MORGAN STANLEY FOCUS GROWTH FUND - Proxy Direct

MORGAN STANLEY FOCUS GROWTH FUND522 Fifth Avenue

New York, NY 10036(800) 548-7786

NOTICE OF SPECIAL MEETING OF SHAREHOLDERSTO BE HELD FEBRUARY 13, 2014

To the Shareholders of Morgan Stanley Focus Growth Fund:

Notice is hereby given of a Special Meeting of Shareholders (the “Meeting”) of Morgan Stanley Focus GrowthFund (the “Acquired Fund”), to be held in Conference Room C, 7th Floor, 522 Fifth Avenue, New York, NY10036, at 9:00 a.m., New York time, on February 13, 2014, and any adjournments or postponements thereof, for thefollowing purposes:

1. To consider and vote upon a proposal to approve the actions and transactions described in that certainAgreement and Plan of Reorganization, dated October 3, 2013 (the “Reorganization Agreement”), between theAcquired Fund and Morgan Stanley Institutional Fund, Inc. (the “Company”), on behalf of the Growth Portfolio (the“Acquiring Fund”), pursuant to which substantially all of the assets and liabilities of the Acquired Fund will betransferred to the Acquiring Fund in exchange for shares of the Acquiring Fund of the Class described in theaccompanying Proxy Statement and Prospectus and pursuant to which the Acquired Fund will be liquidated andterminated (the “Reorganization”). As a result of this transaction, shareholders of the Acquired Fund will becomeshareholders of the Acquiring Fund receiving shares of the Acquiring Fund with a value equal to the aggregate netasset value of their shares of the Acquired Fund held immediately prior to the Reorganization; and

2. To act upon such other matters as may properly come before the Meeting.

The Reorganization is more fully described in the accompanying Proxy Statement and Prospectus and theReorganization Agreement is attached as Exhibit A thereto. Shareholders of record of the Acquired Fund as of theclose of business on November 21, 2013 are entitled to notice of, and to vote at, the Meeting, and any adjournmentsor postponements thereof. Please read the Proxy Statement and Prospectus carefully before telling us, through yourProxy or in person, how you wish your shares to be voted. Alternatively, if you are eligible to vote telephonically bytouchtone telephone or electronically on the Internet (as discussed in the enclosed Proxy Statement and Prospectus),you may do so in lieu of attending the Meeting in person. The Board of Trustees of the Acquired Fundrecommends that you vote in favor of the Reorganization. WE URGE YOU TO PROMPTLY SIGN, DATEAND MAIL THE ENCLOSED PROXY OR RECORD YOUR VOTE ELECTRONICALLY VIATELEPHONE OR THE INTERNET.

By Order of the Board of Trustees,

Mary E. MullinSecretary

December 12, 2013

You can help avoid the necessity and expense of sending follow-up letters to ensure a quorum by promptlyreturning the enclosed Proxy. If you are unable to be present in person, please fill in, sign and return theenclosed Proxy in order that the necessary quorum is represented at the Meeting. The enclosed enveloperequires no postage if mailed in the United States. Shareholders will be able to vote telephonically bytouchtone telephone or electronically on the Internet by following instructions on their proxy form.

Merrill Corp - MS Institutional Fund Proxy-Prospectus [Funds] 10-01-2013 ED [AUX] | pweakly | 09-Dec-13 16:21 | 13-21433-2.aa | Sequence: 1CHKSUM Content: 8690 Layout: 36468 Graphics: No Graphics CLEAN

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MORGAN STANLEY INSTITUTIONAL FUND, INC.

GROWTH PORTFOLIO522 Fifth Avenue

New York, NY 10036(800) 548-7786

This Proxy Statement and Prospectus is being furnished to shareholders (“Shareholders”) of Morgan Stanley FocusGrowth Fund (“MS Focus Growth” or the “Acquired Fund”) in connection with a Special Meeting of Shareholders (the“Meeting”) to be held in Conference Room C, 7th Floor, 522 Fifth Avenue, New York, NY 10036, at 9:00 a.m., NewYork time, on February 13, 2014, and any adjournments or postponements thereof, for the following purposes:

1. To consider and vote upon a proposal to approve the actions and transactions described in that certainAgreement and Plan of Reorganization, dated October 3, 2013 (the “Reorganization Agreement”), between theAcquired Fund and Morgan Stanley Institutional Fund, Inc. (the “Company”), on behalf of the Growth Portfolio(“MSIF Growth” or the “Acquiring Fund”), pursuant to which substantially all of the assets and the liabilities of theAcquired Fund will be transferred to the Acquiring Fund in exchange for shares of the Acquiring Fund of theClass described in the accompanying Proxy Statement and Prospectus and pursuant to which the Acquired Fund willbe liquidated and terminated (the “Reorganization”). As a result of this transaction, shareholders of the AcquiredFund will become shareholders of the Acquiring Fund receiving shares of the Acquiring Fund with a value equal tothe aggregate net asset value (“NAV”) of their shares of the Acquired Fund held immediately prior to theReorganization; and

2. To act upon such other matters as may properly come before the Meeting.

The terms and conditions of the transaction are more fully described in this Proxy Statement and Prospectusand in the Reorganization Agreement attached hereto as Exhibit A. The address and telephone number of theAcquired Fund are the same as those of the Acquiring Fund set forth above. This Proxy Statement also constitutesa Prospectus of the Acquiring Fund, filed by the Company with the Securities and Exchange Commission (the“Commission”) as part of the Company’s Registration Statement on Form N-14 (the “Registration Statement”).The Acquired Fund and Acquiring Fund are referred to collectively as the “Funds.”

