(0.44	)		(0.28	)		(0.28	)		—
Total Distributions		—			(0.00	)(3)		(0.47	)		(0.29	)		(0.37	)		(0.07	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—			—
Net Asset Value, End of Period	$	19.42		$	14.93		$	15.03		$	13.92		$	13.77		$	11.19
Total Return (4)		30.07	%(8)		(0.65	)%		11.40	%		3.14	%		26.47	%		9.76	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	144,368		$	62,440		$	52,128		$	10,943		$	7,647		$	5,259
Ratio of Expenses to Average Net Assets (10)		0.99	%(5)(9)		1.00	%(5)		1.01	%(5)(6)		1.09	%(5)		1.13	%(5)		1.14	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		0.18	%(5)(9)		(0.22	)%(5)		(0.01	)%(5)		0.57	%(5)		0.82	%(5)		0.70	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(9)		0.00	%(7)		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		24	%(8)		42	%		51	%		33	%		40	%		33	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.13	%(9)		1.34	%		1.95	%		3.25	%		3.84	%		3.87	%
Net Investment Income (Loss) to Average Net Assets		0.04	%(9)		(0.56	)%		(0.95	)%		(1.59	)%		(1.89	)%		(2.03	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.79		$	14.93		$	13.87		$	13.78		$	11.19		$	10.26
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		0.01			(0.08	)		(0.06	)		0.01			0.02			0.05
Net Realized and Unrealized Gain (Loss)		4.41			(0.06	)		1.57			0.37			2.89			0.92
Total from Investment Operations		4.42			(0.14	)		1.51			0.38			2.91			0.97
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.01	)		(0.01	)		(0.04	)		(0.04	)
Net Realized Gain		—			—			(0.44	)		(0.28	)		(0.28	)		—
Total Distributions		—			—			(0.45	)		(0.29	)		(0.32	)		(0.04	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—			—
Net Asset Value, End of Period	$	19.21		$	14.79		$	14.93		$	13.87		$	13.78		$	11.19
Total Return(4)		29.89	%(9)		(1.00	)%		10.99	%		2.71	%		26.12	%		9.49	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	72,790		$	11,727		$	9,520		$	992		$	275		$	112
Ratio of Expenses to Average Net Assets (11)		1.23	%(5)(10)		1.35	%(5)		1.34	%(5)(7)		1.49	%(5)		1.44	%(5)(6)		1.39	%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		0.07	%(5)(10)		(0.55	)%(5)		(0.39	)%(5)		0.04	%(5)		0.13	%(5)		0.45	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.00	%(8)		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		24	%(9)		42	%		51	%		33	%		40	%		33	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.37	%(10)		1.66	%		2.28	%		3.81	%		4.49	%		4.12	%
Net Investment Loss to Average Net Assets		(0.07	)%(10)		(0.86	)%		(1.33	)%		(2.28	)%		(2.92	)%		(2.28	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Opportunity Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	14.47		$	14.69		$	13.71		$	13.68		$	11.13		$	10.22
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.06	)		(0.14	)		(0.12	)		(0.05	)		(0.00	)(3)		(0.01	)
Net Realized and Unrealized Gain (Loss)		4.33			(0.08	)		1.54			0.36			2.83			0.92
Total from Investment Operations		4.27			(0.22	)		1.42			0.31			2.83			0.91
Distributions from and/or in Excess of:
Net Realized Gain		—			—			(0.44	)		(0.28	)		(0.28	)		—
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—			—
Net Asset Value, End of Period	$	18.74		$	14.47		$	14.69		$	13.71		$	13.68		$	11.13
Total Return(4)		29.51	%(9)		(1.50	)%		10.38	%		2.24	%		25.49	%		8.90	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	312		$	221		$	266		$	193		$	137		$	112
Ratio of Expenses to Average Net Assets (11)		1.84	%(5)(10)		1.85	%(5)		1.91	%(5)(7)		1.99	%(5)		1.92	%(5)(6)		1.89	%(5)
Ratio of Net Investment Loss to Average Net Assets (11)		(0.74	)%(5)(10)		(1.00	)%(5)		(0.80	)%(5)		(0.38	)%(5)		(0.00	)%(5)(8)		(0.05	)%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(10)		0.00	%(8)		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		24	%(9)		42	%		51	%		33	%		40	%		33	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.55	%(10)		3.16	%		3.54	%		5.06	%		4.91	%		4.62	%
Net Investment Loss to Average Net Assets		(1.45	)%(10)		(2.31	)%		(2.43	)%		(3.45	)%		(2.99	)%		(2.78	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  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.

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	14.39		$	14.63		$	15.39
Income (Loss) from Investment Operations:
Net Investment Loss (3)		(0.06	)		(0.19	)		(0.13	)
Net Realized and Unrealized Gain (Loss)		4.28			(0.05	)		(0.16	)
Total from Investment Operations		4.22			(0.24	)		(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	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	18.61		$	14.39		$	14.63
Total Return(5)		29.33	%(9)		(1.71	)%		(1.85	)%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10,568		$	1,862		$	1,776
Ratio of Expenses to Average Net Assets (11)		2.00	%(6)(10)		2.10	%(6)		2.10	%(6)(7)(10)
Ratio of Net Investment Loss to Average Net Assets (11)		(0.70	)%(6)(10)		(1.32	)%(6)		(1.28	)%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%(10)		0.00	%(8)		0.01	%(10)
Portfolio Turnover Rate		24	%(9)		42	%		51	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.14	%(10)		2.43	%		3.03	%(10)
Net Investment Loss to Average Net Assets		(0.84	)%(10)		(1.65	)%		(2.21	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Opportunity Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	14.94		$	15.03		$	13.92		$	13.77		$	12.75
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.03			(0.03	)		0.02			0.07			(0.02	)
Net Realized and Unrealized Gain (Loss)		4.46			(0.06	)		1.56			0.37			1.41
Total from Investment Operations		4.49			(0.09	)		1.58			0.44			1.39
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)(4)		(0.03	)		(0.01	)		(0.09	)
Net Realized Gain		—			—			(0.44	)		(0.28	)		(0.28	)
Total Distributions		—			(0.00	)(4)		(0.47	)		(0.29	)		(0.37	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	19.43		$	14.94		$	15.03		$	13.92		$	13.77
Total Return(5)		30.05	%(10)		(0.64	)%		11.40	%		3.22	%		10.96	%(10)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,072		$	1,030		$	12		$	11		$	11
Ratio of Expenses to Average Net Assets (12)		0.93	%(6)(11)		0.93	%(6)		1.01	%(6)(8)		1.08	%(6)		1.08	%(6)(7)(11)
Ratio of Net Investment Income (Loss) to Average Net Assets (12)		0.36	%(6)(11)		(0.20	)%(6)		0.12	%(6)		0.51	%(6)		(0.47	)%(6)(11)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%(11)		0.01	%		0.00	%(9)		0.01	%		0.01	%(11)
Portfolio Turnover Rate		24	%(10)		42	%		51	%		33	%		40	%(10)
(12) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.15	%(11)		5.64	%		15.79	%		20.64	%		9.61	%(11)
Net Investment Income (Loss) to Average Net Assets		0.14	%(11)		(4.91	)%		(14.66	)%		(19.05	)%		(9.00	)%(11)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  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.

(9)  Amount is less than 0.005%.

(10)  Not Annualized.

(11)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the International Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April, 30, 2015 the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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, 2017

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 Fund's investments as of June 30, 2017.

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	$	—	$	7,794	$	—	$	7,794
Beverages		19,512		—		—		19,512
Biotechnology		3,772		—		—		3,772
Capital Markets		2,977		—		—		2,977
Diversified Consumer Services		15,897		—		—		15,897
Electronic Equipment, Instruments & Components		4,519		—		—		4,519
Food Products		19,164		—		—		19,164
Health Care Technology		4,645		—		—		4,645
Hotels, Restaurants & Leisure		5,948		—		—		5,948
Household Durables		5,846		—		—		5,846
Household Products		7,427		—		—		7,427
Information Technology Services		18,064		—		—		18,064
Insurance		6		—		—		6
Internet & Direct Marketing Retail		9,946		—		—		9,946
Internet Software & Services		26,958		—		—		26,958
Media		6,777		—		—		6,777
Pharmaceuticals		5,311		—		—		5,311
Professional Services		4,571		—		—		4,571
Road & Rail		10,431		—		—		10,431
Software		4,277		—		—		4,277
Textiles, Apparel & Luxury Goods		30,984		—		—		30,984
Total Common Stocks		207,032		7,794		—		214,826
Participation Notes		—		3,728		—		3,728
Short-Term Investments
Investment Company		15,306		—		—		15,306
Repurchase Agreements		—		1		—		1
Total Short-Term Investments		15,306		1		—		15,307
Total Assets	$	222,338	$	11,523	$	—	$	233,861

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes

transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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 Stock (000)			Preferred Stock (000)
Beginning Balance	$	—	†	$	80
Purchases		—			—
Sales		—			(98	)
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—	††		—
Change in unrealized appreciation (depreciation)		—			(43	)
Realized gains (losses)		—			61
Ending Balance	$	—		$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	—		$	—

†  Includes one security which is valued at zero.

††  Corporate action valued at zero.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which a Fund lends excess 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 Fund 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 the adequacy of the collateral. In the event of default on the obligation to repurchase, the Fund 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 and/or retention of the collateral or proceeds may be subject to legal proceedings. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund's holdings, including derivative instruments, are marked-to-market each day with

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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.

As of June 30, 2017, the Fund did not have any outstanding purchased options.

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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)	$	(39	)(a)

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

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Value Derivative Type	(000)
Currency Risk	Investments (Option Purchased)	$	4	(b)

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

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	$	9,421,000

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	6	(c)	$	—	$	(6	)(d)(e)	$	0

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

(d) The Fund received cash collateral of approximately $6,000, 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.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	—	$	—	$	—	$	6
Total Borrowings	$	6	$	—	$	—	$	—	$	6
Gross amount of recognized liabilities for securities lending transactions									$	6

7.  Structured Investments: The Fund 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 Fund 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 Fund 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 Fund's illiquidity to the extent that the Fund, at a particular time, may be unable to find qualified buyers for these securities.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

8.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.67% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $76,000 of advisory fees were waived and approximately $8,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $147,434,000 and $29,105,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $8,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	5,351	$	58,039	$	48,084	$	27	$	15,306

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	10	$	—	$	96	$	960

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, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Undistributed Net Realized Gain (000)		Paid-in- Capital (000)
$	176	$	78	$	(254	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	372

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. These also include non-specified ordinary losses incurred after December 31 but within the same taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	34	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 39.5%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's contractual management fee and total expense ratio were higher than its peer group averages and the actual management fee was higher than but close to its peer group average. After discussion, the Board concluded that the Fund's (i) performance was competitive with its peer group average; (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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

30

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

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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIIOSAN
1859502 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Real Estate Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

International Real Estate Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,099.30	$	1,019.84	$	5.21	$	5.01		1.00	%
International Real Estate Portfolio Class A		1,000.00		1,098.10		1,018.10		7.02		6.76		1.35
International Real Estate Portfolio Class L		1,000.00		1,095.30		1,015.62		9.61		9.25		1.85
International Real Estate Portfolio Class C		1,000.00		1,093.00		1,014.38		10.90		10.49		2.10
International Real Estate Portfolio Class IS		1,000.00		1,099.30		1,019.98		5.05		4.86		0.97

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

International Real Estate Portfolio

	Shares		Value (000)
Common Stocks (98.3%)
Australia (10.9%)
Dexus REIT		43,812	$	319
Goodman Group REIT		120,672		730
GPT Group REIT		141,787		522
Investa Office Fund REIT		35,319		119
Mirvac Group REIT		151,829		249
Scentre Group REIT		338,329		1,053
Stockland REIT		106,853		360
Vicinity Centres REIT		147,242		291
Westfield Corp. REIT		149,075		920
				4,563
Austria (0.8%)
Atrium European Real Estate Ltd.		24,404		109
BUWOG AG (a)		7,756		223
				332
China (0.7%)
China Overseas Land & Investment Ltd. (b)		54,000		158
China Resources Land Ltd. (b)		24,000		70
China Vanke Co., Ltd. H Shares (b)		26,900		76
				304
Finland (0.6%)
Citycon Oyj		92,902		244
France (8.9%)
Fonciere Des Regions REIT		2,257		209
Gecina SA REIT		3,712		582
ICADE REIT		5,218		438
Klepierre REIT		16,801		689
Mercialys SA REIT		9,335		183
Unibail-Rodamco SE REIT		6,456		1,627
				3,728
Germany (4.7%)
ADO Properties SA (c)		3,971		168
Deutsche Wohnen AG		16,878		645
LEG Immobilien AG		1,593		150
Vonovia SE		24,962		991
				1,954
Hong Kong (24.6%)
Champion REIT		95,000		61
Cheung Kong Property Holdings Ltd.		183,000		1,433
Hang Lung Properties Ltd.		15,000		38
Henderson Land Development Co., Ltd.		64,012		357
Hongkong Land Holdings Ltd.		237,800		1,750
Hysan Development Co., Ltd.		171,836		820
Link REIT		148,395		1,129
New World Development Co., Ltd.		454,788		577
Sino Land Co., Ltd.		53,228		87
Sun Hung Kai Properties Ltd.		149,456		2,196
Swire Properties Ltd.		369,700		1,219
Wharf Holdings Ltd. (The)		70,117		581
				10,248

	Shares		Value (000)
Ireland (2.0%)
Green REIT PLC		260,684	$	424
Hibernia REIT PLC		246,813		387
				811
Japan (22.8%)
Activia Properties, Inc. REIT		69		295
Advance Residence Investment Corp. REIT		106		263
Daiwa Office Investment Corp. REIT		12		61
GLP J-REIT		205		221
Hulic Co., Ltd.		26,000		265
Hulic REIT, Inc.		54		84
Invincible Investment Corp. REIT		656		282
Japan Hotel REIT Investment Corp. REIT		189		134
Japan Prime Realty Investment Corp. REIT		7		24
Japan Real Estate Investment Corp. REIT		93		462
Japan Rental Housing Investments, Inc. REIT		38		28
Japan Retail Fund Investment Corp. REIT		169		312
Kenedix Office Investment Corp. REIT		15		80
Mitsubishi Estate Co., Ltd.		109,100		2,031
Mitsui Fudosan Co., Ltd.		87,000		2,073
Mori Hills Investment Corp. REIT		82		101
Mori Trust Sogo Reit, Inc. REIT		15		24
Nippon Accommodations Fund, Inc. REIT		6		25
Nippon Building Fund, Inc. REIT		125		638
Nippon Prologis, Inc. REIT		134		285
Nomura Real Estate Master Fund, Inc. REIT		361		493
Orix, Inc. J-REIT		120		177
Sumitomo Realty & Development Co., Ltd.		26,000		801
United Urban Investment Corp. REIT		251		358
				9,517
Malta (0.2%)
BGP Holdings PLC (a)(d)(e)		4,769,371		76
Netherlands (1.7%)
Eurocommercial Properties N.V. CVA REIT		12,729		509
Vastned Retail N.V. REIT		1,260		53
Wereldhave N.V. REIT		2,923		143
				705
Norway (1.1%)
Entra ASA (c)		32,054		399
Norwegian Property ASA		49,340		61
				460
Singapore (2.8%)
Ascendas Real Estate Investment Trust REIT		87,000		165
CapitaLand Commercial Trust Ltd. REIT		221,200		267
CapitaLand Ltd.		38,600		98
CapitaLand Mall Trust REIT		128,400		184
EC World Real Estate Investment Trust Unit REIT		39,300		23
Global Logistic Properties Ltd.		35,200		73
Keppel REIT		125,153		104
Mapletree Commercial Trust REIT		40,800		48

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

International Real Estate Portfolio

	Shares		Value (000)
Singapore (cont'd)
Suntec REIT		63,300	$	86
UOL Group Ltd.		17,313		96
				1,144
Spain (1.9%)
Hispania Activos Inmobiliarios SAU REIT		11,503		190
Inmobiliaria Colonial SA		22,579		197
Merlin Properties Socimi SA REIT		32,760		414
				801
Sweden (1.7%)
Atrium Ljungberg AB, Class B		8,458		141
Castellum AB		17,779		261
Hufvudstaden AB, Class A		18,986		315
				717
Switzerland (1.4%)
PSP Swiss Property AG (Registered)		5,770		539
Swiss Prime Site AG (Registered) (a)		676		61
				600
United Kingdom (11.5%)
British Land Co., PLC REIT		111,631		880
Capital & Regional PLC REIT		102,130		75
Derwent London PLC REIT		15,288		529
Great Portland Estates PLC REIT		58,015		451
Hammerson PLC REIT		56,474		423
Intu Properties PLC REIT		66,878		234
Land Securities Group PLC REIT		90,952		1,200
LXB Retail Properties PLC (a)		168,042		69
Segro PLC REIT		39,068		249
St. Modwen Properties PLC		58,860		275
Unite Group PLC REIT		14,715		124
Urban & Civic PLC		79,395		272
				4,781
Total Common Stocks (Cost $36,704)				40,985
Short-Term Investment (0.8%)
Investment Company (0.8%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $334)		333,760		334
Total Investments (99.1%) (Cost $37,038) (f)				41,319
Other Assets in Excess of Liabilities (0.9%)				378
Net Assets (100.0%)			$	41,697

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

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

(d)  At June 30, 2017, the Fund held a fair valued security valued at approximately $76,000, representing 0.2% 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 Company's Directors.

(e)  Security has been deemed illiquid at June 30, 2017.

(f)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $5,244,000 and the aggregate gross unrealized depreciation is approximately $963,000, resulting in net unrealized appreciation of approximately $4,281,000.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Diversified		51.7	%
Retail		20.0
Office		15.0
Residential		7.2
Other*		6.1
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $36,704)	$	40,985
Investment in Security of Affiliated Issuer, at Value (Cost $334)		334
Total Investments in Securities, at Value (Cost $37,038)		41,319
Foreign Currency, at Value (Cost $92)		93
Receivable for Investments Sold		287
Dividends Receivable		121
Tax Reclaim Receivable		35
Receivable for Fund Shares Sold		4
Receivable from Affiliate		—	@
Other Assets		70
Total Assets		41,929
Liabilities:
Payable for Investments Purchased		98
Payable for Professional Fees		47
Payable for Custodian Fees		40
Payable for Fund Shares Redeemed		19
Payable for Advisory Fees		6
Payable for Sub Transfer Agency Fees — Class I		3
Payable for Sub Transfer Agency Fees — Class A		1
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		3
Payable for Directors' Fees and Expenses		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 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		14
Total Liabilities		232
Net Assets	$	41,697
Net Assets Consist Of:
Paid-in-Capital	$	548,978
Accumulated Undistributed Net Investment Income		1,120
Accumulated Net Realized Loss		(512,683	)
Unrealized Appreciation (Depreciation) on:
Investments		4,281
Foreign Currency Translations		1
Net Assets	$	41,697

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	27,331
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,418,127
Net Asset Value, Offering and Redemption Price Per Share	$	19.27
CLASS A:
Net Assets	$	1,578
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		81,950
Net Asset Value, Redemption Price Per Share	$	19.26
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.07
Maximum Offering Price Per Share	$	20.33
CLASS L:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		578
Net Asset Value, Offering and Redemption Price Per Share	$	19.08
CLASS C:
Net Assets	$	107
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,641
Net Asset Value, Offering and Redemption Price Per Share	$	18.93
CLASS IS:
Net Assets	$	12,670
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		657,657
Net Asset Value, Offering and Redemption Price Per Share	$	19.27

@  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, 2017 (unaudited)

International Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $68 of Foreign Taxes Withheld)	$	966
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		967
Expenses:
Advisory Fees (Note B)		164
Custodian Fees (Note F)		58
Professional Fees		52
Registration Fees		23
Administration Fees (Note C)		16
Sub Transfer Agency Fees — Class I		9
Sub Transfer Agency Fees — Class A		1
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)		2
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		8
Total Expenses		353
Waiver of Advisory Fees (Note B)		(136	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(7	)
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		206
Net Investment Income		761
Realized Gain:
Investments Sold		83
Foreign Currency Transactions		3
Net Realized Gain		86
Change in Unrealized Appreciation (Depreciation):
Investments		3,042
Foreign Currency Translations		8
Net Change in Unrealized Appreciation (Depreciation)		3,050
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		3,136
Net Increase in Net Assets Resulting from Operations	$	3,897

@  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, 2017

International Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	761		$	1,826
Net Realized Gain (Loss)		86			(4,059	)
Net Change in Unrealized Appreciation (Depreciation)		3,050			2,792
Net Increase in Net Assets Resulting from Operations		3,897			559
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(1,543	)
Class A:
Net Investment Income		—			(77	)
Class L:
Net Investment Income		—			(2	)
Class C:
Net Investment Income		—			(1	)
Class IS:
Net Investment Income		—			(639	)
Total Distributions		—			(2,262	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,000			2,882
Distributions Reinvested		—			1,354
Redeemed		(2,477	)		(44,218	)
Class A:
Subscribed		173			16
Distributions Reinvested		—			67
Redeemed		(256	)		(764	)
Class H:*
Redeemed		—			(10	)
Class L:
Distributions Reinvested		—			2
Redeemed		(44	)		—
Class C:
Subscribed		100			—
Distributions Reinvested		—			—	@
Redeemed		(14	)		—
Class IS:
Subscribed		145			266
Distributions Reinvested		—			639
Redeemed		(200	)		(9,958	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(1,573	)		(49,724	)
Redemption Fees		1			—	@
Total Increase (Decrease) in Net Assets		2,325			(51,427	)
Net Assets:
Beginning of Period		39,372			90,799
End of Period (Including Accumulated Undistributed Net Investment Income of $1,120 and $359)	$	41,697		$	39,372

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

International Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		55			160
Shares Issued on Distributions Reinvested		—			78
Shares Redeemed		(132	)		(2,346	)
Net Decrease in Class I Shares Outstanding		(77	)		(2,108	)
Class A:
Shares Subscribed		9			1
Shares Issued on Distributions Reinvested		—			4
Shares Redeemed		(13	)		(42	)
Net Decrease in Class A Shares Outstanding		(4	)		(37	)
Class H:*
Shares Redeemed		—			(1	)
Class L:
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(2	)		—
Net Increase (Decrease) in Class L Shares Outstanding		(2	)		—	@@
Class C:
Shares Subscribed		5			—
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		—
Net Increase in Class C Shares Outstanding		4			—	@@
Class IS:
Shares Subscribed		8			14
Shares Issued on Distributions Reinvested		—			37
Shares Redeemed		(11	)		(509	)
Net Decrease in Class IS Shares Outstanding		(3	)		(458	)

*  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, 2017

Financial Highlights

International Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.53		$	18.72		$	19.84		$	19.99		$	20.16		$	14.66
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.34			0.46			0.37			0.39			0.41			0.44
Net Realized and Unrealized Gain (Loss)		1.40			(0.73	)		(1.00	)		(0.07	)		0.65			5.89
Total from Investment Operations		1.74			(0.27	)		(0.63	)		0.32			1.06			6.33
Distributions from and/or in Excess of:
Net Investment Income		—			(0.92	)		(0.49	)		(0.47	)		(1.23	)		(0.83	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	19.27		$	17.53		$	18.72		$	19.84		$	19.99		$	20.16
Total Return (4)		9.93	%(7)		(1.38	)%		(3.29	)%		1.61	%		5.56	%		44.05	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	27,331		$	26,213		$	67,459		$	94,269		$	130,023		$	138,390
Ratio of Expenses to Average Net Assets (9)		1.00	%(5)(8)		1.00	%(5)		1.00	%(5)		1.00	%(5)		1.00	%(5)		1.00	%(5)
Ratio of Net Investment Income to Average Net Assets (9)		3.72	%(5)(8)		2.47	%(5)		1.84	%(5)		1.91	%(5)		2.00	%(5)		2.54	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		11	%(7)		21	%		37	%		59	%		40	%		31	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.71	%(8)		1.37	%		1.29	%		1.16	%		1.23	%(5)		1.12	%
Net Investment Income to Average Net Assets		3.01	%(8)		2.10	%		1.55	%		1.75	%		1.76	%(5)		2.42	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.54		$	18.73		$	19.84		$	19.98		$	20.14		$	14.65
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.31			0.39			0.30			0.31			0.35			0.39
Net Realized and Unrealized Gain (Loss)		1.41			(0.73	)		(1.00	)		(0.06	)		0.66			5.89
Total from Investment Operations		1.72			(0.34	)		(0.70	)		0.25			1.01			6.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.85	)		(0.41	)		(0.39	)		(1.17	)		(0.79	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	19.26		$	17.54		$	18.73		$	19.84		$	19.98		$	20.14
Total Return (4)		9.81	%(8)		(1.78	)%		(3.61	)%		1.27	%		5.28	%		43.71	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,578		$	1,512		$	2,308		$	2,792		$	3,331		$	4,431
Ratio of Expenses to Average Net Assets (10)		1.35	%(5)(9)		1.35	%(5)		1.35	%(5)		1.35	%(5)		1.27	%(5)(6)		1.25	%(5)
Ratio of Net Investment Income to Average Net Assets (10)		3.36	%(5)(9)		2.10	%(5)		1.48	%(5)		1.55	%(5)		1.72	%(5)		2.23	%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.00	%(7)
Portfolio Turnover Rate		11	%(8)		21	%		37	%		59	%		40	%		31	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.20	%(9)		1.85	%		1.70	%		1.58	%		1.53	%(5)		1.38	%
Net Investment Income to Average Net Assets		2.51	%(9)		1.60	%		1.13	%		1.32	%		1.47	%(5)		2.10	%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from April 27, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	17.42		$	18.61		$	19.69		$	19.86		$	20.13		$	17.31
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.30			0.29			0.18			0.21			0.22			0.16
Net Realized and Unrealized Gain (Loss)		1.36			(0.71	)		(0.97	)		(0.06	)		0.68			3.40
Total from Investment Operations		1.66			(0.42	)		(0.79	)		0.15			0.90			3.56
Distributions from and/or in Excess of:
Net Investment Income		—			(0.77	)		(0.29	)		(0.32	)		(1.17	)		(0.74	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		—			—
Net Asset Value, End of Period	$	19.08		$	17.42		$	18.61		$	19.69		$	19.86		$	20.13
Total Return (5)		9.53	%(9)		(2.23	)%		(4.11	)%		0.75	%		4.73	%		21.28	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	53		$	55		$	95		$	73		$	12
Ratio of Expenses to Average Net Assets (11)		1.85	%(6)(10)		1.85	%(6)		1.85	%(6)		1.85	%(6)		1.81	%(6)(7)		1.75	%(6)(10)
Ratio of Net Investment Income to Average Net Assets (11)		3.31	%(6)(10)		1.58	%(6)		0.90	%(6)		1.05	%(6)		1.08	%(6)		1.37	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)(10)
Portfolio Turnover Rate		11	%(9)		21	%		37	%		59	%		40	%		31	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		10.92	%(10)		5.51	%		4.58	%		3.90	%		3.44	%(6)		1.93	%(10)
Net Investment Income (Loss) to Average Net Assets		(5.76	)%(10)		(2.08	)%		(1.83	)%		(1.00	)%		(0.55	)%(6)		1.19	%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(12 to December 31, 2015
Net Asset Value, Beginning of Period	$	17.32		$	18.50		$	21.28
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.22			0.25			0.06
Net Realized and Unrealized Gain (Loss)		1.39			(0.71	)		(2.48	)
Total from Investment Operations		1.61			(0.46	)		(2.42	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.72	)		(0.36	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	18.93		$	17.32		$	18.50
Total Return (5)		9.30	%(8)		(2.44	)%		(11.47	)%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	107		$	21		$	22
Ratio of Expenses to Average Net Assets (10)		2.10	%(6)(9)		2.10	%(6)		2.10	%(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		2.33	%(6)(9)		1.33	%(6)		0.45	%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)(9)
Portfolio Turnover Rate		11	%(8)		21	%		37	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		8.63	%(9)		12.39	%		10.98	%(9)
Net Investment Loss to Average Net Assets		(4.20	)%(9)		(8.96	)%		(8.43	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

International Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	17.52		$	18.71		$	19.83		$	19.99		$	19.97
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.35			0.47			0.37			0.23			0.11
Net Realized and Unrealized Gain (Loss)		1.40			(0.73	)		(1.00	)		0.09			0.22
Total from Investment Operations		1.75			(0.26	)		(0.63	)		0.32			0.33
Distributions from and/or in Excess of:
Net Investment Income		—			(0.93	)		(0.49	)		(0.48	)		(0.31	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		—
Net Asset Value, End of Period	$	19.27		$	17.52		$	18.71		$	19.83		$	19.99
Total Return (5)		9.93	%(9)		(1.33	)%		(3.26	)%		1.60	%		1.68	%(9)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12,670		$	11,573		$	20,944		$	2,557		$	10
Ratio of Expenses to Average Net Assets (11)		0.97	%(6)(10)		0.97	%(6)		0.97	%(6)		0.97	%(6)		0.97	%(6)(7)(10)
Ratio of Net Investment Income to Average Net Assets (11)		3.74	%(6)(10)		2.52	%(6)		1.86	%(6)		1.14	%(6)		1.76	%(6)(10)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.00	%(8)(10)
Portfolio Turnover Rate		11	%(9)		21	%		37	%		59	%		40	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.65	%(10)		1.33	%		1.30	%		1.13	%		6.46	%(10)
Net Investment Income (Loss) to Average Net Assets		3.06	%(10)		2.16	%		1.53	%		0.98	%		(3.73	)%(10)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(7)  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.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the International Real Estate Portfolio. The Fund seeks to provide current income and long-term capital appreciation.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (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.

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

The Company 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 Fund 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 Fund.

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, 2017

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 Fund's investments as of June 30, 2017.

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	$	21,357	$	—	$	—	$	21,357
Industrial		1,746		—		—		1,746
Lodging/Resorts		134		—		—		134
Mixed Industrial/Office		319		—		—		319
Office		6,185		—		—		6,185
Residential		2,921		—		76		2,997
Retail		8,247		—		—		8,247
Total Common Stocks		40,909		—		76		40,985
Short-Term Investment
Investment Company		334		—		—		334
Total Assets	$	41,243	$	—	$	76	$	41,319

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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 Stock (000)
Beginning Balance	$	153
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(77	)
Realized gains (losses)		—
Ending Balance	$	76
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(77	)

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, 2017.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Residential
Common Stock	$	76	Market Transaction Method	Transaction Valuation	$	0.02		$	0.02		$	0.02		Increase
				Discount for Lack of Marketability		50.0	%		50.0	%		50.0	%	Decrease

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund 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 Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $136,000 of advisory fees were waived and approximately $11,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company'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 Fund.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $4,549,000 and $6,107,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	216	$	3,961	$	3,843	$	1	$	334

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	2,262	$	—	$	2,263	$	—

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

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

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies and an expired capital loss carryforward, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	1,152	$	97,646	$	(98,798	)

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	1,576	$	—

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $3,409,000 and long-term capital losses of approximately $218,755,000 that do not have an expiration date.

In addition, at December 31, 2016, the Fund 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
$	217,627	December 31, 2017
	66,872	December 31, 2018

During the year ended December 31, 2016, capital loss carryforwards of approximately $98,798,000 expired for federal income tax purposes.

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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 61.8%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require

standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods but better than 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIRESAN
1860139 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Multi-Asset Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Table of Contents

Shareholders' Letter	2
Consolidated Expense Example	3
Consolidated Portfolio of Investments	4
Consolidated Statement of Assets and Liabilities	17
Consolidated Statement of Operations	19
Consolidated Statements of Changes in Net Assets	20
Consolidated Financial Highlights	22
Notes to Consolidated Financial Statements	27
Investment Advisory Agreement Approval	39
Privacy Notice	41
Director and Officer Information	44

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Expense Example (unaudited)

Multi-Asset Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,016.50	$	1,019.74	$	5.10	$	5.11		1.02	%
Multi-Asset Portfolio Class A		1,000.00		1,014.50		1,018.00		6.84		6.85		1.37
Multi-Asset Portfolio Class L		1,000.00		1,011.50		1,015.47		9.38		9.39		1.88
Multi-Asset Portfolio Class C		1,000.00		1,010.60		1,014.23		10.62		10.64		2.13
Multi-Asset Portfolio Class IS		1,000.00		1,015.40		1,019.84		5.00		5.01		1.00

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments

Multi-Asset Portfolio

	Shares		Value (000)
Common Stocks (47.3%)
Australia (0.1%)
Evolution Mining Ltd.		6,885	$	13
Goodman Group REIT		33		—	@	��
Independence Group NL		2,404		6
Newcrest Mining Ltd.		2,715		42
Northern Star Resources Ltd.		2,461		9
Regis Resources Ltd.		2,054		6
Resolute Mining Ltd.		3,021		3
Saracen Mineral Holdings Ltd. (a)		3,311		3
St. Barbara Ltd. (a)		2,038		4
Stockland REIT		68		—	@
				86
Austria (0.2%)
Erste Group Bank AG (a)		2,642		101
Raiffeisen Bank International AG (a)		1,104		28
				129
Belgium (0.2%)
KBC Group N.V.		2,371		180
Canada (0.5%)
Agnico-Eagle Mines Ltd.		779		35
Alamos Gold, Inc., Class A		1,098		8
Asanko Gold, Inc. (a)		724		1
B2Gold Corp. (a)		3,726		10
Barrick Gold Corp.		4,127		66
Centerra Gold, Inc.		1,210		7
Detour Gold Corp. (a)		687		8
Eldorado Gold Corp.		2,823		7
Endeavour Mining Corp. (a)		279		5
First Majestic Silver Corp. (a)		636		5
Fortuna Silver Mines, Inc. (a)		554		3
Franco-Nevada Corp.		593		43
Goldcorp, Inc.		3,015		39
Guyana Goldfields, Inc. (a)		670		3
IAMGOLD Corp. (a)		1,727		9
Kinross Gold Corp. (a)		5,099		21
Kirkland Lake Gold Ltd.		810		8
Klondex Mines Ltd. (a)		706		2
New Gold, Inc. (a)		2,011		6
OceanaGold Corp.		2,450		7
Osisko Gold Royalties Ltd.		371		5
Pan American Silver Corp.		585		10
Sandstorm Gold Ltd. (a)		577		2
SEMAFO, Inc. (a)		1,361		3
Silver Standard Resources, Inc. (a)		437		4
Tahoe Resources, Inc.		1,299		11
Torex Gold Resources, Inc. (a)		257		5
Wheaton Precious Metals Corp.		1,888		38
Yamana Gold, Inc.		4,029		10
				381

	Shares		Value (000)
China (0.0%)
Zhaojin Mining Industry Co., Ltd. H Shares (b)		3,500	$	3
Zijin Mining Group Co., Ltd. H Shares (b)		24,000		8
				11
Denmark (0.7%)
DSV A/S		5,823		358
ISS A/S		5,875		230
				588
France (11.3%)
Accor SA		15,932		747
Aeroports de Paris (ADP)		649		105
Atos SE		4,620		649
BNP Paribas SA		10,013		721
Bouygues SA		12,498		527
Capgemini SE		8,498		878
Cie de Saint-Gobain		26,684		1,426
Credit Agricole SA		9,990		161
Groupe Eurotunnel SE		14,546		155
Metropole Television SA		2,160		50
Natixis SA		8,873		60
Peugeot SA		57,467		1,146
Rexel SA		13,759		225
Societe Generale SA		7,235		389
Television Francaise 1		6,524		91
Vinci SA		20,031		1,710
				9,040
Germany (1.8%)
Commerzbank AG (a)		10,081		120
Deutsche Boerse AG		7,247		765
Fraport AG Frankfurt Airport Services Worldwide		1,887		167
ProSiebenSat.1 Media SE (Registered)		7,961		333
Stroeer SE & Co. KGaA		1,408		84
				1,469
Greece (0.3%)
Alpha Bank AE (a)		29,917		74
Eurobank Ergasias SA (a)		42,354		47
National Bank of Greece SA (a)		177,228		67
Piraeus Bank SA (a)		169,265		42
				230
Hong Kong (0.0%)
Hanergy Thin Film Power Group Ltd. (a)(c)(d)		178,000		1
Ireland (0.8%)
Bank of Ireland (a)		264,293		69
CRH PLC		15,107		535
				604
Italy (3.3%)
Atlantia SpA		26,641		750
Intesa Sanpaolo SpA		128,522		406
Mediaset SpA		61,409		241
Mediobanca SpA		91,391		902

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
Italy (cont'd)
UniCredit SpA (a)		18,063	$	337
Unione di Banche Italiane SpA		8,335		36
				2,672
Netherlands (1.7%)
ABN AMRO Group N.V. CVA (e)		2,222		59
ING Groep N.V.		36,551		630
Randstad Holding N.V.		11,168		652
				1,341
Peru (0.0%)
Cia de Minas Buenaventura SA ADR		1,100		13
South Africa (0.1%)
AngloGold Ashanti Ltd. ADR		1,600		15
Gold Fields Ltd. ADR		3,400		12
Harmony Gold Mining Co., Ltd. ADR		1,800		3
Sibanye Gold Ltd. ADR		2,542		12
				42
Spain (2.5%)
Banco Bilbao Vizcaya Argentaria SA		68,147		565
Banco de Sabadell SA		50,181		102
Banco Santander SA		136,260		901
Bankia SA		10,868		53
Bankinter SA		6,366		59
CaixaBank SA		25,138		120
Mediaset Espana Comunicacion SA		16,547		206
				2,006
Switzerland (1.3%)
Adecco Group AG (Registered)		14,003		1,065
United Kingdom (0.0%)
Centamin PLC		4,728		9
Randgold Resources Ltd. ADR		300		27
				36
United States (22.5%)
Abbott Laboratories		4,510		219
AbbVie, Inc.		4,341		315
AES Corp.		1,747		19
Aetna, Inc.		970		147
Agilent Technologies, Inc.		970		58
Alexion Pharmaceuticals, Inc. (a)		435		53
Allergan PLC		970		236
Alliant Energy Corp.		435		17
Altria Group, Inc.		5,190		386
Ameren Corp.		704		38
American Electric Power Co., Inc.		1,237		86
American Water Works Co., Inc.		435		34
AmerisourceBergen Corp.		435		41
Amgen, Inc.		1,991		343
Anthem, Inc.		704		132
Archer-Daniels-Midland Co.		1,481		61
AT&T, Inc.		16,467		621
Baxter International, Inc.		1,237		75
Becton Dickinson and Co.		435		85

	Shares		Value (000)
Biogen, Inc. (a)		435	$	118
Boston Scientific Corp. (a)		3,564		99
Bristol-Myers Squibb Co.		4,341		242
Brown-Forman Corp., Class B		435		21
Campbell Soup Co.		435		23
Capital One Financial Corp.		9,194		760
Cardinal Health, Inc.		704		55
Celgene Corp. (a)		2,185		284
Centene Corp. (a)		435		35
CenterPoint Energy, Inc.		1,237		34
CenturyLink, Inc.		1,406		34
Cerner Corp. (a)		704		47
Church & Dwight Co., Inc.		704		37
Cigna Corp.		704		118
Clorox Co. (The)		267		36
CMS Energy Corp.		704		33
Coca-Cola Co.		10,666		478
Coeur Mining, Inc. (a)		714		6
Colgate-Palmolive Co.		2,450		182
Conagra Brands, Inc.		1,237		44
Consolidated Edison, Inc.		704		57
Constellation Brands, Inc., Class A		435		84
Cooper Cos., Inc. (The)		267		64
Costco Wholesale Corp.		1,237		198
Coty, Inc., Class A		1,406		26
CR Bard, Inc.		267		84
CVS Health Corp.		2,861		230
Danaher Corp.		1,723		145
DaVita, Inc. (a)		435		28
DENTSPLY SIRONA, Inc.		435		28
Discover Financial Services		12,037		749
Dominion Energy, Inc.		1,723		132
Dr. Pepper Snapple Group, Inc.		435		40
DTE Energy Co.		435		46
Duke Energy Corp.		2,091		175
Edison International		970		76
Edwards Lifesciences Corp. (a)		435		51
Eli Lilly & Co.		2,794		230
Endo International PLC (a)		435		5
Entergy Corp.		435		33
Envision Healthcare Corp. (a)		267		17
Estee Lauder Cos., Inc. (The), Class A		435		42
Eversource Energy		970		59
Exelon Corp.		2,426		87
Express Scripts Holding Co. (a)		1,823		116
FirstEnergy Corp.		1,237		36
Frontier Communications Corp.		3,029		4
General Mills, Inc.		1,406		78
Gilead Sciences, Inc.		3,298		233
HCA Healthcare, Inc. (a)		704		61
Hecla Mining Co.		1,579		8
Henry Schein, Inc. (a)		267		49
Hershey Co. (The)		435		47
Hologic, Inc. (a)		704		32

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
United States (cont'd)
Hormel Foods Corp.		704	$	24
Humana, Inc.		435		105
IDEXX Laboratories, Inc. (a)		267		43
Illumina, Inc. (a)		435		75
JM Smucker Co. (The)		267		32
Johnson & Johnson		6,839		905
Kellogg Co.		704		49
Kimberly-Clark Corp.		970		125
Kraft Heinz Co. (The)		1,481		127
Kroger Co. (The)		2,450		57
Laboratory Corp. of America Holdings (a)		267		41
Level 3 Communications, Inc. (a)		704		42
Mallinckrodt PLC (a)		267		12
McCormick & Co., Inc.		267		26
McEwen Mining, Inc.		1,248		3
McKesson Corp.		435		72
Medtronic PLC		3,564		316
Merck & Co., Inc.		7,104		455
Molson Coors Brewing Co., Class B		435		38
Mondelez International, Inc., Class A		4,075		176
Monster Beverage Corp. (a)		970		48
Mylan N.V. (a)		1,237		48
Newmont Mining Corp.		1,890		61
NextEra Energy, Inc.		1,237		173
NiSource, Inc.		970		25
NRG Energy, Inc.		704		12
Patterson Cos., Inc.		267		13
PepsiCo, Inc.		3,906		451
PerkinElmer, Inc.		267		18
Perrigo Co., PLC		435		33
Pfizer, Inc.		15,591		524
PG&E Corp.		1,406		93
Philip Morris International, Inc.		4,075		479
Pinnacle West Capital Corp.		267		23
PPL Corp.		2,091		81
Procter & Gamble Co. (The)		7,104		619
Public Service Enterprise Group, Inc.		1,481		64
Quest Diagnostics, Inc.		435		48
Regeneron Pharmaceuticals, Inc. (a)		267		131
Reynolds American, Inc.		2,159		140
Royal Gold, Inc.		194		15
SCANA Corp.		435		29
Sempra Energy		704		79
Southern Co. (The)		2,594		124
Stryker Corp.		704		98
Synchrony Financial		25,189		751
Sysco Corp.		1,237		62
Thermo Fisher Scientific, Inc.		970		169
Tyson Foods, Inc., Class A		704		44
UnitedHealth Group, Inc.		2,526		468
Universal Health Services, Inc., Class B		267		33
Varian Medical Systems, Inc. (a)		267		28

	Shares		Value (000)
Verizon Communications, Inc.		10,666	$	476
Vertex Pharmaceuticals, Inc. (a)		704		91
Wal-Mart Stores, Inc.		3,806		288
Walgreens Boots Alliance, Inc.		2,185		171
Waters Corp. (a)		267		49
WEC Energy Group, Inc.		704		43
Whole Foods Market, Inc.		704		30
Xcel Energy, Inc.		1,406		65
Zimmer Biomet Holdings, Inc.		435		56
Zoetis, Inc.		1,406		88
				18,066
Total Common Stocks (Cost $33,014)				37,960
	Face Amount (000)
Fixed Income Securities (20.6%)
Sovereign (16.7%)
Brazil (7.4%)
Brazil Notas do Tesouro Nacional, Series F, 10.00%, 1/1/23	BRL	20,745		5,909
Greece (3.3%)
Hellenic Republic Government Bond, 3.00%, 2/24/23 - 2/24/42 (f)	EUR	2,920		2,666
Portugal (6.0%)
Portugal Obrigacoes do Tesouro OT, 2.88%, 7/21/26 (e)		2,066		2,376
4.13%, 4/14/27 (e)		1,949		2,433
				4,809
Total Sovereign (Cost $12,933)				13,384
U.S. Treasury Security (3.9%)
United States (3.9%)
U.S. Treasury Note, 0.38%, 1/15/27 (Cost $3,163)	$	3,193		3,138
Total Fixed Income Securities (Cost $16,096)				16,522
	Shares
Short-Term Investments (32.0%)
Investment Company (23.2%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $18,583)		18,583,061		18,583
	Face Amount (000)
U.S. Treasury Security (8.8%)
U.S. Treasury Bill, 1.19%, 4/26/18 (g) (Cost $7,051)	$	7,120		7,052
Total Short-Term Investments (Cost $25,634)				25,635
Total Investments (99.9%) (Cost $74,744) (h)(i)				80,117
Other Assets in Excess of Liabilities (0.1%)				38
Net Assets (100.0%)			$	80,155

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  Security has been deemed illiquid at June 30, 2017.

(d)  At June 30, 2017, the Fund held a fair valued security valued at approximately $1,000, representing less than 0.05% 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 Company'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, 2017. Maturity date disclosed is the ultimate maturity date.

(g)  Rate shown is the yield to maturity at June 30, 2017.

(h)  Securities are available for collateral in connection with open foreign currency forward exchange contracts, futures contracts and swap agreements.

(i)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $6,090,000 and the aggregate gross unrealized depreciation is approximately $717,000, resulting in net unrealized appreciation of approximately $5,373,000.

@  Value is less than $500.

ADR  American Depositary Receipt.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Foreign Currency Forward Exchange Contracts:

The Fund had the following foreign currency forward exchange contracts open at June 30, 2017:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
Bank of America NA	CHF	148	$	152	8/10/17	$	(3	)
Bank of America NA	ILS	2,587	$	732	8/10/17		(11	)
Bank of America NA	PLN	2,707	$	709	8/10/17		(21	)
Bank of America NA	$	35	ILS	121	8/10/17		(—	@)
Bank of Montreal	HUF	198,504	$	714	8/10/17		(21	)
Bank of Montreal	$	235	GBP	186	8/10/17		7
Bank of Montreal	$	29	HUF	7,847	8/10/17		(—	@)
Bank of New York Mellon	$	19	GBP	15	8/10/17		1
Bank of New York Mellon	$	18	SEK	154	8/10/17		1
Barclays Bank PLC	AUD	2,170	$	1,643	8/10/17		(24	)
Barclays Bank PLC	EUR	4,806	$	5,362	8/10/17		(138	)
Barclays Bank PLC	SGD	1,004	$	723	8/10/17		(7	)
Barclays Bank PLC	$	4,736	GBP	3,746	8/10/17		147
Citibank NA	CHF	180	$	185	8/10/17		(3	)
Citibank NA	CLP	213,254	$	318	8/10/17		(3	)
Citibank NA	CLP	9,372	$	14	8/10/17		(—	@)
Citibank NA	CLP	69,773	$	103	8/10/17		(2	)
Citibank NA	CLP	257,563	$	383	8/10/17		(5	)
Citibank NA	CLP	11,986	$	18	8/10/17		(—	@)
Citibank NA	CLP	9,316	$	14	8/10/17		(—	@)
Citibank NA	EUR	1,375	$	1,534	8/10/17		(39	)
Citibank NA	RUB	18,087	$	315	8/10/17		10
Citibank NA	RUB	811	$	14	8/10/17		—	@
Citibank NA	RUB	5,823	$	102	8/10/17		4
Citibank NA	RUB	22,228	$	382	8/10/17		7
Citibank NA	RUB	1,036	$	18	8/10/17		1
Citibank NA	RUB	804	$	14	8/10/17		—	@
Citibank NA	THB	24,824	$	730	8/10/17		(1	)
Citibank NA	TRY	287	$	81	8/10/17		—	@
Citibank NA	$	75	CLP	50,194	8/10/17		1
Citibank NA	$	28	CLP	19,244	8/10/17		1
Citibank NA	$	25	CLP	16,263	8/10/17		(—	@)
Citibank NA	$	75	RUB	4,325	8/10/17		(2	)
Citibank NA	$	32	RUB	1,837	8/10/17		(1	)
Citibank NA	$	24	RUB	1,403	8/10/17		(1	)
Citibank NA	$	14	SEK	121	8/10/17		1
Citibank NA	$	4,641	TRY	16,681	8/10/17		50
Commonwealth Bank of Australia	AUD	1,194	$	904	8/10/17		(13	)
Commonwealth Bank of Australia	EUR	4,633	$	5,168	8/10/17		(133	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated 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	$	161	AUD	210	8/10/17	$	—	@
Commonwealth Bank of Australia	$	3,616	GBP	2,859	8/10/17		113
Credit Suisse International	EUR	727	$	811	8/10/17		(21	)
Credit Suisse International	$	27	GBP	21	8/10/17		1
Goldman Sachs International	AUD	643	$	487	8/10/17		(7	)
Goldman Sachs International	BRL	4,715	$	1,374	8/10/17		(38	)
Goldman Sachs International	BRL	6,355	$	1,915	8/10/17		11
Goldman Sachs International	BRL	1,037	$	312	8/10/17		1
Goldman Sachs International	BRL	4,897	$	1,473	8/10/17		6
Goldman Sachs International	BRL	5,934	$	1,790	8/10/17		12
Goldman Sachs International	BRL	337	$	101	8/10/17		—	@
Goldman Sachs International	DKK	1,779	$	267	8/10/17		(7	)
Goldman Sachs International	EUR	1,952	$	2,178	8/10/17		(55	)
Goldman Sachs International	EUR	113	$	126	8/10/17		(2	)
Goldman Sachs International	EUR	121	$	136	8/10/17		(3	)
Goldman Sachs International	HKD	1,272	$	163	8/10/17		—	@
Goldman Sachs International	IDR	4,239,907	$	317	8/10/17		—	@
Goldman Sachs International	IDR	185,150	$	14	8/10/17		—	@
Goldman Sachs International	IDR	1,373,977	$	103	8/10/17		—	@
Goldman Sachs International	IDR	5,078,178	$	377	8/10/17		(3	)
Goldman Sachs International	IDR	236,243	$	18	8/10/17		(—	@)
Goldman Sachs International	IDR	183,621	$	14	8/10/17		(—	@)
Goldman Sachs International	INR	20,539	$	317	8/10/17		—	@
Goldman Sachs International	INR	892	$	14	8/10/17		(—	@)
Goldman Sachs International	INR	6,688	$	103	8/10/17		(—	@)
Goldman Sachs International	INR	24,473	$	376	8/10/17		(1	)
Goldman Sachs International	INR	1,138	$	18	8/10/17		—	@
Goldman Sachs International	INR	885	$	14	8/10/17		(—	@)
Goldman Sachs International	$	324	BRL	1,084	8/10/17		1
Goldman Sachs International	$	24	BRL	81	8/10/17		—	@
Goldman Sachs International	$	481	BRL	1,620	8/10/17		4
Goldman Sachs International	$	144	HKD	1,121	8/10/17		(—	@)
Goldman Sachs International	$	74	IDR	989,574	8/10/17		—	@
Goldman Sachs International	$	24	IDR	319,846	8/10/17		—	@
Goldman Sachs International	$	24	IDR	327,048	8/10/17		(—	@)
Goldman Sachs International	$	73	INR	4,764	8/10/17		—	@
Goldman Sachs International	$	19	INR	1,213	8/10/17		—	@
Goldman Sachs International	$	24	INR	1,586	8/10/17		(—	@)
Goldman Sachs International	ZAR	4,290	$	325	8/10/17		(1	)
JPMorgan Chase Bank NA	BRL	1,215	$	378	8/10/17		14
JPMorgan Chase Bank NA	BRL	564	$	169	8/10/17		(—	@)
JPMorgan Chase Bank NA	BRL	1,044	$	313	8/10/17		1
JPMorgan Chase Bank NA	BRL	612	$	183	8/10/17		—	@
JPMorgan Chase Bank NA	BRL	56	$	18	8/10/17		1
JPMorgan Chase Bank NA	BRL	44	$	13	8/10/17		(—	@)
JPMorgan Chase Bank NA	JPY	851,167	$	7,652	8/10/17		73
JPMorgan Chase Bank NA	JPY	37,518	$	334	8/10/17		—	@
JPMorgan Chase Bank NA	MXN	2,159	$	119	8/10/17		—	@
JPMorgan Chase Bank NA	MYR	1,360	$	319	8/10/17		3
JPMorgan Chase Bank NA	MYR	60	$	14	8/10/17		(—	@)
JPMorgan Chase Bank NA	MYR	443	$	104	8/10/17		1
JPMorgan Chase Bank NA	MYR	1,649	$	378	8/10/17		(5	)
JPMorgan Chase Bank NA	MYR	77	$	18	8/10/17		(—	@)
JPMorgan Chase Bank NA	MYR	60	$	14	8/10/17		(—	@)
JPMorgan Chase Bank NA	TWD	9,602	$	319	8/10/17		3
JPMorgan Chase Bank NA	TWD	419	$	14	8/10/17		—	@
JPMorgan Chase Bank NA	TWD	3,114	$	104	8/10/17		1
JPMorgan Chase Bank NA	TWD	11,493	$	382	8/10/17		4
JPMorgan Chase Bank NA	TWD	533	$	18	8/10/17		—	@

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated 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)
JPMorgan Chase Bank NA	TWD	417	$	14	8/10/17	$	—	@
JPMorgan Chase Bank NA	$	60	JPY	6,665	8/10/17		(1	)
JPMorgan Chase Bank NA	$	4,832	MXN	88,238	8/10/17		2
JPMorgan Chase Bank NA	$	74	MYR	321	8/10/17		—	@
JPMorgan Chase Bank NA	$	27	MYR	116	8/10/17		—	@
JPMorgan Chase Bank NA	$	25	MYR	105	8/10/17		(—	@)
JPMorgan Chase Bank NA	$	4,425	TRY	15,896	8/10/17		45
JPMorgan Chase Bank NA	$	75	TWD	2,227	8/10/17		(1	)
JPMorgan Chase Bank NA	$	27	TWD	817	8/10/17		(—	@)
JPMorgan Chase Bank NA	$	25	TWD	743	8/10/17		(—	@)
JPMorgan Chase Bank NA	ZAR	5,087	$	385	8/10/17		(1	)
State Street Bank and Trust Co.	EUR	1,063	$	1,186	8/10/17		(30	)
State Street Bank and Trust Co.	KRW	356,942	$	319	8/10/17		7
State Street Bank and Trust Co.	KRW	15,753	$	14	8/10/17		—	@
State Street Bank and Trust Co.	KRW	116,289	$	104	8/10/17		2
State Street Bank and Trust Co.	KRW	432,714	$	383	8/10/17		5
State Street Bank and Trust Co.	KRW	19,999	$	18	8/10/17		—	@
State Street Bank and Trust Co.	KRW	15,738	$	14	8/10/17		—	@
State Street Bank and Trust Co.	$	75	KRW	83,626	8/10/17		(2	)
State Street Bank and Trust Co.	$	30	KRW	33,688	8/10/17		(—	@)
State Street Bank and Trust Co.	$	25	KRW	27,835	8/10/17		(—	@)
UBS AG	AUD	4,606	$	3,488	8/10/17		(50	)
UBS AG	CHF	435	$	448	8/10/17		(7	)
UBS AG	DKK	1,178	$	177	8/10/17		(5	)
UBS AG	EUR	13,818	$	15,414	8/10/17		(398	)
UBS AG	EUR	318	$	363	8/10/17		(—	@)
UBS AG	GBP	42	$	55	8/10/17		(—	@)
UBS AG	SEK	1,498	$	178	8/10/17		(—	@)
UBS AG	$	101	EUR	90	8/10/17		2
UBS AG	$	6,395	SEK	56,058	8/10/17		272
Citibank NA	CZK	3,472	$	141	2/1/18		(13	)
Citibank NA	CZK	13,821	$	559	2/1/18		(55	)
Citibank NA	CZK	5,073	$	205	2/1/18		(21	)
Citibank NA	CZK	3,852	$	167	2/1/18		(4	)
Citibank NA	CZK	8,057	$	335	2/1/18		(22	)
Citibank NA	CZK	58,994	$	2,533	2/1/18		(86	)
Citibank NA	CZK	33,101	$	1,422	2/1/18		(47	)
Citibank NA	CZK	8,467	$	376	2/1/18		(—	@)
Citibank NA	CZK	3,994	$	166	2/1/18		(12	)
Citibank NA	CZK	36,957	$	1,527	2/1/18		(113	)
Citibank NA	EUR	3,857	$	4,204	2/1/18		(252	)
Citibank NA	EUR	1,286	$	1,401	2/1/18		(84	)
Citibank NA	EUR	1,316	$	1,429	2/1/18		(91	)
Citibank NA	EUR	3,379	$	3,683	2/1/18		(221	)
Citibank NA	EUR	3,863	$	4,203	2/1/18		(260	)
Citibank NA	EUR	412	$	469	2/1/18		(7	)
Citibank NA	EUR	533	$	593	2/1/18		(23	)
Citibank NA	EUR	415	$	466	2/1/18		(13	)
Citibank NA	$	3,727	CZK	91,295	2/1/18		326
Citibank NA	$	4,252	CZK	104,373	2/1/18		381
Citibank NA	$	4,131	CZK	101,598	2/1/18		380
Citibank NA	$	1,378	CZK	33,866	2/1/18		126
Citibank NA	$	1,404	CZK	34,662	2/1/18		135
Citibank NA	$	607	CZK	14,359	2/1/18		30
Citibank NA	$	465	CZK	10,946	2/1/18		21
Citibank NA	$	476	CZK	11,033	2/1/18		14
Citibank NA	$	559	EUR	517	2/1/18		38
Citibank NA	$	160	EUR	147	2/1/18		10
Citibank NA	$	227	EUR	205	2/1/18		10

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated 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)
Citibank NA	$	1,583	EUR	1,430	2/1/18	$	69
Citibank NA	$	2,498	EUR	2,202	2/1/18		46
Citibank NA	$	1,291	EUR	1,138	2/1/18		24
Citibank NA	$	128	EUR	119	2/1/18		9
Citibank NA	$	84	EUR	74	2/1/18		1
Citibank NA	$	274	EUR	242	2/1/18		5
Citibank NA	$	318	EUR	275	2/1/18		—	@
						$	51

Futures Contracts:

The Fund had the following futures contracts open at June 30, 2017:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
Gold Futures (United States)		10	$	1,242		Aug-17	$	(14	)
MSCI Emerging Market E Mini (United States)		27		1,361		Sep-17		(5	)
NIKKEI 225 Index (Japan)		22		1,963		Sep-17		(5	)
TOPIX Index (Japan)		38		5,445		Sep-17		31
U.S. Treasury 10 yr. Ultra Long Bond (United States)		121		16,312		Sep-17		(37	)
Short:
Brent Crude Futures (United Kingdom)		16		(780	)	Jul-17		(29	)
Copper Future (United States)		53		(3,592	)	Sep-17		(48	)
Euro Stoxx 50 Index (Germany)		50		(1,960	)	Sep-17		59
German Euro BTP (Germany)		12		(1,852	)	Sep-17		(16	)
German Euro Bund (Germany)		114		(21,076	)	Sep-17		357
Hang Seng Index (Hong Kong)		74		(4,832	)	Jul-17		54
S&P 500 E Mini Index (United States)		130		(15,736	)	Sep-17		59
							$	406

Total Return Swap Agreements:

The Fund had the following total return swap agreements open at June 30, 2017:

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Upfront Payment Paid (Received) (000)		Unrealized Appreciation (Depreciation) (000)
Barclays Bank PLC	Barclays Bank Custom Basket Elevators Index††	$	734	3 Month USD LIBOR plus 0.12%	Pay	9/8/17	$	—	$	3
Barclays Bank PLC	Barclays Bank Custom Basket Elevators Index††		813	3 Month USD LIBOR plus 0.12%	Pay	9/8/17		—		(5	)
Barclays Bank PLC	Barclays Bank Custom Basket Elevators Index††		53	3 Month USD LIBOR plus 0.12%	Pay	9/8/17		—		—	@
Barclays Bank PLC	Barclays Bank Custom Basket Elevators Index††		42	3 Month USD LIBOR plus 0.12%	Pay	9/8/17		—		—	@
Barclays Bank PLC	Barclays Bank Custom Basket Elevators Index††		41	3 Month USD LIBOR plus 0.12%	Pay	9/8/17		—		—	@
BNP Paribas SA	BNP Custom Basket Iron Ore Index††		2,126	3 Month USD LIBOR minus 0.12%	Pay	11/16/17		—		(123	)
BNP Paribas SA	BNP Custom Basket Iron Ore Index††		280	3 Month USD LIBOR minus 0.12%	Pay	11/16/17		—		(16	)
BNP Paribas SA	BNP Custom Basket Iron Ore Index††		170	3 Month USD LIBOR minus 0.12%	Pay	11/16/17		—		(6	)
BNP Paribas SA	BNP Custom Basket Iron Ore Index††		130	3 Month USD LIBOR minus 0.12%	Pay	11/16/17		—		(5	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Total Return Swap Agreements (cont'd):

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Upfront Payment Paid (Received) (000)		Unrealized Appreciation (Depreciation) (000)
BNP Paribas SA	BNP Custom Basket Iron Ore Index††	$	140	3 Month USD LIBOR minus 0.12%	Pay	11/16/17	$	—	$	(—	@)
BNP Paribas SA	BNP Custom Basket Iron Ore Index††		290	3 Month USD LIBOR minus 0.04%	Pay	11/16/17		—		(22	)
Citibank NA	Citi Custom U.S. Cyclicals Index††		1,454	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		5
Citibank NA	Citi Custom U.S. Cyclicals Index††		587	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		3
Citibank NA	Citi Custom U.S. Cyclicals Index††		5,879	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		20
Citibank NA	Citi Custom U.S. Cyclicals Index††		530	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		1
Citibank NA	Citi Custom U.S. Cyclicals Index††		400	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		(—	@)
Citibank NA	Citi Custom U.S. Cyclicals Index††		410	3 Month USD LIBOR plus 0.12%	Pay	2/20/18		—		(6	)
JPMorgan Chase Bank NA	S&P 500 Capital Goods Industry Group Index		2,210	3 Month USD LIBOR plus 0.19%	Pay	3/8/18		—		(8	)
JPMorgan Chase Bank NA	S&P 500 Capital Goods Industry Group Index		3,474	3 Month USD LIBOR	Pay	3/8/18		—		(12	)
JPMorgan Chase Bank NA	S&P 500 Capital Goods Industry Group Index		376	3 Month USD LIBOR	Pay	3/8/18		—		(1	)
JPMorgan Chase Bank NA	S&P 500 Capital Goods Industry Group Index		289	3 Month USD LIBOR	Pay	3/8/18		—		(1)
JPMorgan Chase Bank NA	S&P 500 Capital Goods Industry Group Index		293	3 Month USD LIBOR	Pay	3/8/18		—		(1)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		1,687	3 Month USD LIBOR plus 0.10%	Pay	3/15/18		—		(35	)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		384	3 Month USD LIBOR minus 0.10%	Pay	3/15/18		—		(8)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		372	3 Month USD LIBOR minus 0.10%	Pay	3/15/18		—		(8	)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		100	3 Month USD LIBOR plus 0.10%	Pay	3/15/18		—		(—	@)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		100	3 Month USD LIBOR plus 0.10%	Pay	3/15/18		—		(2	)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		81	3 Month USD LIBOR plus 0.10%	Pay	3/15/18		—		(2	)
JPMorgan Chase Bank NA	JPM Custom China Tier 2 Banks Index††		80	3 Month USD LIBOR plus 0.10%	Pay	3/15/18		—		(2	)
JPMorgan Chase Bank NA	JPM Custom U.S. Cyclicals Index††		130	3 Month USD LIBOR	Pay	5/23/18		—		1
JPMorgan Chase Bank NA	JPM Custom U.S. Cyclicals Index††		90	3 Month USD LIBOR	Pay	5/23/18		—		(3)
JPMorgan Chase Bank NA	JPM Custom U.S. Cyclicals Index††		1,816	3 Month USD LIBOR minus 0.10%	Pay	5/23/18		—		(2	)
JPMorgan Chase Bank NA	JPM Custom U.S. Cyclicals Index††		1,804	3 Month USD LIBOR	Pay	5/23/18		—		(70)
JPMorgan Chase Bank NA	JPM Custom U.S. Cyclicals Index††		90	3 Month USD LIBOR	Pay	5/23/18		—		(1)
JPMorgan Chase Bank NA	JPM Custom U.S. Defensive Index††		1,843	3 Month USD LIBOR minus 0.02%	Receive	5/23/18		—		47
JPMorgan Chase Bank NA	JPM Custom U.S. Defensive Index††		90	3 Month USD LIBOR minus 0.02%	Receive	5/23/18		—		2

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Total Return Swap Agreements (cont'd):

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Upfront Payment Paid (Received) (000)		Unrealized Appreciation (Depreciation) (000)
JPMorgan Chase Bank NA	JPM Custom U.S. Defensive Index††	$	90	3 Month USD LIBOR minus 0.02%	Receive	5/23/18	$	—	$	2
JPMorgan Chase Bank NA	JPM Custom U.S. Defensive Index††		1,876	3 Month USD LIBOR minus 0.02%	Receive	5/23/18		—		1
JPMorgan Chase Bank NA	JPM Custom China Property Index††		700	3 Month USD LIBOR minus 0.10%	Pay	6/11/18		—		(6	)
									$	(260	)

††  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 Barclays Bank Custom Basket Elevators Index as of June 30, 2017.

Security Description	Index Weight
Barclays Bank Custom Basket Elevators Index
Fujitec Co., Ltd.		1.39	%
Kone OYJ		53.89
Schindler Holding AG		44.18
Yungtay Engineering Co., Ltd.		0.54
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with BNP Custom Basket Iron Ore Index as of June 30, 2017.

Security Description	Index Weight
BNP Custom Basket Iron Ore Index
African Rainbow Minerals Ltd.		1.07	%
Assore Ltd.		0.23
BHP Billiton PLC		25.56
Ferrexpo PLC		1.09
Fortescue Metals Group Ltd.		8.19
Rio Tinto PLC		41.72
Vale SA		22.14
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with Citi Custom U.S. Cyclicals Index as of June 30, 2017.

Security Description	Index Weight
Citi Custom U.S. Cyclicals Index
3M Co.		1.27	%
Accenture PLC		0.78
Activision Blizzard, Inc.		0.35
Acuity Brands, Inc.		0.09
Adobe Systems, Inc.		0.72
Advance Auto Parts, Inc.		0.09
Air Products & Chemicals, Inc.		0.32
Akamai Technologies, Inc.		0.09
Alaska Air Group, Inc.		0.11
Albemarle Corp.		0.12

Security Description	Index Weight
Allegion PLC		0.08	%
Alliance Data Systems Corp.		0.15
Alphabet, Inc.		5.59
Amazon.com, Inc.		3.89
American Airlines Group, Inc.		0.26
AMETEK, Inc.		0.14
Amphenol Corp.		0.23
Analog Devices, Inc.		0.40
Apple, Inc.		7.90
Applied Materials, Inc.		0.47
Arconic, Inc.		0.09
Autodesk, Inc.		0.20
Automatic Data Processing, Inc.		0.47
AutoNation, Inc.		0.03
AutoZone, Inc.		0.17
Avery Dennison Corp.		0.08
Ball Corp.		0.16
Bed Bath & Beyond, Inc.		0.05
Best Buy Co., Inc.		0.16
Boeing Co. (The)		1.15
BorgWarner, Inc.		0.09
Broadcom Ltd.		0.96
CA, Inc.		0.11
CarMax, Inc.		0.12
Carnival Corp.		0.28
Cars.com, Inc.		0.02
Caterpillar, Inc.		0.62
CBS Corp.		0.25
CF Industries Holdings, Inc.		0.07
CH Robinson Worldwide, Inc.		0.10
Charter Communications, Inc.		0.76
Chipotle Mexican Grill, Inc.		0.12
Cintas Corp.		0.11
Cisco Systems, Inc.		1.60
Citrix Systems, Inc.		0.13
Coach, Inc.		0.13
Cognizant Technology Solutions Corp.		0.41
Comcast Corp.		1.90
Corning, Inc.		0.29
CSRA, Inc.		0.05
CSX Corp.		0.53

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
Cummins, Inc.		0.25	%
Darden Restaurants, Inc.		0.11
Deere & Co.		0.36
Delphi Automotive PLC		0.24
Delta Air Lines, Inc.		0.40
Discovery Communications, Inc.		0.09
Dollar General Corp.		0.19
Dollar Tree, Inc.		0.17
Dover Corp.		0.13
Dow Chemical Co. (The)		0.71
DR Horton, Inc.		0.12
Dun & Bradstreet Corp. (The)		0.05
DXC Technology Co.		0.11
Eastman Chemical Co.		0.12
Eaton Corp PLC		0.35
eBay, Inc.		0.37
Ecolab, Inc.		0.36
EI du Pont de Nemours & Co.		0.71
Electronic Arts, Inc.		0.31
Emerson Electric Co.		0.39
Equifax, Inc.		0.16
Expedia, Inc.		0.19
Expeditors International of Washington, Inc.		0.10
F5 Networks, Inc.		0.09
Facebook, Inc.		3.68
Fastenal Co.		0.13
FedEx Corp.		0.54
Fidelity National Information Services, Inc.		0.29
First Solar, Inc.		0.03
Fiserv, Inc.		0.27
FLIR Systems, Inc.		0.05
Flowserve Corp.		0.06
Fluor Corp.		0.06
FMC Corp.		0.10
Foot Locker, Inc.		0.07
Ford Motor Co.		0.45
Fortive Corp.		0.19
Fortune Brands Home & Security, Inc.		0.10
Freeport-McMoRan, Inc.		0.16
Gap, Inc. (The)		0.05
Garmin Ltd.		0.06
General Dynamics Corp.		0.58
General Electric Co.		2.93
Genuine Parts Co.		0.14
Global Payments, Inc.		0.15
Goodyear Tire & Rubber Co. (The)		0.09
H&R Block, Inc.		0.07
Hanesbrands, Inc.		0.09
Harley-Davidson, Inc.		0.10
Harris Corp.		0.14
Hasbro, Inc.		0.13
Hewlett Packard Enterprise Co.		0.28
Home Depot, Inc. (The)		1.91
Honeywell International, Inc.		1.02
HP, Inc.		0.30
Illinois Tool Works, Inc.		0.46
Ingersoll-Rand PLC		0.24
Intel Corp.		1.69
International Business Machines Corp.		1.36
International Flavors & Fragrances, Inc.		0.11

Security Description	Index Weight
International Paper Co.		0.24	%
Interpublic Group of Cos., Inc. (The)		0.09
Intuit, Inc.		0.33
Jacobs Engineering Group, Inc.		0.07
JB Hunt Transport Services, Inc.		0.08
Johnson Controls International PLC		0.41
Juniper Networks, Inc.		0.11
Kansas City Southern		0.11
KLA-Tencor Corp.		0.15
Kohl's Corp.		0.07
L Brands, Inc.		0.14
L3 Technologies, Inc.		0.13
Lam Research Corp.		0.24
Leggett & Platt, Inc.		0.07
Lennar Corp.		0.11
LKQ Corp.		0.10
Lockheed Martin Corp.		0.71
Lowe's Cos., Inc.		0.69
LyondellBasell Industries N.V.		0.29
Macy's, Inc.		0.07
Marriott International, Inc.		0.33
Martin Marietta Materials, Inc.		0.14
Masco Corp.		0.13
Mattel, Inc.		0.08
McDonald's Corp.		1.31
Michael Kors Holdings Ltd.		0.06
Microchip Technology, Inc.		0.18
Micron Technology, Inc.		0.32
Microsoft Corp.		5.45
Mohawk Industries, Inc.		0.15
Monsanto Co.		0.54
Mosaic Co. (The)		0.08
Motorola Solutions, Inc.		0.15
NetApp, Inc.		0.11
Netflix, Inc.		0.67
Newell Brands, Inc.		0.26
Newmont Mining Corp.		0.18
News Corp.		0.07
Nielsen Holdings PLC		0.13
NIKE, Inc.		0.79
Nordstrom, Inc.		0.06
Norfolk Southern Corp.		0.36
Northrop Grumman Corp.		0.46
Nucor Corp.		0.18
NVIDIA Corp.		0.89
Omnicom Group, Inc.		0.20
Oracle Corp.		1.52
O'Reilly Automotive, Inc.		0.22
PACCAR, Inc.		0.23
Parker-Hannifin Corp.		0.21
Paychex, Inc.		0.19
PayPal Holdings, Inc.		0.62
Pentair PLC		0.11
Pitney Bowes, Inc.		0.03
PPG Industries, Inc.		0.30
Praxair, Inc.		0.39
Priceline Group, Inc. (The)		0.93
PulteGroup, Inc.		0.08
PVH Corp.		0.09
Qorvo, Inc.		0.08

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
QUALCOMM, Inc.		0.82	%
Quanta Services, Inc.		0.05
Ralph Lauren Corp.		0.04
Raytheon Co.		0.48
Red Hat, Inc.		0.18
Republic Services, Inc.		0.15
Robert Half International, Inc.		0.06
Rockwell Automation, Inc.		0.21
Rockwell Collins, Inc.		0.14
Roper Technologies, Inc.		0.23
Ross Stores, Inc.		0.24
Royal Caribbean Cruises Ltd.		0.19
Ryder System, Inc.		0.04
salesforce.com, Inc.		0.57
Scripps Networks Interactive, Inc.		0.07
Seagate Technology PLC		0.11
Sealed Air Corp.		0.10
Sherwin-Williams Co. (The)		0.29
Signet Jewelers Ltd.		0.04
Skyworks Solutions, Inc.		0.18
Snap-on, Inc.		0.09
Southwest Airlines Co.		0.38
Stanley Black & Decker, Inc.		0.21
Staples, Inc.		0.07
Starbucks Corp.		0.87
Stericycle, Inc.		0.06
Symantec Corp.		0.18
Target Corp.		0.30
TE Connectivity Ltd.		0.29
TEGNA, Inc.		0.03
Teradata Corp.		0.04
Texas Instruments, Inc.		0.80
Textron, Inc.		0.13
Tiffany & Co.		0.10
Time Warner, Inc.		0.81
TJX Cos., Inc. (The)		0.48
Total System Services, Inc.		0.10
Tractor Supply Co.		0.07
TransDigm Group, Inc.		0.14
TripAdvisor, Inc.		0.05
Twenty-First Century Fox, Inc.		0.46
Ulta Beauty, Inc.		0.18
Under Armour, Inc.		0.08
Union Pacific Corp.		0.92
United Continental Holdings, Inc.		0.22
United Parcel Service, Inc.		0.78
United Rentals, Inc.		0.10
United Technologies Corp.		0.96
Urban Outfitters, Inc.		0.02
VeriSign, Inc.		0.09
Verisk Analytics, Inc.		0.13
VF Corp.		0.19
Viacom, Inc.		0.12
Visa, Inc.		1.79
Vulcan Materials Co.		0.17
Walt Disney Co. (The)		1.61
Waste Management, Inc.		0.31
Western Digital Corp.		0.26
Western Union Co. (The)		0.10
WestRock Co.		0.15

Security Description	Index Weight
Whirlpool Corp.		0.15	%
WW Grainger, Inc.		0.10
Wyndham Worldwide Corp.		0.11
Wynn Resorts Ltd.		0.11
Xerox Corp.		0.06
Xilinx, Inc.		0.17
Xylem, Inc.		0.10
Yum! Brands, Inc.		0.26
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM Custom China Tier 2 Banks Index as of June 30, 2017.

Security Description	Index Weight
JPM Custom China Tier 2 Banks Index
Bank of Communications Co., Ltd.		12.93	%
China CITIC Bank Corp., Ltd.		36.14
China Everbright Bank Co., Ltd.		2.12
China Merchants Bank Co., Ltd.		31.55
China Minsheng Banking Corp., Ltd.		13.10
Chongqing Rural Commercial Bank Co., Ltd.		4.16
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM Custom U.S. Cyclicals Index as of June 30, 2017.

Security Description	Index Weight
JPM Custom U.S. Cyclicals Index
3M Co.		4.62	%
Acuity Brands, Inc.		0.33
Advanced Micro Devices, Inc.		0.34
Allegion PLC		0.29
AMETEK, Inc.		0.52
Analog Devices, Inc.		1.01
Applied Materials, Inc.		1.59
Arconic, Inc.		0.37
Boeing Co. (The)		4.19
BorgWarner, Inc.		0.43
Broadcom Ltd.		3.33
Caterpillar, Inc.		2.34
Coach, Inc.		0.53
Cummins, Inc.		0.93
Deere & Co.		1.35
Delphi Automotive PLC		1.19
Dover Corp.		0.46
DR Horton, Inc.		0.47
Eaton Corp PLC		1.30
Emerson Electric Co.		1.43
Fastenal Co.		0.47
Flowserve Corp.		0.23
Fluor Corp.		0.24
Ford Motor Co.		2.20
Fortive Corp.		0.71
Fortune Brands Home & Security, Inc.		0.37
Garmin Ltd.		0.23
General Dynamics Corp.		2.10
General Electric Co.		8.77
General Motors Co.		2.40
Goodyear Tire & Rubber Co. (The)		0.44

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
Hanesbrands, Inc.		0.35	%
Harley-Davidson, Inc.		0.48
Hasbro, Inc.		0.50
Honeywell International, Inc.		3.78
Illinois Tool Works, Inc.		1.66
Ingersoll-Rand PLC		0.88
Intel Corp.		5.69
Jacobs Engineering Group, Inc.		0.25
Johnson Controls International PLC		1.51
KLA-Tencor Corp.		0.51
L3 Technologies, Inc.		0.48
Lam Research Corp.		0.82
Leggett & Platt, Inc.		0.28
Lennar Corp.		0.43
Lockheed Martin Corp.		2.58
Masco Corp.		0.46
Mattel, Inc.		0.29
Michael Kors Holdings Ltd.		0.23
Microchip Technology, Inc.		0.60
Micron Technology, Inc.		1.10
Mohawk Industries, Inc.		0.61
Newell Brands, Inc.		1.03
NIKE, Inc.		3.12
Northrop Grumman Corp.		1.67
NVIDIA Corp.		3.04
PACCAR, Inc.		0.86
Parker-Hannifin Corp.		0.79
Pentair PLC		0.41
PulteGroup, Inc.		0.28
PVH Corp.		0.36
Qorvo, Inc.		0.29
QUALCOMM, Inc.		2.91
Quanta Services, Inc.		0.19
Ralph Lauren Corp.		0.17
Raytheon Co.		1.76
Rockwell Automation, Inc.		0.77
Rockwell Collins, Inc.		0.63
Roper Technologies, Inc.		0.88
Skyworks Solutions, Inc.		0.63
Snap-on, Inc.		0.34
Stanley Black & Decker, Inc.		0.80
Texas Instruments, Inc.		2.74
Textron, Inc.		0.47
TransDigm Group, Inc.		0.50
Under Armour, Inc.		0.31
United Rentals, Inc.		0.35
United Technologies Corp.		3.40
VF Corp.		0.76
Whirlpool Corp.		0.57
WW Grainger, Inc.		0.36
Xilinx, Inc.		0.57
Xylem, Inc.		0.37
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM Custom U.S. Defensive Index as of June 30, 2017.

Security Description	Index Weight
JPM Custom U.S. Defensive Index
AbbVie, Inc.		2.41	%
AES Corp.		0.15
Agilent Technologies, Inc.		0.40
Alexion Pharmaceuticals, Inc.		0.60
Allergan PLC		1.84
Alliant Energy Corp.		0.19
Altria Group, Inc.		2.98
Ameren Corp.		0.27
American Electric Power Co., Inc.		0.70
American Water Works Co., Inc.		0.29
Amgen, Inc.		2.71
Archer-Daniels-Midland Co.		0.50
AT&T, Inc.		4.92
Biogen, Inc.		1.25
Bristol-Myers Squibb Co.		1.94
Brown-Forman Corp.		0.17
Campbell Soup Co.		0.21
Celgene Corp.		2.10
CenterPoint Energy, Inc.		0.25
CenturyLink, Inc.		0.27
Church & Dwight Co., Inc.		0.28
Clorox Co. (The)		0.35
CMS Energy Corp.		0.27
Coca-Cola Co. (The)		3.57
Colgate-Palmolive Co.		1.28
Conagra Brands, Inc.		0.31
Consolidated Edison, Inc.		0.51
Constellation Brands, Inc.		0.68
Costco Wholesale Corp.		1.48
Coty, Inc.		0.18
CVS Health Corp.		1.81
Dominion Energy, Inc.		1.01
Dr Pepper Snapple Group, Inc.		0.35
DTE Energy Co.		0.39
Duke Energy Corp.		1.21
Edison International		0.54
Eli Lilly & Co.		1.70
Entergy Corp.		0.29
Estee Lauder Cos., Inc. (The)		0.44
Eversource Energy		0.39
Exelon Corp.		0.68
FirstEnergy Corp.		0.27
General Mills, Inc.		0.68
Gilead Sciences, Inc.		1.99
Hershey Co. (The)		0.30
Hormel Foods Corp.		0.19
Illumina, Inc.		0.55
Incyte Corp.		0.43
JM Smucker Co. (The)		0.28
Johnson & Johnson		7.20
Kellogg Co.		0.37
Kimberly-Clark Corp.		0.95
Kraft Heinz Co. (The)		1.05
Kroger Co. (The)		0.45
Level 3 Communications, Inc.		0.36
Mallinckrodt PLC		0.10

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
McCormick & Co., Inc.		0.23	%
Merck & Co., Inc.		3.68
Mettler-Toledo International, Inc.		0.31
Molson Coors Brewing Co.		0.33
Mondelez International, Inc.		1.35
Monster Beverage Corp.		0.43
Mylan N.V.		0.36
NextEra Energy, Inc.		1.34
NiSource, Inc.		0.17
NRG Energy, Inc.		0.11
PepsiCo, Inc.		3.38
PerkinElmer, Inc.		0.15
Perrigo Co., PLC		0.22
Pfizer, Inc.		4.28
PG&E Corp.		0.71
Philip Morris International, Inc.		3.72
Pinnacle West Capital Corp.		0.20
PPL Corp.		0.54
Procter & Gamble Co. (The)		4.61
Public Service Enterprise Group, Inc.		0.45
Regeneron Pharmaceuticals, Inc.		0.73
Reynolds American, Inc.		1.09
SCANA Corp.		0.20
Sempra Energy		0.59
Southern Co. (The)		0.99
Sysco Corp.		0.52
Thermo Fisher Scientific, Inc.		1.40
Tyson Foods, Inc.		0.38
Verizon Communications, Inc.		3.93
Vertex Pharmaceuticals, Inc.		0.66
Walgreens Boots Alliance, Inc.		1.45
Wal-Mart Stores, Inc.		2.38
Waters Corp.		0.30
WEC Energy Group, Inc.		0.40
Whole Foods Market, Inc.		0.28
Xcel Energy, Inc.		0.47
Zoetis, Inc.		0.62
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM Custom China Property Index as of June 30, 2017.

Security Description	Index Weight
JPM Custom China Property Index
China Jinmao Holdings Group Ltd.		2.83	%
China Overseas Land & Investment Ltd.		20.48
China Resources Land Ltd.		13.01
China Vanke Co., Ltd.		23.71
Country Garden Holdings Co., Ltd.		15.92
Guangzhou R&F Properties Co., Ltd.		3.16
Longfor Properties Co., Ltd.		8.18
Shimao Property Holdings Ltd.		3.61
Sino-Ocean Group Holding Ltd.		2.34
SOHO China Ltd.		1.69
Sunac China Holdings Ltd.		5.07
		100.00	%

@    Value is less than $500.

LIBOR  London Interbank Offered Rate.

AUD  —  Australian Dollar

BRL  —  Brazilian Real

CHF  —  Swiss Franc

CLP  —  Chilean Peso

CZK  —  Czech Koruna

DKK  —  Danish Krone

EUR  —  Euro

GBP  —  British Pound

HKD  —  Hong Kong Dollar

HUF  —  Hungarian Forint

IDR  —  Indonesian Rupiah

ILS  —  Israeli Shekel

INR  —  Indian Rupee

JPY  —  Japanese Yen

KRW  —  South Korean Won

MXN  —  Mexican Peso

MYR  —  Malaysian Ringgit

PLN  —  Polish Zloty

RUB  —  Russian Ruble

SEK  —  Swedish Krona

SGD  —  Singapore Dollar

THB  —  Thai Baht

TRY  —  Turkish Lira

TWD  —  Taiwan Dollar

USD  —  United States Dollar

ZAR  —  South African Rand

Portfolio Composition

Classification	Percentage of Total Investments
Common Stocks		47.4	%
Short-Term Investments		32.0
Sovereign		16.7
Other*		3.9
Total Investments		100.0	%**

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

**  Does not include open long/short futures contracts with an underlying face amount of approximately $76,151,000 with net unrealized appreciation of approximately $406,000. Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $51,000 and does not include open swap agreements with net unrealized depreciation of approximately $260,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Multi-Asset Portfolio

Consolidated Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $56,161)	$	61,534
Investment in Security of Affiliated Issuer, at Value (Cost $18,583)		18,583
Total Investments in Securities, at Value (Cost $74,744)		80,117
Foreign Currency, at Value (Cost $75)		79
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		2,441
Receivable for Variation Margin on Futures Contracts		2,124
Interest Receivable		636
Tax Reclaim Receivable		196
Unrealized Appreciation on Swap Agreements		85
Receivable for Fund Shares Sold		85
Dividends Receivable		24
Receivable from Affiliate		12
Other Assets		91
Total Assets		85,890
Liabilities:
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		2,390
Payable for Investments Purchased		2,250
Unrealized Depreciation on Swap Agreements		345
Due to Broker		285
Payable for Fund Shares Redeemed		141
Payable for Custodian Fees		105
Payable for Advisory Fees		91
Payable for Sub Transfer Agency Fees — Class I		32
Payable for Sub Transfer Agency Fees — Class A		2
Payable for Sub Transfer Agency Fees — Class L		4
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Professional Fees		38
Deferred Capital Gain Country Tax		13
Payable for Transfer Agency Fees — Class A		8
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		5
Payable for Shareholder Services Fees — Class A		2
Payable for Distribution and Shareholder Services Fees — Class L		3
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		21
Total Liabilities		5,735
Net Assets	$	80,155
Net Assets Consist Of:
Paid-in-Capital	$	162,748
Distributions in Excess of Net Investment Income		(481	)
Accumulated Net Realized Loss		(87,680	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $13 of Deferred Capital Gain Country Tax)		5,360
Futures Contracts		406
Swap Agreements		(260	)
Foreign Currency Forward Exchange Contracts		51
Foreign Currency Translations		11
Net Assets	$	80,155

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Multi-Asset Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	67,846
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		6,866,397
Net Asset Value, Offering and Redemption Price Per Share	$	9.88
CLASS A:
Net Assets	$	7,786
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		793,170
Net Asset Value, Redemption Price Per Share	$	9.82
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.54
Maximum Offering Price Per Share	$	10.36
CLASS L:
Net Assets	$	4,348
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		447,754
Net Asset Value, Offering and Redemption Price Per Share	$	9.71
CLASS C:
Net Assets	$	166
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		17,406
Net Asset Value, Offering and Redemption Price Per Share	$	9.57
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	$	9.87

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Multi-Asset Portfolio

Consolidated Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers	$	683
Dividends from Securities of Unaffiliated Issuers (Net of $79 of Foreign Taxes Withheld)		653
Dividends from Security of Affiliated Issuer (Note G)		152
Total Investment Income		1,488
Expenses:
Advisory Fees (Note B)		462
Custodian Fees (Note F)		111
Professional Fees		61
Sub Transfer Agency Fees — Class I		44
Sub Transfer Agency Fees — Class A		2
Sub Transfer Agency Fees — Class L		3
Sub Transfer Agency Fees — Class C		—	@
Administration Fees (Note C)		43
Shareholder Services Fees — Class A (Note D)		12
Distribution and Shareholder Services Fees — Class L (Note D)		20
Distribution and Shareholder Services Fees — Class C (Note D)		1
Registration Fees		21
Transfer Agency Fees — Class I (Note E)		5
Transfer Agency Fees — Class A (Note E)		10
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		12
Shareholder Reporting Fees		10
Organization Costs for Subsidiary		6
Directors' Fees and Expenses		3
Other Expenses		7
Total Expenses		836
Waiver of Advisory Fees (Note B)		(160	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(35	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(6	)
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)		(41	)
Net Expenses		591
Net Investment Income		897
Realized Gain (Loss):
Investments Sold		1,879
Foreign Currency Forward Exchange Contracts		1,263
Foreign Currency Transactions		(21	)
Futures Contracts		(1,953	)
Swap Agreements		(5,160	)
Net Realized Loss		(3,992	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $13)		4,065
Foreign Currency Forward Exchange Contracts		(1,893	)
Foreign Currency Translations		23
Futures Contracts		685
Swap Agreements		1,475
Net Change in Unrealized Appreciation (Depreciation)		4,355
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		363
Net Increase in Net Assets Resulting from Operations	$	1,260

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Multi-Asset Portfolio

Consolidated Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	897		$	632
Net Realized Loss		(3,992	)		(13,105	)
Net Change in Unrealized Appreciation (Depreciation)		4,355			2,665
Net Increase (Decrease) in Net Assets Resulting from Operations		1,260			(9,808	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(3,297	)
Class A:
Net Investment Income		—			(226	)
Class C:
Net Investment Income		—			(3	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(3,526	)
Capital Share Transactions:(1)
Class I:
Subscribed		12,616			12,373
Distributions Reinvested		—			3,296
Redeemed		(55,640	)		(174,882	)
Class A:
Subscribed		537			2,631
Distributions Reinvested		—			186
Redeemed		(5,714	)		(17,814	)
Class L:
Exchanged		—			660
Redeemed		(2,041	)		(8,164	)
Class C:
Subscribed		10			119
Distributions Reinvested		—			3
Redeemed		(117	)		(248	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(50,349	)		(181,840	)
Total Decrease in Net Assets		(49,089	)		(195,174	)
Net Assets:
Beginning of Period		129,244			324,418
End of Period (Including Distributions in Excess of Net Investment Income of $(481) and $(1,378))	$	80,155		$	129,244

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Multi-Asset Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,290			1,241
Shares Issued on Distributions Reinvested		—			350
Shares Redeemed		(5,706	)		(17,884	)
Net Decrease in Class I Shares Outstanding		(4,416	)		(16,293	)
Class A:
Shares Subscribed		56			265
Shares Issued on Distributions Reinvested		—			20
Shares Redeemed		(597	)		(1,838	)
Net Decrease in Class A Shares Outstanding		(541	)		(1,553	)
Class L:
Shares Exchanged		—			67
Shares Redeemed		(215	)		(857	)
Net Decrease in Class L Shares Outstanding		(215	)		(790	)
Class C:
Shares Subscribed		1			13
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(12	)		(26	)
Net Decrease in Class C Shares Outstanding		(11	)		(13	)

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Financial Highlights

Multi-Asset Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from June 22, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015(9)			2014(9)			2013(9)			December 31, 2012(9)
Net Asset Value, Beginning of Period	$	9.72		$	10.17		$	11.55		$	11.68		$	10.30		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.08			0.03			0.07			(0.02	)		0.03			(0.02	)
Net Realized and Unrealized Gain (Loss)		0.08			(0.31	)		(1.29	)		0.11			1.84			0.47
Total from Investment Operations		0.16			(0.28	)		(1.22	)		0.09			1.87			0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.16	)		(0.22	)		—			—
Net Realized Gain		—			—			—			(0.00	)(4)		(0.49	)		(0.15	)
Total Distributions		—			(0.17	)		(0.16	)		(0.22	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.88		$	9.72		$	10.17		$	11.55		$	11.68		$	10.30
Total Return (5)		1.65	%(7)		(2.75	)%		(10.60	)%		0.77	%		18.24	%		4.53	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	67,846		$	109,692		$	280,423		$	495,419		$	107,463		$	20,496
Ratio of Expenses to Average Net Assets (10)		1.02	%(6)(8)		1.04	%(6)		1.05	%(6)		1.01	%(6)		1.03	%(6)		1.01	%(6)(8)
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		1.74	%(6)(8)		0.35	%(6)		0.60	%(6)		(0.14	)%(6)		0.25	%(6)		(0.30	)%(6)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.08	%(8)		0.06	%		0.04	%		0.09	%		0.07	%		0.09	%(8)
Portfolio Turnover Rate		200	%(7)		353	%		355	%		264	%		223	%		167	%(7)
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.47	%(8)		1.25	%		1.14	%		1.21	%		1.97	%		2.41	%(8)
Net Investment Income (Loss) to Average Net Assets		1.29	%(8)		0.14	%		0.51	%		(0.34	)%		(0.69	)%		(1.70	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  Not Annualized.

(8)  Annualized.

(9)  Not consolidated.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Financial Highlights

Multi-Asset Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from June 22, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015(10)			2014(10)			2013(10)			December 31, 2012(10)
Net Asset Value, Beginning of Period	$	9.68		$	10.09		$	11.50		$	11.63		$	10.29		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.06			(0.00	)(4)		0.03			(0.05	)		0.01			(0.03	)
Net Realized and Unrealized Gain (Loss)		0.08			(0.31	)		(1.28	)		0.11			1.82			0.47
Total from Investment Operations		0.14			(0.31	)		(1.25	)		0.06			1.83			0.44
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.16	)		(0.19	)		—			—
Net Realized Gain		—			—			—			(0.00	)(4)		(0.49	)		(0.15	)
Total Distributions		—			(0.10	)		(0.16	)		(0.19	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.82		$	9.68		$	10.09		$	11.50		$	11.63		$	10.29
Total Return (5)		1.45	%(8)		(2.94	)%		(11.00	)%		0.55	%		17.86	%		4.43	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,786		$	12,914		$	29,123		$	54,771		$	13,437		$	103
Ratio of Expenses to Average Net Assets (11)		1.37	%(6)(9)		1.39	%(6)		1.37	%(6)		1.30	%(6)		1.30	%(6)(7)		1.26	%(6)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.35	%(6)(9)		(0.01	)%(6)		0.27	%(6)		(0.43	)%(6)		0.07	%(6)		(0.55	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.08	%(9)		0.06	%		0.04	%		0.09	%		0.07	%		0.09	%(9)
Portfolio Turnover Rate		200	%(8)		353	%		355	%		264	%		223	%		167	%(8)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.86	%(9)		1.59	%		1.47	%		1.46	%		2.24	%		2.66	%(9)
Net Investment Income (Loss) to Average Net Assets		0.86	%(9)		(0.21	)%		0.17	%		(0.59	)%		(0.87	)%		(1.95	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

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

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Not Annualized.

(9)  Annualized.

(10)  Not consolidated.

The accompanying notes are an integral part of the consolidated financial statements.
23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Financial Highlights

Multi-Asset Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,												Period from June 22, 2012(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015(10)			2014(10)			2013(10)			December 31, 2012(10)
Net Asset Value, Beginning of Period	$	9.60		$	9.94		$	11.39		$	11.53		$	10.26		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.05			(0.04	)		(0.02	)		(0.10	)		(0.05	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		0.06			(0.30	)		(1.27	)		0.10			1.81			0.47
Total from Investment Operations		0.11			(0.34	)		(1.29	)		(0.00	)(4)		1.76			0.41
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.16	)		(0.14	)		—			—
Net Realized Gain		—			—			—			(0.00	)(4)		(0.49	)		(0.15	)
Total Distributions		—			—			(0.16	)		(0.14	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.71		$	9.60		$	9.94		$	11.39		$	11.53		$	10.26
Total Return (5)		1.15	%(8)		(3.42	)%		(11.37	)%		0.02	%		17.23	%		4.13	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,348		$	6,357		$	14,443		$	41,253		$	9,513		$	337
Ratio of Expenses to Average Net Assets (11)		1.88	%(6)(9)		1.85	%(6)		1.85	%(6)		1.77	%(6)		1.79	%(6)(7)		1.76	%(6)(9)
Ratio of Net Investment Income (Loss) to Average Net Assets (11)		1.05	%(6)(9)		(0.43	)%(6)		(0.18	)%(6)		(0.90	)%(6)		(0.46	)%(6)		(1.05	)%(6)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.07	%(9)		0.06	%		0.04	%		0.09	%		0.07	%		0.09	%(9)
Portfolio Turnover Rate		200	%(8)		353	%		355	%		264	%		223	%		167	%(8)
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.26	%(9)		2.02	%		1.92	%		1.93	%		2.73	%		3.16	%(9)
Net Investment Income (Loss) to Average Net Assets		0.67	%(9)		(0.60	)%		(0.25	)%		(1.06	)%		(1.40	)%		(2.45	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Not Annualized.

(9)  Annualized.

(10)  Not consolidated.

The accompanying notes are an integral part of the consolidated financial statements.
24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Financial Highlights

Multi-Asset Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015(8)
Net Asset Value, Beginning of Period	$	9.47		$	9.93		$	11.09
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		0.03			(0.09	)		(0.07	)
Net Realized and Unrealized Gain (Loss)		0.07			(0.28	)		(0.93	)
Total from Investment Operations		0.10			(0.37	)		(1.00	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.09	)		(0.16	)
Net Asset Value, End of Period	$	9.57		$	9.47		$	9.93
Total Return (4)		1.06	%(6)		(3.70	)%		(9.07	)%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	166		$	272		$	420
Ratio of Expenses to Average Net Assets (9)		2.13	%(5)(7)		2.14	%(5)		2.17	%(5)(7)
Ratio of Net Investment Income (Loss) to Average Net Assets (9)		0.71	%(5)(7)		(0.95	)%(5)		(1.07	)%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.07	%(7)		0.06	%		0.03	%(7)
Portfolio Turnover Rate		200	%(6)		353	%		355	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.33	%(7)		2.88	%		2.59	%(7)
Net Investment Loss to Average Net Assets		(0.49	)%(7)		(1.69	)%		(1.49	)%(7)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

(8)  Not consolidated.

The accompanying notes are an integral part of the consolidated financial statements.
25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Consolidated Financial Highlights

Multi-Asset Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from May 29, 2015(2) to December 31, 2015(8)
Net Asset Value, Beginning of Period	$	9.72		$	10.17		$	11.09
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.10			0.13			0.01
Net Realized and Unrealized Gain (Loss)		0.05			(0.41	)		(0.77	)
Total from Investment Operations		0.15			(0.28	)		(0.76	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.16	)
Net Asset Value, End of Period	$	9.87		$	9.72		$	10.17
Total Return (4)		1.54	%(6)		(2.65	)%		(6.89	)%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9		$	9		$	9
Ratio of Expenses to Average Net Assets (9)		1.00	%(5)(7)		1.01	%(5)		1.04	%(5)(7)
Ratio of Net Investment Income to Average Net Assets (9)		2.15	%(5)(7)		1.36	%(5)		0.23	%(5)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.07	%(7)		0.06	%		0.03	%(7)
Portfolio Turnover Rate		200	%(6)		353	%		355	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		20.49	%(7)		22.77	%		17.31	%(7)
Net Investment Loss to Average Net Assets		(17.34	)%(7)		(20.40	)%		(16.04	)%(7)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Not Annualized.

(7)  Annualized.

(8)  Not consolidated.

The accompanying notes are an integral part of the consolidated financial statements.
26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Consolidated Financial Statements (unaudited)

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

The accompanying consolidated financial statements relate to the Multi-Asset Portfolio. The Fund seeks total return. The Fund's ("Adviser"), Morgan Stanley Investment Management Inc., seeks to achieve this objective with an emphasis on positive absolute return and controlling downside portfolio risk.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April, 30, 2015, the Fund 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 Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

Effective October 3, 2016, the Fund may, consistent with its principal investment strategies, invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Multi-Asset Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest, directly or indirectly through the use of derivatives, in securities, commodities, commodity-related instruments and other investments, primarily futures, swaps and notes. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation. As of June 30, 2017, the Subsidiary represented approximately $16,863,000 or approximately 21.04% of the total assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to the commodity markets within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

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/vendor approved by the Company's Board of

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (4) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (5) OTC swaps may be valued by an outside pricing service approved by the Directors or quotes from a broker or dealer. Swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange; (6) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Directors. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange ("NYSE"). If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (7) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (8) and 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.

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

The Company 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"

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

("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 Fund's investments as of June 30, 2017.

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Automobiles	$	1,146		$	—	$	—	$	1,146
Banks		6,229			—		—		6,229
Beverages		1,160			—		—		1,160
Biotechnology		1,568			—		—		1,568
Building Products		1,426			—		—		1,426
Capital Markets		765			—		—		765
Commercial Services & Supplies		230			—		—		230
Construction & Engineering		2,237			—		—		2,237
Construction Materials		535			—		—		535
Consumer Finance		2,260			—		—		2,260
Diversified Telecommunication Services		1,177			—		—		1,177
Electric Utilities		1,128			—		—		1,128
Equity Real Estate Investment Trusts (REITs)		—	@		—		—		—	@
Food & Staples Retailing		1,036			—		—		1,036
Food Products		731			—		—		731
Health Care Equipment & Supplies		1,423			—		—		1,423
Health Care Providers & Services		1,579			—		—		1,579
Health Care Technology		47			—		—		47
Hotels, Restaurants & Leisure		747			—		—		747
Household Products		999			—		—		999
Independent Power and Renewable Electricity Producers		31			—		—		31
Information Technology Services		1,527			—		—		1,527
Life Sciences Tools & Services		369			—		—		369
Media		1,005			—		—		1,005
Metals & Mining		662			—		—		662
Multi-Utilities		580			—		—		580
Personal Products		68			—		—		68
Pharmaceuticals		2,778			—		—		2,778
Professional Services		1,717			—		—		1,717
Road & Rail		358			—		—		358
Semiconductors & Semiconductor Equipment		—			—		1		1
Tobacco		1,005			—		—		1,005
Trading Companies & Distributors		225			—		—		225
Transportation Infrastructure		1,177			—		—		1,177
Water Utilities		34			—		—		34
Total Common Stocks		37,959			—		1		37,960
Fixed Income Securities
Sovereign		—			13,384		—		13,384
U.S. Treasury Security		—			3,138		—		3,138
Total Fixed Income Securities		—			16,522		—		16,522

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Consolidated 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)
Short-Term Investments
Investment Company	$	18,583		$	—		$	—	$	18,583
U.S. Treasury Security		—			7,052			—		7,052
Total Short-Term Investments		18,583			7,052			—		25,635
Foreign Currency Forward Exchange Contracts		—			2,441			—		2,441
Futures Contracts		560			—			—		560
Total Return Swap Agreements		—			85			—		85
Total Assets		57,102			26,100			1		83,203
Liabilities:
Foreign Currency Forward Exchange Contracts		—			(2,390	)		—		(2,390	)
Futures Contracts		(154	)		—			—		(154	)
Total Return Swap Agreements		—			(345	)		—		(345	)
Total Liabilities		(154	)		(2,735	)		—		(2,889	)
Total	$	56,948		$	23,365		$	1	$	80,314

@  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 Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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	$	2	†
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		(370	)
Change in unrealized appreciation (depreciation)		369
Realized gains (losses)		—
Ending Balance	$	1
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(1	)

†  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, 2017.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Semiconductors & Semiconductor Equipment
Common Stock	$	1	Tangible Net Asset Value Method	Tangible Net Asset Value Per Share	$	0.01		$	0.01		$	0.01		Increase
				Discount for Recoverability of Certain Assets		75.0	%		75.0	%		75.0	%	Decrease

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Consolidated Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Consolidated 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 Consolidated 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 Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund 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

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund 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 Fund as unrealized gain or loss. The Fund 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 Fund'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 Fund of margin deposits in the event of bankruptcy of a broker with which the Fund has open positions in the futures contract.

Swaps: The Fund 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 Fund'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 Fund'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 Fund 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

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund'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 Fund may be either the buyer or seller in a credit default swap. Where the Fund is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by the issuer of the debt obligation. If no default occurs, the Fund 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 Fund 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 Fund if the Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund 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 Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund 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 Fund'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 Consolidated 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 Fund has an unrealized loss on a swap agreement, the Fund 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 Consolidated Statement of Assets and Liabilities.

Upfront payments paid or received by the Fund will be reflected as an asset or liability, respectively, in the Consolidated Statement of Assets and Liabilities.

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

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following tables set forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Consolidated Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward	Currency Risk	$	2,441
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		203	(a)
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		357	(a)
Swap Agreements	Unrealized Appreciation on Swap Agreements	Equity Risk		85
Total			$	3,086
	Liability Derivatives Consolidated Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward	Currency Risk	$	(2,390	)
Futures Contracts	Variation Margin on Futures Contracts	Commodity Risk		(91	)(a)
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		(10	)(a)
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		(53	)(a)
Swap Agreements	Unrealized Depreciation on Swap Agreements	Equity Risk		(345	)
Total			$	(2,889	)

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	1,263
Commodity	Futures Contracts		(8	)
Equity Risk	Futures Contracts		(1,315	)
Interest Rate Risk	Futures Contracts		(630	)
Credit Risk	Swap Agreements		155
Equity Risk	Swap Agreements		172
Interest Rate Risk	Swap Agreements		(5,487	)
Total		$	(5,850	)

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(1,893	)
Commodity	Futures Contracts		(306	)
Equity Risk	Futures Contracts		671
Interest Rate Risk	Futures Contracts		320
Equity Risk	Swap Agreements		751
Credit Risk	Swap Agreements		(126	)
Interest Rate Risk	Swap Agreements		850
Total		$	267

At June 30, 2017, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Consolidated Statement of Assets and Liabilities
Derivatives(b)	Assets(c) (000)		Liabilities(c) (000)
Foreign Currency Forward  Exchange Contracts	$	2,441	$	(2,390	)
Swap Agreements		85		(345	)
Total	$	2,526	$	(2,735	)

(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 Consolidated Statement of Assets and Liabilities.

The Fund 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 Fund 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 Fund and a counterparty gives the non-defaulting party the right to

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 Fund'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, 2017.

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Consolidated Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Received (000)			Net Amount (not less than $0) (000)
Bank of Montreal	$	7	$	(7	)	$	—		$	0
Bank of New York Mellon		2		—			—			2
Barclays Bank PLC		150		(150	)		—			0
Citibank NA		1,729		(1,387	)		(285	)		57
Commonwealth Bank of Australia		113		(113	)		—			0
Credit Suisse International		1		(1	)		—			0
Goldman Sachs International		35		(35	)		—			0
JPMorgan Chase Bank NA		201		(170	)		—			31
State Street Bank and Trust Co.		14		(14	)		—			0
UBS AG		274		(274	)		—			0
Total	$	2,526	$	(2,151	)	$	(285	)	$	90
Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Consolidated Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Pledged) (000)			Net Amount (not less than $0) (000)
Bank of America NA	$	35	$	—		$	—		$	35
Bank of Montreal		21		(7	)		—			14
Barclays Bank PLC		174		(150	)		(6	)		18
BNP Paribas SA		172		—			—			172
Citibank NA		1,387		(1,387	)		—			0
Commonwealth Bank of Australia		146		(113	)		—			33
Credit Suisse International		21		(1	)		—			20
Goldman Sachs International		117		(35	)		—			82
JPMorgan Chase Bank NA		170		(170	)		—			0
State Street Bank and Trust Co.		32		(14	)		—			18
UBS AG		460		(274	)		—			186
Total	$	2,735	$	(2,151	)	$	(6	)	$	578

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	223,597,000
Futures Contracts:
Average monthly original value	$	156,399,000
Swap Agreements:
Average monthly notional amount	$	25,390,000

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund owns shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually in the following calendar

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.48% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $160,000 of advisory fees were waived and approximately $44,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State

Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment

36

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $86,789,000 and $72,784,000, respectively. For the six months ended June 30, 2017, purchases and sales of long-term U.S. Government securities were approximately $9,256,000 and $6,080,000, respectively.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $41,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	88,232	$	73,464	$	143,113	$	152	$	18,583

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 consolidated financial statements.

The Fund 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 consolidated 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 consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	3,526	$	—	$	8,076	$	—

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)

37

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Consolidated 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, tax adjustments on certain equity securities designated as issued by passive foreign investment companies, swap transactions and a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	1,078	$	5,880	$	(6,958	)

At December 31, 2016, the Portfolio had no distributable earnings on a tax basis.

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $79,580,000 and $3,729,000 respectively, that do not have an expiration date.

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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. These also include non-specified ordinary losses incurred after December 31 but within the same taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	376	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 71.9%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

38

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one- and three-year periods and the period since the end of June 2012, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that while the Fund'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 Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

39

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

40

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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.

41

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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

42

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 non-affiliated 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.

43

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

44

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIMASAN
1859541 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Small Company Growth Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

Small Company Growth Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Small Company Growth Portfolio Class I	$	1,000.00	$	1,152.30	$	1,019.84	$	5.34	*	$	5.01	*		1.00	%
Small Company Growth Portfolio Class A		1,000.00		1,151.00		1,018.10		7.20	*		6.76	*		1.35
Small Company Growth Portfolio Class L		1,000.00		1,147.30		1,015.62		9.85	*		9.25	*		1.85
Small Company Growth Portfolio Class C		1,000.00		991.90		1,002.38		1.72	**		1.73	**		2.10
Small Company Growth Portfolio Class IS		1,000.00		1,153.50		1,020.18		4.97	*		4.66	*		0.93

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

**  Expenses are calculated using the Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 30/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

Small Company Growth Portfolio

	Shares		Value (000)
Common Stocks (87.2%)
Biotechnology (1.8%)
Agios Pharmaceuticals, Inc. (a)		22,346	$	1,150
Alnylam Pharmaceuticals, Inc. (a)		15,832		1,263
Bellicum Pharmaceuticals, Inc. (a)(b)		87,978		1,027
Editas Medicine, Inc. (a)(b)		60,824		1,021
Intellia Therapeutics, Inc. (a)(b)		73,843		1,181
Intrexon Corp. (a)(b)		57,913		1,395
Juno Therapeutics, Inc. (a)(b)		42,418		1,268
				8,305
Consumer Finance (0.9%)
LendingClub Corp. (a)		723,941		3,989
Health Care Equipment & Supplies (1.5%)
Penumbra, Inc. (a)		82,042		7,199
Health Care Providers & Services (3.5%)
HealthEquity, Inc. (a)		327,841		16,336
Health Care Technology (14.0%)
athenahealth, Inc. (a)		209,023		29,378
Castlight Health, Inc., Class B (a)(b)		554,101		2,300
Cotiviti Holdings, Inc. (a)		532,454		19,775
Veeva Systems, Inc., Class A (a)		230,655		14,142
				65,595
Hotels, Restaurants & Leisure (10.9%)
BJ's Restaurants, Inc. (a)		89,944		3,350
Habit Restaurants, Inc. (The) (a)		803,967		12,703
Potbelly Corp. (a)		180,083		2,071
Shake Shack, Inc., Class A (a)(b)		721,893		25,180
Zoe's Kitchen, Inc. (a)(b)		646,843		7,704
				51,008
Internet & Direct Marketing Retail (4.0%)
Etsy, Inc. (a)		279,729		4,196
MakeMyTrip Ltd. (a)		105,438		3,537
Netshoes Cayman Ltd. (a)		209,404		3,985
Wayfair, Inc., Class A (a)		91,267		7,017
				18,735
Internet Software & Services (21.0%)
Benefitfocus, Inc. (a)		101,786		3,700
Coupa Software, Inc. (a)(b)		249,448		7,229
Criteo SA ADR (France) (a)		285,835		14,020
GrubHub, Inc. (a)		579,341		25,259
MuleSoft, Inc., Class A (a)		159,413		3,976
New Relic, Inc. (a)		95,575		4,111
Okta, Inc. (a)		84,142		1,918
Shutterstock, Inc. (a)		243,381		10,728
Yelp, Inc. (a)		422,985		12,698
Zillow Group, Inc., Class C (a)		294,347		14,426
				98,065

	Shares		Value (000)
Machinery (4.6%)
Welbilt, Inc. (a)		1,132,206	$	21,342
Multi-Line Retail (1.0%)
Dillard's, Inc., Class A (b)		79,886		4,609
Professional Services (7.8%)
Advisory Board Co. (The) (a)		526,458		27,113
WageWorks, Inc. (a)		141,432		9,504
				36,617
Software (11.5%)
Ellie Mae, Inc. (a)		187,293		20,585
Guidewire Software, Inc. (a)		331,138		22,752
HubSpot, Inc. (a)		59,362		3,903
Xero Ltd. (New Zealand) (a)		136,114		2,514
Zendesk, Inc. (a)		138,043		3,835
				53,589
Specialty Retail (4.7%)
Five Below, Inc. (a)		448,942		22,165
Total Common Stocks (Cost $330,580)				407,554
Preferred Stocks (6.1%)
Health Care Technology (1.2%)
Grand Rounds, Inc. Series B (a)(c)(d)(e) (acquisition cost — $3,362; acquired 7/3/14)		3,269,139		5,655
Internet Software & Services (0.7%)
Doximity, Inc. Series C (a)(c)(d)(e) (acquisition cost — $3,834; acquired 4/10/14)		795,247		3,038
Software (4.2%)
DOMO, Inc. (a)(c)(d)(e) (acquisition cost — $10,559; acquired 1/31/14 - 2/7/14)		2,554,715		16,146
Lookout, Inc. Series F (a)(c)(d)(e) (acquisition cost — $13,476; acquired 6/17/14)		1,179,743		3,610
				19,756
Total Preferred Stocks (Cost $31,231)				28,449
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY November 2017 @ CNY 7.40, Royal Bank of Scotland (Cost $278)		82,679		51

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

Small Company Growth Portfolio

	Shares		Value (000)
Short-Term Investments (11.0%)
Securities held as Collateral on Loaned Securities (9.2%)
Investment Company (7.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		32,867,713	$	32,868
	Face Amount (000)
Repurchase Agreements (2.2%)
Barclays Capital, Inc., (1.08%, dated 6/30/17, due 7/3/17; proceeds $3,985; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 6/30/22 - 8/15/42; valued at $4,065)	$	3,985		3,985
HSBC Securities USA, Inc., (1.06%, dated 6/30/17, due 7/3/17; proceeds $3,647; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $3,722)		3,647		3,647
HSBC Securities USA, Inc., (1.07%, dated 6/30/17, due 7/3/17; proceeds $2,605; fully collateralized by a U.S. Government agency security; 5.00% due 6/1/47; valued at $2,658)		2,605		2,605
				10,237
Total Securities held as Collateral on Loaned Securities (Cost $43,105)				43,105
	Shares
Investment Company (1.8%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $8,184)		8,184,123		8,184
Total Short-Term Investments (Cost $51,289)				51,289
Total Investments (104.3%) (Cost $413,378) Including $42,000 of Securities Loaned (f)				487,343
Liabilities in Excess of Other Assets (–4.3%)				(20,175	)
Net Assets (100.0%)			$	467,168

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2017.

(c)  At June 30, 2017, the Fund held fair valued securities valued at approximately $28,449,000, representing 6.1% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Company's Directors.

(d)  Security has been deemed illiquid at June 30, 2017.

(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 Fund 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, 2017, amounts to approximately $28,449,000 and represents 6.1% of net assets.

(f)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $95,771,000 and the aggregate gross unrealized depreciation is approximately $21,806,000, resulting in net unrealized appreciation of approximately $73,965,000.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Internet Software & Services		22.8	%
Other**		20.0
Software		16.5
Health Care Technology		16.0
Hotels, Restaurants & Leisure		11.5
Professional Services		8.2
Specialty Retail		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, 2017.

**  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, 2017 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $372,326)	$	446,291
Investment in Security of Affiliated Issuer, at Value (Cost $41,052)		41,052
Total Investments in Securities, at Value (Cost $413,378)		487,343
Receivable for Investments Sold		23,658
Dividends Receivable		384
Receivable for Fund Shares Sold		328
Receivable from Affiliate		5
Other Assets		171
Total Assets		511,889
Liabilities:
Collateral on Securities Loaned, at Value		43,105
Payable for Advisory Fees		1,027
Payable for Sub Transfer Agency Fees — Class I		155
Payable for Sub Transfer Agency Fees — Class A		53
Payable for Sub Transfer Agency Fees — Class L		2
Payable for Fund Shares Redeemed		195
Payable for Administration Fees		35
Payable for Professional Fees		21
Payable for Directors' Fees and Expenses		15
Payable for Shareholder Services Fees — Class A		12
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		3
Payable for Transfer Agency Fees — Class A		3
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Investments Purchased		—	@
Other Liabilities		94
Total Liabilities		44,721
Net Assets	$	467,168
Net Assets Consist Of:
Paid-in-Capital	$	274,297
Accumulated Net Investment Loss		(3,096	)
Accumulated Net Realized Gain		122,002
Unrealized Appreciation (Depreciation) on:
Investments		73,965
Foreign Currency Translations		(—	@)
Net Assets	$	467,168

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	241,044
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		15,777,152
Net Asset Value, Offering and Redemption Price Per Share	$	15.28
CLASS A:
Net Assets	$	54,700
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,054,833
Net Asset Value, Redemption Price Per Share	$	13.49
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.75
Maximum Offering Price Per Share	$	14.24
CLASS L:
Net Assets	$	1,619
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		124,392
Net Asset Value, Offering and Redemption Price Per Share	$	13.01
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		736
Net Asset Value, Offering and Redemption Price Per Share	$	13.48
CLASS IS:
Net Assets	$	169,795
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,077,907
Net Asset Value, Offering and Redemption Price Per Share	$	15.33
(1) Including: Securities on Loan, at Value:	$	42,000

@  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, 2017 (unaudited)

Small Company Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Income from Securities Loaned — Net	$	417
Dividends from Securities of Unaffiliated Issuers		88
Dividends from Security of Affiliated Issuer (Note G)		51
Interest from Securities of Unaffiliated Issuers		(149	)@@
Total Investment Income		407
Expenses:
Advisory Fees (Note B)		2,667
Sub Transfer Agency Fees — Class I		193
Sub Transfer Agency Fees — Class A		69
Sub Transfer Agency Fees — Class L		2
Administration Fees (Note C)		232
Shareholder Services Fees — Class A (Note D)		85
Distribution and Shareholder Services Fees — Class L (Note D)		6
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Professional Fees		53
Shareholder Reporting Fees		36
Registration Fees		27
Custodian Fees (Note F)		19
Transfer Agency Fees — Class I (Note E)		8
Transfer Agency Fees — Class A (Note E)		8
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		2
Directors' Fees and Expenses		11
Pricing Fees		3
Other Expenses		18
Expenses Before Non Operating Expenses		3,440
Bank Overdraft Expense		13
Total Expenses		3,453
Waiver of Advisory Fees (Note B)		(370	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(112	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(19	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(2	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(2	)
Rebate from Morgan Stanley Affiliate (Note G)		(18	)
Net Expenses		2,930
Net Investment Loss		(2,523	)
Realized Gain (Loss):
Investments Sold		100,953
Foreign Currency Transactions		(13	)
Net Realized Gain		100,940
Change in Unrealized Appreciation (Depreciation):
Investments		(13,984	)
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		(13,984	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		86,956
Net Increase in Net Assets Resulting from Operations	$	84,433

@  Amount is less than $500.

@@  Relates to reversal of previously accrued income for written off security.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Small Company Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	(2,523	)	$	26
Net Realized Gain		100,940			52,262
Net Change in Unrealized Appreciation (Depreciation)		(13,984	)		(85,970	)
Net Increase (Decrease) in Net Assets Resulting from Operations		84,433			(33,682	)
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(13,037	)
Class A:
Net Realized Gain		—			(3,815	)
Class L:
Net Realized Gain		—			(61	)
Class IS:
Net Realized Gain		—			(12,878	)
Total Distributions		—			(29,791	)
Capital Share Transactions:(1)
Class I:
Subscribed		25,892			66,765
Distributions Reinvested		—			11,844
Redeemed		(128,744	)		(467,089	)
Class A:
Subscribed		4,363			9,837
Distributions Reinvested		—			3,802
Redeemed		(47,105	)		(57,910	)
Class L:
Distributions Reinvested		—			61
Redeemed		(122	)		(323	)
Class C:
Subscribed		10	*		—
Class IS:
Subscribed		53,150			47,147
Distributions Reinvested		—			12,801
Redeemed		(281,642	)		(323,566	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(374,198	)		(696,631	)
Redemption Fees		14			8
Total Decrease in Net Assets		(289,751	)		(760,096	)
Net Assets:
Beginning of Period		756,919			1,517,015
End of Period (Including Accumulated Net Investment Loss of $(3,096) and $(573))	$	467,168		$	756,919

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Small Company Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,810			5,147
Shares Issued on Distributions Reinvested		—			889
Shares Redeemed		(9,111	)		(35,214	)
Net Decrease in Class I Shares Outstanding		(7,301	)		(29,178	)
Class A:
Shares Subscribed		348			856
Shares Issued on Distributions Reinvested		—			322
Shares Redeemed		(3,788	)		(4,837	)
Net Decrease in Class A Shares Outstanding		(3,440	)		(3,659	)
Class L:
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(10	)		(28	)
Net Decrease in Class L Shares Outstanding		(10	)		(23	)
Class C:
Shares Subscribed		1	*		—
Net Increase in Class C Shares Outstanding		1			—
Class IS:
Shares Subscribed		3,734			3,684
Shares Issued on Distributions Reinvested		—			958
Shares Redeemed		(19,860	)		(25,375	)
Net Decrease in Class IS Shares Outstanding		(16,126	)		(20,733	)

*  For the period May 31, 2017 through June 30, 2017.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Small Company Growth Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	13.26		$	13.75		$	16.50		$	20.55		$	14.16		$	12.64
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (2)		(0.06	)		0.00	(3)		(0.05	)		(0.06	)		(0.09	)		(0.03	)
Net Realized and Unrealized Gain (Loss)		2.08			(0.05	)		(1.51	)		(2.04	)		8.77			2.19
Total from Investment Operations		2.02	��		(0.05	)		(1.56	)		(2.10	)		8.68			2.16
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(1.19	)		(1.95	)		(2.29	)		(0.64	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	15.28		$	13.26		$	13.75		$	16.50		$	20.55		$	14.16
Total Return (4)		15.23	%(8)		(0.35	)%		(9.58	)%		(9.68	)%		62.26	%		17.10	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	241,044		$	305,945		$	718,386		$	1,156,812		$	2,017,558		$	1,143,640
Ratio of Expenses to Average Net Assets (10)		1.00	%(5)(9)		1.02	%(5)(6)		1.05	%(5)		1.05	%(5)		1.04	%(5)		1.05	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.00	%(5)(9)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (10)		(0.86	)%(5)(9)		0.02	%(5)		(0.29	)%(5)		(0.34	)%(5)		(0.49	)%(5)		(0.20	)%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		0.01	%		0.00	%(7)
Portfolio Turnover Rate		46	%(8)		51	%		42	%		53	%		43	%		22	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.22	%(9)		1.17	%		1.11	%		1.13	%		1.08	%		1.12	%
Net Investment Loss to Average Net Assets		(1.08	)%(9)		(0.13	)%		(0.35	)%		(0.42	)%		(0.53	)%		(0.27	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(6)  Effective July 1, 2016, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.00% for Class I share. Prior to July 1, 2016, the maximum ratio was 1.05% for Class I shares.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Small Company Growth Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.72		$	12.25		$	14.89		$	18.83		$	13.13		$	11.80
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.08	)		(0.04	)		(0.09	)		(0.11	)		(0.13	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		1.85			(0.05	)		(1.36	)		(1.88	)		8.12			2.03
Total from Investment Operations		1.77			(0.09	)		(1.45	)		(1.99	)		7.99			1.97
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(1.19	)		(1.95	)		(2.29	)		(0.64	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Net Asset Value, End of Period	$	13.49		$	11.72		$	12.25		$	14.89		$	18.83		$	13.13
Total Return (4)		15.10	%(9)		(0.73	)%		(9.88	)%		(9.98	)%		61.88	%		16.70	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	54,700		$	87,864		$	136,621		$	186,307		$	282,632		$	156,824
Ratio of Expenses to Average Net Assets (11)		1.35	%(5)(10)		1.37	%(5)(7)		1.37	%(5)	��	1.38	%(5)		1.31	%(5)(6)		1.30	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.35	%(5)(10)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Loss to Average Net Assets (11)		(1.20	)%(5)(10)		(0.35	)%(5)		(0.61	)%(5)		(0.67	)%(5)		(0.75	)%(5)		(0.45	)%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%		0.00	%(8)
Portfolio Turnover Rate		46	%(9)		51	%		42	%		53	%		43	%		22	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.53	%(10)		1.45	%		1.38	%		N/A			1.35	%		1.37	%
Net Investment Loss to Average Net Assets		(1.38	)%(10)		(0.43	)%		(0.62	)%		N/A			(0.79	)%		(0.52	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  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.

(7)  Effective July 1, 2016, 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, 2016, the maximum ratio was 1.40% for Class A shares.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Small Company Growth Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	11.34		$	11.92		$	14.60		$	18.60		$	13.06		$	11.79
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.10	)		(0.10	)		(0.16	)		(0.19	)		(0.21	)		(0.12	)
Net Realized and Unrealized Gain (Loss)		1.77			(0.04	)		(1.33	)		(1.86	)		8.04			2.03
Total from Investment Operations		1.67			(0.14	)		(1.49	)		(2.05	)		7.83			1.91
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(1.19	)		(1.95	)		(2.29	)		(0.64	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		(0.00	)(3)
Net Asset Value, End of Period	$	13.01		$	11.34		$	11.92		$	14.60		$	18.60		$	13.06
Total Return (4)		14.73	%(9)		(1.17	)%		(10.36	)%		(10.43	)%		60.97	%		16.21	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,619		$	1,524		$	1,874		$	2,370		$	2,632		$	1,696
Ratio of Expenses to Average Net Assets (11)		1.85	%(5)(10)		1.87	%(5)(7)		1.90	%(5)		1.90	%(5)		1.83	%(5)(6)		1.80	%(5)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.85	%(5)(10)		N/A			N/A			N/A			N/A			N/A
Ratio of Net Investment Loss to Average Net Assets (11)		(1.71	)%(5)(10)		(0.88	)%(5)		(1.13	)%(5)		(1.16	)%(5)		(1.27	)%(5)		(0.95	)%(5)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(8)(10)		0.00	%(8)		0.00	%(8)		0.00	%(8)		0.01	%		0.00	%(8)
Portfolio Turnover Rate		46	%(9)		51	%		42	%		53	%		43	%		22	%
(11) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.23	%(10)		2.21	%		2.10	%		2.02	%		1.92	%		1.87	%
Net Investment Loss to Average Net Assets		(2.09	)%(10)		(1.22	)%		(1.33	)%		(1.28	)%		(1.36	)%		(1.02	)%

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Loss to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment loss.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  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.

(7)  Effective July 1, 2016, 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, 2016, the maximum ratio was 1.90% for Class L shares.

(8)  Amount is less than 0.005%.

(9)  Not Annualized.

(10)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Small Company Growth Portfolio

	Class C
Selected Per Share Data and Ratios	Period from May 31, 2017(1) to June 30, 2017 (unaudited)
Net Asset Value, Beginning of Period	$	13.59
Loss from Investment Operations:
Net Investment Loss (2)		(0.02	)
Net Realized and Unrealized Loss		(0.09	)
Total from Investment Operations		(0.11	)
Redemption Fees		0.00	(3)
Net Asset Value, End of Period	$	13.48
Total Return (4)		(0.81	)%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10
Ratio of Expenses to Average Net Assets (9)		2.10	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(1.94	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)
Portfolio Turnover Rate		46	%(7)
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		15.76	%(8)
Net Investment Loss to Average Net Assets		(15.60	)%(8)

(1)  Commencement of Offering.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

Small Company Growth Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	13.29		$	13.77		$	16.51		$	20.55		$	19.51
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (3)		(0.06	)		0.01			(0.03	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		2.10			(0.05	)		(1.52	)		(2.06	)		3.15
Total from Investment Operations		2.04			(0.04	)		(1.55	)		(2.09	)		3.13
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(1.19	)		(1.95	)		(2.09	)
Redemption Fees		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)		0.00	(4)
Net Asset Value, End of Period	$	15.33		$	13.29		$	13.77		$	16.51		$	20.55
Total Return (5)		15.35	%(10)		(0.28	)%		(9.52	)%		(9.63	)%		16.50	%(10)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	169,795		$	361,586		$	660,134		$	671,885		$	125,351
Ratio of Expenses to Average Net Assets (12)		0.93	%(7)(11)		0.95	%(6)(8)		0.98	%(6)		0.97	%(6)		0.97	%(6)(7)(11)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.93	%(7)(11)		N/A			N/A			N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (12)		(0.79	)%(7)(11)		0.08	%(6)		(0.21	)%(6)		(0.17	)%(6)		(0.30	)%(6)(11)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(9)(11)		0.00	%(9)		0.00	%(9)		0.00	%(9)		0.01	%(11)
Portfolio Turnover Rate		46	%(10)		51	%		42	%		53	%		43	%(10)
(12) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.06	%(11)		1.03	%		0.99	%		0.98	%		0.99	%(11)
Net Investment Loss to Average Net Assets		(0.92	)%(11)		(0.00	)%(9)		(0.22	)%		(0.18	)%		(0.32	)%(11)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund 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."

(7)  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.

(8)  Effective July 1, 2016, 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. Prior to July 1, 2016, the maximum ratio was 0.98% for Class IS shares.

(9)  Amount is less than 0.005%.

(10)  Not Annualized.

(11)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the Small Company Growth Portfolio. The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of small capitalization companies.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On May 31, 2017, the Fund recommenced offering Class I, Class A and Class IS shares and commenced offering Class C shares. The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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 its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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; and (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.

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

The Company 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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
Biotechnology	$	8,305	$	—	$	—	$	8,305
Consumer Finance		3,989		—		—		3,989
Health Care Equipment & Supplies		7,199		—		—		7,199
Health Care Providers & Services		16,336		—		—		16,336
Health Care Technology		65,595		—		—		65,595
Hotels, Restaurants & Leisure		51,008		—		—		51,008
Internet & Direct Marketing Retail		18,735		—		—		18,735
Internet Software & Services		98,065		—		—		98,065
Machinery		21,342		—		—		21,342
Multi-Line Retail		4,609		—		—		4,609
Professional Services		36,617		—		—		36,617
Software		53,589		—		—		53,589
Specialty Retail		22,165		—		—		22,165
Total Common Stocks		407,554		—		—		407,554

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	$	—	$	—	$	28,449	$	28,449
Call Option Purchased		—		51		—		51
Short-Term Investments
Investment Company		41,052		—		—		41,052
Repurchase Agreements		—		10,237		—		10,237
Total Short-Term Investments		41,052		10,237		—		51,289
Total Assets	$	448,606	$	10,288	$	28,449	$	487,343

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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.

	Preferred Stocks (000)
Beginning Balance	$	62,200
Purchases		—
Sales		(40,595	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		6,508
Realized gains (losses)		336
Ending Balance	$	28,449
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	7,631

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, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Health Care Technology
Preferred Stock	$	5,655	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		6.3	x	19.9	x		6.8	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, 2017

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

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Internet Software & Services
Preferred Stock	$	3,038	Market Transaction Method	Precedent Transaction	$	3.63		$	3.63		$	3.63		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		24.0	%		26.0	%		25.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.6	x		10.1	x		7.5	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Software
Preferred Stocks	$	16,146	Market Transaction Method	Precedent Transaction	$	8.43		$	8.43		$	8.43		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		3.0x			7.7	x		6.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	3,610	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		4.8x			6.6	x		5.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund 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 Fund 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 Fund 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 Fund, 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 Fund 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund 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 Fund'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 Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund 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 Fund'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 Fund 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 ("SEC") rules and regulations, or may cause the Fund to be more volatile than if the Fund

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund'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 Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund 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 during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 Fund sells an option, it sells to another party the right to buy from or sell to the Fund 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 during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund 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 Fund 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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of June 30, 2017.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	51	(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 Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Option Purchased)		$(460)(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 (Option Purchased)		$(187)(c)

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

At June 30, 2017, the Fund'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	$	51	(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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Fund 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 Fund 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 Fund 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 Fund 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 Fund'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, 2017.

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	$	51	$	—		$	51

For the six months ended June 30, 2017, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	102,491,000

6.  Securities Lending: The Fund 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 Fund. The Fund 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 Fund'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 Fund 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, 2017.

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)
$	42,000	(e)	$	—	$	(42,000	)(f)(g)	$	0

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

(f) The Fund received cash collateral of approximately $43,105,000, which was subsequently invested in Repurchases Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $287,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", 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, 2017.

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	$	42,000	$	—	$	—	$	—	$	42,000
Total Borrowings	$	42,000	$	—	$	—	$	—	$	42,000
Gross amount of recognized liabilities for securities lending transactions									$	42,000

7.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer

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

8.  Redemption Fees: The Fund 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 Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund 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 Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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, 2017

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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.79% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $370,000 of advisory fees were waived and approximately $135,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

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

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

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $246,081,000 and $603,604,000, respectively. There were no purchases and sales

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $18,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	89,258	$	300,004	$	348,210	$	51	$	41,052

During the six months ended June 30, 2017, the Fund incurred approximately $13,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	29,791	$	—	$	126,283

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 for the timing of the recognition of gains

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

(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, 2016:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	543	$	2,869	$	(3,412	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	44,122

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2016, the Fund deferred to January 1, 2017 for U.S. federal income tax purposes the following losses:

Qualified Late Year Ordinary Losses (000)		Post-October Capital Losses (000)
$	506	$	—

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 42.0%.

K. Accounting Pronouncement: In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures,

particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with report ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund'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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's contractual management fee was higher than its peer group average, its actual management fee was lower than its peer group average. The Board also noted that the total expense ratio was higher than but close to its peer group average. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

32

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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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISCGSAN
1858417 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

US Core Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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
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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

US Core Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	1,074.60	$	1,020.93	$	4.01	$	3.91		0.78	%
US Core Portfolio Class A		1,000.00		1,071.80		1,019.09		5.91		5.76		1.15
US Core Portfolio Class C		1,000.00		1,069.20		1,015.37		9.75		9.49		1.90
US Core Portfolio Class IS		1,000.00		1,074.60		1,021.08		3.86		3.76		0.75

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

US Core Portfolio

	Shares		Value (000)
Common Stocks (98.5%)
Aerospace & Defense (4.6%)
Northrop Grumman Corp.		2,020	$	519
Banks (5.2%)
JPMorgan Chase & Co.		6,450		589
Biotechnology (2.9%)
Amgen, Inc.		923		159
Celgene Corp. (a)		1,293		168
				327
Capital Markets (10.1%)
Ameriprise Financial, Inc.		4,411		561
Franklin Resources, Inc.		12,832		575
				1,136
Consumer Finance (2.1%)
Synchrony Financial		7,824		233
Electrical Equipment (1.5%)
Emerson Electric Co.		2,916		174
Energy Equipment & Services (3.4%)
National Oilwell Varco, Inc.		7,388		243
Schlumberger Ltd.		2,045		135
				378
Equity Real Estate Investment Trusts (REITs) (2.1%)
Hudson Pacific Properties, Inc. REIT		7,070		242
Health Care Equipment & Supplies (3.9%)
Danaher Corp.		5,199		439
Health Care Providers & Services (3.0%)
Cigna Corp.		2,014		337
Hotels, Restaurants & Leisure (7.2%)
Hilton Worldwide Holdings, Inc.		6,433		398
Starbucks Corp.		7,123		415
				813
Household Durables (1.6%)
Newell Brands, Inc.		3,284		176
Information Technology Services (6.1%)
Mastercard, Inc., Class A		5,620		683
Internet & Direct Marketing Retail (5.9%)
Priceline Group, Inc. (The) (a)		356		666
Internet Software & Services (6.5%)
Alphabet, Inc., Class A (a)		789		733
Machinery (4.8%)
Illinois Tool Works, Inc.		3,732		535
Media (5.9%)
Comcast Corp., Class A		16,988		661
Multi-Line Retail (0.4%)
Target Corp.		875		46
Pharmaceuticals (4.2%)
Allergan PLC		1,957		476

	Shares		Value (000)
Semiconductors & Semiconductor Equipment (7.7%)
Broadcom Ltd.		1,123	$	262
QUALCOMM, Inc.		5,587		308
Taiwan Semiconductor Manufacturing Co., Ltd. ADR (Taiwan)		8,597		301
				871
Software (3.5%)
VMware, Inc., Class A (a)		4,555		398
Tech Hardware, Storage & Peripherals (5.9%)
Apple, Inc.		4,592		661
Total Common Stocks (Cost $9,902)				11,093
Short-Term Investment (0.7%)
Investment Company (0.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $74)		74,017		74
Total Investments (99.2%) (Cost $9,976) (b)				11,167
Other Assets in Excess of Liabilities (0.8%)				91
Net Assets (100.0%)			$	11,258

(a)  Non-income producing security.

(b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,303,000 and the aggregate gross unrealized depreciation is approximately $112,000, resulting in net unrealized appreciation of approximately $1,191,000.

ADR  American Depositary Receipt.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		39.0	%
Capital Markets		10.2
Semiconductors & Semiconductor Equipment		7.8
Hotels, Restaurants & Leisure		7.3
Internet Software & Services		6.5
Information Technology Services		6.1
Internet & Direct Marketing Retail		6.0
Media		5.9
Tech Hardware, Storage & Peripherals		5.9
Banks		5.3
Total Investments		100.0	%

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

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

US Core Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $9,902)	$	11,093
Investment in Security of Affiliated Issuer, at Value (Cost $74)		74
Total Investments in Securities, at Value (Cost $9,976)		11,167
Due from Adviser		53
Dividends Receivable		17
Receivable from Affiliate		—	@
Other Assets		49
Total Assets		11,286
Liabilities:
Payable for Offering Costs		18
Payable for Professional Fees		5
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		1
Payable for Custodian Fees		1
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 C		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		2
Total Liabilities		28
Net Assets	$	11,258
Net Assets Consist of:
Paid-in-Capital	$	10,266
Accumulated Undistributed Net Investment Income		5
Accumulated Net Realized Loss		(204	)
Unrealized Appreciation (Depreciation) on:
Investments		1,191
Net Assets	$	11,258
CLASS I:
Net Assets	$	8,071
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		718,578
Net Asset Value, Offering and Redemption Price Per Share	$	11.23
CLASS A:
Net Assets	$	1,541
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		137,684
Net Asset Value, Redemption Price Per Share	$	11.19
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.62
Maximum Offering Price Per Share	$	11.81
CLASS C:
Net Assets	$	1,635
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		146,889
Net Asset Value, Offering and Redemption Price Per Share	$	11.13
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	$	11.23

@  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, 2017 (unaudited)

US Core Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	93
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		93
Expenses:
Offering Costs		48
Professional Fees		44
Advisory Fees (Note B)		32
Shareholder Services Fees — Class A (Note D)		2
Distribution and Shareholder Services Fees — Class C (Note D)		7
Registration Fees		7
Shareholder Reporting Fees		4
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 C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		2
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class C		—	@
Directors' Fees and Expenses		1
Pricing Fees		1
Other Expenses		7
Total Expenses		163
Expenses Reimbursed by Adviser (Note B)		(78	)
Waiver of Advisory Fees (Note B)		(32	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		52
Net Investment Income		41
Realized Loss:
Investments Sold		(127	)
Change in Unrealized Appreciation (Depreciation):
Investments		843
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		716
Net Increase in Net Assets Resulting from Operations	$	757

@  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, 2017

US Core Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Period from May 27, 2016^ to December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	41		$	42
Net Realized Loss		(127	)		(77	)
Net Change in Unrealized Appreciation (Depreciation)		843			348
Net Increase in Net Assets Resulting from Operations		757			313
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(64	)
Class A:
Net Investment Income		—			(11	)
Class C:
Net Investment Income		—			(6	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(81	)
Capital Share Transactions:(1)
Class I:
Subscribed		298			7,645
Distributions Reinvested		—			14
Redeemed		(97	)		(560	)
Class A:
Subscribed		111			1,488
Distributions Reinvested		—			11
Redeemed		(81	)		(104	)
Class C:
Subscribed		213			1,366
Distributions Reinvested		—			6
Redeemed		(50	)		(1	)
Class IS:
Subscribed		—			10
Net Increase in Net Assets Resulting from Capital Share Transactions		394			9,875
Total Increase in Net Assets		1,151			10,107
Net Assets:
Beginning of Period		10,107			—
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $5 and $(36), respectively)	$	11,258		$	10,107
(1) Capital Share Transactions:
Class I:
Shares Subscribed		27			754
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(8	)		(55	)
Net Increase in Class I Shares Outstanding		19			700
Class A:
Shares Subscribed		10			144
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(7	)		(10	)
Net Increase in Class A Shares Outstanding		3			135
Class C:
Shares Subscribed		20			131
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(5	)		(—	@@)
Net Increase in Class C Shares Outstanding		15			132
Class IS:
Shares Subscribed		—			1

^  Commencement of Operations.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

US Core Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.45		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.07
Net Realized and Unrealized Gain		0.73			0.48
Total from Investment Operations		0.78			0.55
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)
Net Asset Value, End of Period	$	11.23		$	10.45
Total Return (3)		7.46	%(6)		5.50	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,071		$	7,314
Ratio of Expenses to Average Net Assets (8)		0.78	%(4)(7)		0.77	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.94	%(4)(7)		1.12	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		33	%(6)		28	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.83	%(7)		3.62	%(7)
Net Investment Loss to Average Net Assets		(1.11	)%(7)		(1.73	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

US Core Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.44		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.03			0.04
Net Realized and Unrealized Gain		0.72			0.49
Total from Investment Operations		0.75			0.53
Distributions from and/or in Excess of:
Net Investment Income		—			(0.09	)
Net Asset Value, End of Period	$	11.19		$	10.44
Total Return (3)		7.18	%(6)		5.30	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,541		$	1,406
Ratio of Expenses to Average Net Assets (8)		1.15	%(4)(7)		1.15	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.57	%(4)(7)		0.66	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		33	%(6)		28	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.22	%(7)		4.12	%(7)
Net Investment Loss to Average Net Assets		(1.50	)%(7)		(2.31	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

US Core Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.41		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss (2)		(0.01	)		(0.00	)(3)
Net Realized and Unrealized Gain		0.73			0.48
Total from Investment Operations		0.72			0.48
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)
Net Asset Value, End of Period	$	11.13		$	10.41
Total Return (4)		6.92	%(7)		4.79	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,635		$	1,377
Ratio of Expenses to Average Net Assets (9)		1.90	%(5)(8)		1.90	%(5)(8)
Ratio of Net Investment Loss to Average Net Assets (9)		(0.16	)%(5)(8)		(0.05	)%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)(8)
Portfolio Turnover Rate		33	%(7)		28	%(7)
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.97	%(8)		4.99	%(8)
Net Investment Loss to Average Net Assets		(2.23	)%(8)		(3.14	)%(8)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

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

(5)  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

US Core Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Period from May 27, 2016(1) to December 31, 2016
Net Asset Value, Beginning of Period	$	10.45		$	10.00
Income from Investment Operations:
Net Investment Income (2)		0.05			0.07
Net Realized and Unrealized Gain		0.73			0.48
Total from Investment Operations		0.78			0.55
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)
Net Asset Value, End of Period	$	11.23		$	10.45
Total Return (3)		7.46	%(6)		5.52	%(6)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (8)		0.75	%(4)(7)		0.75	%(4)(7)
Ratio of Net Investment Income to Average Net Assets (8)		0.96	%(4)(7)		1.17	%(4)(7)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)(7)
Portfolio Turnover Rate		33	%(6)		28	%(6)
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		17.91	%(7)		19.22	%(7)
Net Investment Loss to Average Net Assets		(16.20	)%(7)		(17.30	)%(7)

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the US Core Portfolio. The Fund seeks long-term capital appreciation.

The Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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; and (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.

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

12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

The Company 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.

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The following is a summary of the inputs used to value the Fund's investments as of June 30, 2017.

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	$	519	$	—	$	—	$	519
Banks		589		—		—		589
Biotechnology		327		—		—		327
Capital Markets		1,136		—		—		1,136
Consumer Finance		233		—		—		233
Electrical Equipment		174		—		—		174
Energy Equipment & Services		378		—		—		378
Equity Real Estate Investment Trusts (REITs)		242		—		—		242
Health Care Equipment & Supplies		439		—		—		439
Health Care Providers & Services		337		—		—		337
Hotels, Restaurants & Leisure		813		—		—		813
Household Durables		176		—		—		176
Information Technology Services		683		—		—		683
Internet & Direct Marketing Retail		666		—		—		666
Internet Software & Services		733		—		—		733
Machinery		535		—		—		535
Media		661		—		—		661
Multi-Line Retail		46		—		—		46
Pharmaceuticals		476		—		—		476
Semiconductors & Semiconductor Equipment		871		—		—		871
Software		398		—		—		398
Tech Hardware, Storage & Peripherals		661		—		—		661
Total Common Stocks		11,093		—		—		11,093
Short-Term Investment
Investment Company		74		—		—		74
Total Assets	$	11,167	$	—	$	—	$	11,167

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund did not have any investments transfer between investment levels.

3.  Indemnifications:  The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund's

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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, 2017, approximately $32,000 of advisory fees were waived and 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 Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund'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 Company's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer

Agency Agreement, the Company pays BFDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $4,724,000 and $3,467,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the period ended June 30, 2017, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the period ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2017 (000)
$	581	$	1,220	$	1,727	$	—	@	$	74

@ Amount is less than $500.

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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 Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. The tax period ended December 31, 2016, 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 year 2016 was as follows:

2016 Distributions Paid From:
Ordinary Income (000)		Paid-in- Capital (000)
$	78	$	3

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

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

Permanent differences, due to a distribution in excess of current earnings, resulted in the following reclassifications among the components of net assets at December 31, 2016:

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

At December 31, 2016, the Fund had no distributable earnings on a tax basis.

At December 31, 2016, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $52,000 that do not have an expiration date.

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 Fund 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: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 50.0%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which,

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the period since the end of May 2016, the month of the Fund's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund's total expense ratio. The Board noted that the Fund's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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, 2017

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 non-affiliated 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 AN 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, 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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSCPSAN
1860545 EXP. 08.31.18

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

U.S. Real Estate Portfolio

Semi-Annual Report

June 30, 2017

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund 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 Fund'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 Fund, including performance, characteristics, and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

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

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 "Fund") 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 2017

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Expense Example (unaudited)

U.S. Real Estate Portfolio

As a shareholder of the Fund, 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 Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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, 2017 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 Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund'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 Fund 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 1/1/17		Actual Ending Account Value 6/30/17		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	$	991.00	$	1,019.84	$	4.94	$	5.01		1.00	%
U.S. Real Estate Portfolio Class A		1,000.00		989.30		1,018.20		6.56		6.66		1.33
U.S. Real Estate Portfolio Class L		1,000.00		986.10		1,015.62		9.11		9.25		1.85
U.S. Real Estate Portfolio Class C		1,000.00		984.70		1,014.38		10.33		10.49		2.10
U.S. Real Estate Portfolio Class IS		1,000.00		990.70		1,020.28		4.49		4.56		0.91

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

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments

U.S. Real Estate Portfolio

	Shares		Value (000)
Common Stocks (99.3%)
Apartments (12.6%)
Apartment Investment & Management Co., Class A REIT		120,703	$	5,187
AvalonBay Communities, Inc. REIT		58,033		11,152
Camden Property Trust REIT		236,213		20,198
Education Realty Trust, Inc. REIT		31,187		1,208
Equity Residential REIT		506,906		33,370
Essex Property Trust, Inc. REIT		56,820		14,618
Monogram Residential Trust, Inc. REIT		161,570		1,569
				87,302
Commercial Financing (0.9%)
Blackstone Mortgage Trust, Inc., Class A REIT		105,216		3,325
Starwood Property Trust, Inc. REIT		132,540		2,967
				6,292
Data Centers (2.8%)
Digital Realty Trust, Inc. REIT		79,149		8,940
QTS Realty Trust, Inc., Class A REIT		199,708		10,451
				19,391
Diversified (7.7%)
VEREIT, Inc. REIT		876,530		7,135
Vornado Realty Trust REIT		496,196		46,593
				53,728
Free Standing (0.9%)
National Retail Properties, Inc. REIT		135,821		5,311
Spirit Realty Capital, Inc. REIT		133,210		987
				6,298
Health Care (8.5%)
HCP, Inc. REIT		134,047		4,284
Healthcare Realty Trust, Inc. REIT		362,122		12,367
Healthcare Trust of America, Inc., Class A REIT		188,519		5,865
MedEquities Realty Trust, Inc. REIT		208,667		2,633
Ventas, Inc. REIT		281,900		19,586
Welltower, Inc. REIT		189,259		14,166
				58,901
Industrial (5.0%)
DCT Industrial Trust, Inc. REIT		130,132		6,954
Duke Realty Corp. REIT		75,015		2,097
Exeter Industrial Value Fund, LP REIT (See Note A-4) (a)(b)(c)(d)		7,905,000		1,953
Liberty Property Trust REIT		10,707		436
ProLogis, Inc. REIT		300,946		17,647
Rexford Industrial Realty, Inc. REIT		212,626		5,834
				34,921
Lodging/Resorts (7.9%)
Chesapeake Lodging Trust REIT		382,775		9,366
Hilton Worldwide Holdings, Inc.		111,893		6,921
Host Hotels & Resorts, Inc. REIT		1,175,603		21,478

	Shares		Value (000)
LaSalle Hotel Properties REIT		578,004	$	17,225
				54,990
Manufactured Homes (0.4%)
Equity Lifestyle Properties, Inc. REIT		32,219		2,782
Office (14.4%)
Alexandria Real Estate Equities, Inc. REIT		48,872		5,888
Boston Properties, Inc. REIT		312,053		38,389
BRCP REIT II, LP (See Note A-4) (a)(b)(c)(d)		8,363,574		1,899
Columbia Property Trust, Inc. REIT		154,565		3,459
Corporate Office Properties Trust REIT		61,304		2,147
Cousins Properties, Inc. REIT		501,635		4,409
Douglas Emmett, Inc. REIT		120,912		4,620
Hudson Pacific Properties, Inc. REIT		189,578		6,482
Kilroy Realty Corp. REIT		102,103		7,673
Mack-Cali Realty Corp. REIT		302,908		8,221
Paramount Group, Inc. REIT		838,021		13,408
SL Green Realty Corp. REIT		29,190		3,088
				99,683
Regional Malls (21.7%)
CBL & Associates Properties, Inc. REIT		29,345		247
GGP, Inc. REIT		1,576,891		37,152
Macerich Co. (The) REIT		232,090		13,475
Pennsylvania Real Estate Investment Trust REIT		176,291		1,996
Simon Property Group, Inc. REIT		585,737		94,749
Taubman Centers, Inc. REIT		41,990		2,500
				150,119
Self Storage (7.2%)
CubeSmart REIT		124,259		2,987
Life Storage, Inc. REIT		111,589		8,269
Public Storage REIT		184,518		38,477
				49,733
Shopping Centers (6.8%)
Brixmor Property Group, Inc. REIT		271,196		4,849
DDR Corp. REIT		234,010		2,123
Federal Realty Investment Trust REIT		21,559		2,725
Kimco Realty Corp. REIT		48,140		883
Regency Centers Corp. REIT		486,165		30,453
Tanger Factory Outlet Centers, Inc. REIT		245,033		6,366
				47,399
Single Family Homes (1.5%)
American Homes 4 Rent, Class A REIT		144,714		3,266
Colony Starwood Homes REIT		194,952		6,689
Invitation Homes, Inc. REIT		9,140		198
				10,153
Specialty (1.0%)
Gaming and Leisure Properties, Inc. REIT		190,313		7,169
Total Common Stocks (Cost $514,537)				688,861

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

Portfolio of Investments (cont'd)

U.S. Real Estate Portfolio

	Shares		Value (000)
Short-Term Investment (0.9%)
Investment Company (0.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $6,208)		6,207,602	$	6,208
Total Investments (100.2%) (Cost $520,745) (e)				695,069
Liabilities in Excess of Other Assets (–0.2%)				(1,723	)
Net Assets (100.0%)			$	693,346

(a)  Non-income producing security.

(b)  At June 30, 2017, the Fund held fair valued securities valued at approximately $3,852,000, representing 0.6% 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 Company's Directors.

(c)  Security has been deemed illiquid at June 30, 2017.

(d)  Restricted security valued at fair value and not registered under the Securities Act of 1933. BRCP REIT II, LP was acquired between 10/06 - 4/11 and has a current cost basis of approximately $3,819,000. Exeter Industrial Value Fund, LP was acquired between 11/07 - 4/11 and has a current cost basis of approximately $0. At June 30, 2017, these securities had an aggregate market value of approximately $3,852,000, representing 0.6% of net assets.

(e)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $185,312,000 and the aggregate gross unrealized depreciation is approximately $10,988,000, resulting in net unrealized appreciation of approximately $174,324,000.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Regional Malls		21.6	%
Office		14.3
Apartments		12.6
Health Care		8.5
Other*		8.4
Lodging/Resorts		7.9
Diversified		7.7
Self Storage		7.2
Shopping Centers		6.8
Industrial		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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2017 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $514,537)	$	688,861
Investment in Security of Affiliated Issuer, at Value (Cost $6,208)		6,208
Total Investments in Securities, at Value (Cost $520,745)		695,069
Foreign Currency, at Value (Cost $1)		1
Receivable for Investments Sold		3,608
Dividends Receivable		2,544
Receivable for Fund Shares Sold		920
Receivable from Affiliate		4
Other Assets		123
Total Assets		702,269
Liabilities:
Payable for Investments Purchased		3,929
Payable for Fund Shares Redeemed		3,285
Payable for Advisory Fees		1,382
Payable for Sub Transfer Agency Fees — Class I		130
Payable for Sub Transfer Agency Fees — Class A		23
Payable for Sub Transfer Agency Fees — Class L		2
Payable for Administration Fees		46
Payable for Directors' Fees and Expenses		26
Payable for Professional Fees		24
Payable for Shareholder Services Fees — Class A		13
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Custodian Fees		10
Payable for Transfer Agency Fees — Class I		5
Payable for Transfer Agency Fees — Class A		3
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		43
Total Liabilities		8,923
Net Assets	$	693,346
Net Assets Consist Of:
Paid-in-Capital	$	469,517
Accumulated Undistributed Net Investment Income		7,324
Accumulated Net Realized Gain		42,181
Unrealized Appreciation (Depreciation) on:
Investments		174,324
Foreign Currency Translations		(—	@)
Net Assets	$	693,346

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2017 (000)
CLASS I:
Net Assets	$	415,236
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		24,445,921
Net Asset Value, Offering and Redemption Price Per Share	$	16.99
CLASS A:
Net Assets	$	63,905
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,871,588
Net Asset Value, Redemption Price Per Share	$	16.51
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.91
Maximum Offering Price Per Share	$	17.42
CLASS L:
Net Assets	$	2,985
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		181,187
Net Asset Value, Offering and Redemption Price Per Share	$	16.47
CLASS C:
Net Assets	$	467
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		28,494
Net Asset Value, Offering and Redemption Price Per Share	$	16.39
CLASS IS:
Net Assets	$	210,753
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		12,403,656
Net Asset Value, Offering and Redemption Price Per Share	$	16.99

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017 (unaudited)

U.S. Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2017 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	12,905
Dividends from Security of Affiliated Issuer (Note G)		17
Total Investment Income		12,922
Expenses:
Advisory Fees (Note B)		2,838
Administration Fees (Note C)		290
Sub Transfer Agency Fees — Class I		207
Sub Transfer Agency Fees — Class A		54
Sub Transfer Agency Fees — Class L		2
Sub Transfer Agency Fees — Class C		—	@
Shareholder Services Fees — Class A (Note D)		87
Distribution and Shareholder Services Fees — Class L (Note D)		12
Distribution and Shareholder Services Fees — Class C (Note D)		2
Professional Fees		47
Shareholder Reporting Fees		38
Registration Fees		35
Transfer Agency Fees — Class I (Note E)		14
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)		16
Directors' Fees and Expenses		11
Pricing Fees		2
Other Expenses		9
Expenses Before Non Operating Expenses		3,674
Bank Overdraft Expense		1
Total Expenses		3,675
Reimbursement of Class Specific Expenses — Class I (Note B)		(12	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(5	)
Net Expenses		3,657
Net Investment Income		9,265
Realized Gain:
Investments Sold		40,021
Change in Unrealized Appreciation (Depreciation):
Investments		(56,511	)
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		(56,511	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(16,490	)
Net Decrease in Net Assets Resulting from Operations	$	(7,225	)

@  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, 2017

U.S. Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	9,265		$	13,938
Net Realized Gain		40,021			52,824
Net Change in Unrealized Appreciation (Depreciation)		(56,511	)		(13,149	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(7,225	)		53,613
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(1,753	)		(10,756	)
Net Realized Gain		—			(42,079	)
Class A:
Net Investment Income		(215	)		(1,446	)
Net Realized Gain		—			(6,682	)
Class L:
Net Investment Income		(5	)		(45	)
Net Realized Gain		—			(303	)
Class C:
Net Investment Income		(1	)		(3	)
Net Realized Gain		—			(21	)
Class IS:
Net Investment Income		(788	)		(3,742	)
Net Realized Gain		—			(15,246	)
Total Distributions		(2,762	)		(80,323	)
Capital Share Transactions:(1)
Class I:
Subscribed		28,084			89,531
Distributions Reinvested		1,695			52,022
Redeemed		(103,457	)		(257,414	)
Class A:
Subscribed		4,883			20,770
Distributions Reinvested		214			8,073
Redeemed		(16,222	)		(37,132	)
Class L:
Exchanged		—			4
Distributions Reinvested		5			346
Redeemed		(438	)		(740	)
Class C:
Subscribed		97			404
Distributions Reinvested		1			22
Redeemed		(50	)		(72	)
Class IS:
Subscribed		36,217			89,169
Distributions Reinvested		169			3,809
Redeemed		(18,302	)		(30,860	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(67,104	)		(62,068	)
Total Decrease in Net Assets		(77,091	)		(88,778	)
Net Assets:
Beginning of Period		770,437			859,215
End of Period (Including Accumulated Undistributed Net Investment Income of $7,324 and $821)	$	693,346		$	770,437

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

U.S. Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2017 (unaudited) (000)			Year Ended December 31, 2016 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,645			4,857
Shares Issued on Distributions Reinvested		99			2,935
Shares Redeemed		(6,055	)		(14,086	)
Net Decrease in Class I Shares Outstanding		(4,311	)		(6,294	)
Class A:
Shares Subscribed		293			1,161
Shares Issued on Distributions Reinvested		13			468
Shares Redeemed		(979	)		(2,106	)
Net Decrease in Class A Shares Outstanding		(673	)		(477	)
Class L:
Shares Exchanged		—			—	@@
Shares Issued on Distributions Reinvested		1			20
Shares Redeemed		(27	)		(42	)
Net Decrease in Class L Shares Outstanding		(26	)		(22	)
Class C:
Shares Subscribed		6			23
Shares Issued on Distributions Reinvested		—	@@		1
Shares Redeemed		(3	)		(4	)
Net Increase in Class C Shares Outstanding		3			20
Class IS:
Shares Subscribed		2,109			4,903
Shares Issued on Distributions Reinvested		10			218
Shares Redeemed		(1,071	)		(1,696	)
Net Increase in Class IS Shares Outstanding		1,048			3,425

@@  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, 2017

Financial Highlights

U.S. Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	17.21		$	17.86		$	20.48		$	16.55		$	16.93		$	14.99
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.22			0.31			0.32			0.36			0.27			0.24
Net Realized and Unrealized Gain (Loss)		(0.37	)		0.91			0.10			4.66			0.14			2.19
Total from Investment Operations		(0.15	)		1.22			0.42			5.02			0.41			2.43
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.38	)		(0.26	)		(0.35	)		(0.20	)		(0.20	)
Net Realized Gain		—			(1.49	)		(2.78	)		(0.74	)		(0.59	)		(0.29	)
Total Distributions		(0.07	)		(1.87	)		(3.04	)		(1.09	)		(0.79	)		(0.49	)
Net Asset Value, End of Period	$	16.99		$	17.21		$	17.86		$	20.48		$	16.55		$	16.93
Total Return (3)		(0.90	)%(6)		6.79	%		2.27	%		30.74	%		2.45	%		16.26	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	415,236		$	494,967		$	625,999		$	948,311		$	797,933		$	826,420
Ratio of Expenses to Average Net Assets (8)		1.00	%(4)(7)		1.00	%(4)		0.98	%(4)		0.95	%(4)		1.01	%(4)		0.98	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.00	%(4)(7)		N/A			0.98	%(4)		0.94	%(4)		1.00	%(4)		0.97	%(4)
Ratio of Net Investment Income to Average Net Assets (8)		2.56	%(4)(7)		1.73	%(4)		1.61	%(4)		1.90	%(4)		1.51	%(4)		2.45	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(5)(7)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
Portfolio Turnover Rate		23	%(6)		24	%		24	%		25	%		24	%		22	%
(8) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.01	%(7)		1.02	%		N/A			N/A			1.03	%		N/A
Net Investment Income to Average Net Assets		2.55	%(7)		1.71	%		N/A			N/A			1.49	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class I shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  Amount is less than 0.005%.

(6)  Not Annualized.

(7)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

U.S. Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	16.74		$	17.42		$	20.04		$	16.21		$	16.60		$	14.70
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.18			0.24			0.28			0.29			0.23			0.19
Net Realized and Unrealized Gain (Loss)		(0.36	)		0.89			0.08			4.56			0.12			2.16
Total from Investment Operations		(0.18	)		1.13			0.42			4.85			0.35			2.35
Distributions from and/or in Excess of:
Net Investment Income		(0.05	)		(0.32	)		(0.20	)		(0.28	)		(0.15	)		(0.16	)
Net Realized Gain		—			(1.49	)		(2.78	)		(0.74	)		(0.59	)		(0.29	)
Total Distributions		(0.05	)		(1.81	)		(2.98	)		(1.02	)		(0.74	)		(0.45	)
Net Asset Value, End of Period	$	16.51		$	16.74		$	17.42		$	20.04		$	16.21		$	16.60
Total Return (3)		(1.07	)%(7)		6.47	%		2.01	%		30.28	%		2.14	%		16.02	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	63,905		$	76,082		$	87,462		$	107,441		$	101,325		$	92,240
Ratio of Expenses to Average Net Assets (9)		1.33	%(4)(8)		1.29	%(4)		1.28	%(4)		1.31	%(4)		1.28	%(4)(5)		1.23	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.33	%(4)(8)		N/A			1.28	%(4)		1.30	%(4)		1.27	%(4)(5)		1.22	%(4)
Ratio of Net Investment Income to Average Net Assets (9)		2.23	%(4)(8)		1.37	%(4)		1.43	%(4)		1.54	%(4)		1.35	%(4)		2.20	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		23	%(7)		24	%		24	%		25	%		24	%		22	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.30	%		N/A			N/A			1.29	%		N/A
Net Investment Income to Average Net Assets		N/A			1.36	%		N/A			N/A			1.34	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class A shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

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

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

U.S. Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2017			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			2013			2012
Net Asset Value, Beginning of Period	$	16.73		$	17.41		$	20.03		$	16.20		$	16.59		$	14.69
Income (Loss) from Investment Operations:
Net Investment Income (2)		0.14			0.15			0.21			0.20			0.13			0.10
Net Realized and Unrealized Gain (Loss)		(0.37	)		0.89			0.04			4.56			0.13			2.16
Total from Investment Operations		(0.23	)		1.04			0.25			4.76			0.26			2.26
Distributions from and/or in Excess of:
Net Investment Income		(0.03	)		(0.23	)		(0.09	)		(0.19	)		(0.06	)		(0.07	)
Net Realized Gain		—			(1.49	)		(2.78	)		(0.74	)		(0.59	)		(0.29	)
Total Distributions		(0.03	)		(1.72	)		(2.87	)		(0.93	)		(0.65	)		(0.36	)
Net Asset Value, End of Period	$	16.47		$	16.73		$	17.41		$	20.03		$	16.20		$	16.59
Total Return (3)		(1.39	)%(7)		5.91	%		1.44	%		29.68	%		1.62	%		15.44	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,985		$	3,471		$	3,993		$	4,919		$	4,462		$	4,975
Ratio of Expenses to Average Net Assets (9)		1.85	%(4)(8)		1.84	%(4)		1.82	%(4)		1.79	%(4)		1.78	%(4)(5)		1.73	%(4)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.85	%(4)(8)		N/A			1.81	%(4)		1.78	%(4)		1.77	%(4)(5)		1.72	%(4)
Ratio of Net Investment Income to Average Net Assets (9)		1.71	%(4)(8)		0.84	%(4)		1.08	%(4)		1.06	%(4)		0.73	%(4)		1.70	%(4)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)		0.00	%(6)
Portfolio Turnover Rate		23	%(7)		24	%		24	%		25	%		24	%		22	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.87	%(8)		1.84	%		N/A			N/A			1.79	%		N/A
Net Investment Income to Average Net Assets		1.69	%(8)		0.84	%		N/A			N/A			0.72	%		N/A

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class L shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(5)  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.

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

U.S. Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2017 (unaudited)			Year Ended December 31, 2016(1)			Period from April 30, 2015(2) to December 31, 2015
Net Asset Value, Beginning of Period	$	16.67		$	17.36		$	19.73
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.13			0.13			0.18
Net Realized and Unrealized Gain (Loss)		(0.39	)		0.87			0.31
Total from Investment Operations		(0.26	)		1.00			0.49
Distributions from and/or in Excess of:
Net Investment Income		(0.02	)		(0.20	)		(0.08	)
Net Realized Gain		—			(1.49	)		(2.78	)
Total Distributions		(0.02	)		(1.69	)		(2.86	)
Net Asset Value, End of Period	$	16.39		$	16.67		$	17.36
Total Return (4)		(1.53	)%(7)		5.72	%		2.70	%(7)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	467		$	427		$	91
Ratio of Expenses to Average Net Assets (9)		2.10	%(5)(8)		2.10	%(5)		2.10	%(5)(8)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.10	%(5)(8)		N/A			2.10	%(5)(8)
Ratio of Net Investment Income to Average Net Assets (9)		1.53	%(5)(8)		0.73	%(5)		1.44	%(5)(8)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(6)(8)		0.00	%(6)		0.00	%(6)(8)
Portfolio Turnover Rate		23	%(7)		24	%		24	%
(9) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.38	%(8)		3.13	%		5.89	%(8)
Net Investment Income (Loss) to Average Net Assets		1.25	%(8)		(0.30	)%		(2.35	)%(8)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class C shares. The Ratio of Expenses to Average Net Assets and the Ratio of Net Investment Income to Average Net Assets would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

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

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  Amount is less than 0.005%.

(7)  Not Annualized.

(8)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Financial Highlights

U.S. Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2017			Year Ended December 31,									Period from September 13, 2013(2) to
Selected Per Share Data and Ratios	(unaudited)			2016(1)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	17.22		$	17.86		$	20.48		$	16.55		$	17.13
Income (Loss) from Investment Operations:
Net Investment Income (3)		0.23			0.33			0.36			0.38			0.03
Net Realized and Unrealized Gain (Loss)		(0.39	)		0.92			0.08			4.65			0.01
Total from Investment Operations		(0.16	)		1.25			0.44			5.03			0.04
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.40	)		(0.28	)		(0.36	)		(0.11	)
Net Realized Gain		—			(1.49	)		(2.78	)		(0.74	)		(0.51	)
Total Distributions		(0.07	)		(1.89	)		(3.06	)		(1.10	)		(0.62	)
Net Asset Value, End of Period	$	16.99		$	17.22		$	17.86		$	20.48		$	16.55
Total Return (4)		(0.93	)%(8)		6.96	%		2.36	%		30.82	%		0.30	%(8)
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	210,753		$	195,490		$	141,670		$	12		$	10
Ratio of Expenses to Average Net Assets (10)		0.91	%(5)(9)		0.89	%(5)		0.90	%(5)		0.89	%(5)		0.90	%(5)(6)(9)
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.91	%(5)(9)		N/A			0.90	%(5)		0.88	%(5)		0.89	%(5)(6)(9)
Ratio of Net Investment Income to Average Net Assets (10)		2.69	%(5)(9)		1.79	%(5)		1.81	%(5)		1.96	%(5)		0.52	%(5)(9)
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%(7)(9)		0.00	%(7)		0.00	%(7)		0.00	%(7)		N/A
Portfolio Turnover Rate		23	%(8)		24	%		24	%		25	%		24	%
(10) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.90	%		0.90	%		20.21	%		6.19	%(9)
Net Investment Income (Loss) to Average Net Assets		N/A			1.78	%		1.81	%		(17.36	)%		(4.77	)%(9)

(1)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of Class IS shares. The Ratio of Expenses to Average Net Assets would have been less than 0.005% higher and the Ratio of Net Investment Income to Average Net Assets would have been less than 0.005% lower had the custodian not reimbursed the Fund.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Fund 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."

(6)  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.

(7)  Amount is less than 0.005%.

(8)  Not Annualized.

(9)  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

Notes to Financial Statements (unaudited)

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

The accompanying financial statements relate to the U.S. Real Estate Portfolio. The Fund 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 Fund has capital subscription commitments to certain investee companies for this same purpose, the details of which are disclosed in the Unfunded Commitments note.

The Fund offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Fund 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 Company 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/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are 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 in the relevant exchanges; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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; (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; and (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.

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

The Company 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 Fund 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 Fund.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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 Fund's investments as of June 30, 2017.

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	$	87,302	$	—	$	—	$	87,302
Commercial Financing		6,292		—		—		6,292
Data Centers		19,391		—		—		19,391
Diversified		53,728		—		—		53,728
Free Standing		6,298		—		—		6,298
Health Care		58,901		—		—		58,901
Industrial		32,968		—		1,953		34,921
Lodging/Resorts		54,990		—		—		54,990
Manufactured Homes		2,782		—		—		2,782
Office		97,784		—		1,899		99,683
Regional Malls		150,119		—		—		150,119
Self Storage		49,733		—		—		49,733
Shopping Centers		47,399		—		—		47,399
Single Family Homes		10,153		—		—		10,153
Specialty		7,169		—		—		7,169
Total Common Stocks		685,009		—		3,852		688,861
Short-Term Investment
Investment Company		6,208		—		—		6,208
Total Assets	$	691,217	$	—	$	3,852	$	695,069

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Fund 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	$	14,538
Purchases		—
Sales		(7,816	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		(1,949	)
Change in unrealized appreciation (depreciation)		(1,871	)
Realized gains (losses)		950
Ending Balance	$	3,852
Net change in unrealized appreciation from investments still held as of June 30, 2017	$	(248	)

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, 2017.

	Fair Value at June 30, 2017 (000)		Valuation Technique	Unobservable Input
Industrial
Common Stock	$	1,953	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and Significant Market Changes between last Capital Statement and Valuation Date	Adjusted Capital Balance
Office
Common Stock	$	1,899	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and Significant Market Changes between last Capital Statement and Valuation Date	Adjusted Capital Balance

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund 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 Fund 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 Fund'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 Fund 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 Fund and BRCP REIT II, LP, the Fund 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, 2017, 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 Fund and Exeter Industrial Value Fund, LP, the Fund 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, 2017, Exeter Industrial Value Fund, LP has drawn down approximately $7,905,000 which represents 93.0% of the commitment.

5.  Restricted Securities: The Fund 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 Fund 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 Fund, 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 Fund can 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 the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company 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 Fund 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 Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds 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 Fund 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 Fund 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, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.78% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund 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 Fund'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, 2017, approximately $13,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund'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 Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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 Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company 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 Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company 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 Fund 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 Fund's average daily net assets attributable to Class L shares.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

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

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Company 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, 2017, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments, were approximately $168,874,000 and $222,892,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2017.

The Fund 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 Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the six months ended June 30, 2017, advisory fees paid were reduced by approximately $5,000 relating to the Fund's investment in the Liquidity Funds.

A summary of the Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

Value December 31, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2017 (000)
$	5,194	$	79,144	$	78,130	$	17	$	6,208

The Fund 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, 2017, the Fund did not engage in any cross-trade transactions.

The Fund 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 Fund.

H. Federal Income Taxes: It is the Fund'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 Fund 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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

in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund 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, 2016, 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 2016 and 2015 was as follows:

2016 Distributions Paid From:				2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	21,077	$	59,246	$	13,888	$	121,343

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 and differing treatments of gains (losses) related to REIT adjustments, resulted in the following reclassifications among the components of net assets at December 31, 2016:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(1,646	)	$	1,677	$	(31	)

At December 31, 2016, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	7,381

I. Credit Facility: The Company and other Morgan Stanley funds participated 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 six months ended June 30, 2017, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2017, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 35.9%.

K. Accounting Pronouncement: In October 2016, the Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Fund's net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Fund, management expects that the impact of the Fund's adoption will be limited to additional financial statement disclosures.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2017

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 Fund'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 Fund. (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 presented 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 Fund. 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 Fund and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Fund

The Board reviewed the performance, fees and expenses of the Fund compared to its peers, as presented 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 Fund. 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, 2016, 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 Fund's performance was below its peer group average for the one-year period but better than its peer group average for the 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 Fund relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Fund'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 Fund's management fee and total expense ratio were higher than its peer group averages. After discussion, the Board concluded that the Fund'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 Fund and how that relates to the Fund's total expense ratio and particularly the Fund'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 Fund 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 Fund 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 Fund 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, 2017

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 Fund 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 Fund 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 Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund'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 Fund 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 Fund'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 Fund 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, 2017

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, 2017

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 non-affiliated 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, 2017

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 non-affiliated 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, 2017

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Patricia Maleski
Michael E. Nugent, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Michael J. Key
Vice President

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

Perkins Coie LLP
30 Rockefeller Plaza
New York, New York 10112

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 to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company 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 Fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the Fund'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 Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

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

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

© 2017 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSREASAN
1860531 EXP. 08.31.18

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 Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Company 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, 2017

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, 2017

/s/ Francis Smith

Francis Smith

Principal Financial Officer

August 17, 2017