The Company is an open-end management investment company. The investment objective of the AcquiringFund is to seek long-term capital appreciation by investing primarily in growth-oriented equity securities of largecapitalization companies.

This Proxy Statement and Prospectus sets forth concisely information about the Acquiring Fund that Shareholdersof the Acquired Fund should know before voting on the Reorganization Agreement. A copy of the prospectus for theAcquiring Fund, dated April 30, 2013, as may be amended and supplemented from time to time, is attached as Exhibit B,which Prospectus forms a part of Post-Effective Amendment No. 114 to the Company’s Registration Statement onForm N-1A (File Nos. 033-23166; 811-05624), and incorporated herein by reference (the “Acquiring Fund’sProspectus”). Also incorporated herein by reference is the prospectus of the Acquired Fund, dated April 30, 2013, asmay be amended and supplemented from time to time, which prospectus forms a part of Post-Effective AmendmentNo. 44 to the Acquired Fund’s Registration Statement on Form N-1A (File Nos. 002-66269; 811-2978).

In addition, also enclosed and incorporated herein by reference is the Annual Report of the Acquiring Fundfor the fiscal year ended December 31, 2012 and the Semi-Annual Report of the Acquiring Fund for the six-monthperiod ended June 30, 2013 (File No. 811-05624). Also incorporated herein by reference is the Annual Report ofthe Acquired Fund for the fiscal year ended December 31, 2012 and the Semi-Annual Report of the Acquired Fundfor the six-month period ended June 30, 2013 (File No. 811-2978). A Statement of Additional Information relatingto the Reorganization, described in this Proxy Statement and Prospectus, dated December 12, 2013, has been filedwith the Commission and is also incorporated herein by reference. Such documents are available upon request andwithout charge by calling (800) 548-7786 with respect to each of the Acquired Fund and Acquiring Fund or byvisiting the Commission’s website at www.sec.gov.

Shareholders are advised to read and retain this Proxy Statement and Prospectus for future reference.

The Securities and Exchange Commission has not approved or disapproved these securities or passedupon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

This Proxy Statement and Prospectus is dated December 12, 2013.

Merrill Corp - MS Institutional Fund Proxy-Prospectus [Funds] 10-01-2013 ED [AUX] | thunt | 10-Dec-13 12:26 | 13-21433-2.ba | Sequence: 1CHKSUM Content: 35491 Layout: 4575 Graphics: No Graphics CLEAN


TABLE OF CONTENTSPROXY STATEMENT AND PROSPECTUS

Synopsis 1General 1The Reorganization 1Fee Tables 2Annual Fund Operating Expenses 5Portfolio Turnover 5Tax Consequences of the Reorganization 5Comparison of Acquired Fund and Acquiring Fund 5Principal Risk Factors 12Voting Information 13Record Date 13Quorum 14Voting Procedures 14Expenses of Solicitation 15Vote Required 15Performance Information 15The Reorganization 15The Board’s Considerations 15The Reorganization Agreement 17Tax Aspects of the Reorganization 18Description of Shares 19Capitalization Tables (unaudited) 19Appraisal Rights 20Comparison of Investment Objectives, Principal Policies and Restrictions 20Investment Objectives and Policies 20MS Focus Growth (Acquired Fund) 20MSIF Growth (Acquiring Fund) 21Investment Restrictions 21Additional Information About the Acquiring Fund and the Acquired Fund 22General 22Rights of Acquired Fund Shareholders and Acquiring Fund Shareholders 23Financial Information 24Shareholder Proposals 24Management 24Description of Shares and Shareholder Inquiries 24Dividends, Distributions and Taxes 25Purchases, Exchanges and Redemptions 25Share Information 25Financial Statements and Experts 27Legal Matters 28Available Information 28Other Business 28Exhibit A – Agreement and Plan of Reorganization A-1Exhibit B – Prospectus of the Acquiring Fund dated April 30, 2013, as it may be amended and supplemented from time to time B-1Exhibit C – Annual Report for the Acquiring Fund for the fiscal year ended December 31, 2012 C-1Exhibit D – Semi-Annual Report for the Acquiring Fund for the period ended June 30, 2013 D-1


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SYNOPSIS

The following is a synopsis of certain information contained in or incorporated by reference in this ProxyStatement and Prospectus. This synopsis is only a summary and is qualified in its entirety by the more detailedinformation contained or incorporated by reference in this Proxy Statement and Prospectus and the ReorganizationAgreement. Shareholders should carefully review this Proxy Statement and Prospectus and the ReorganizationAgreement in their entirety and, in particular, the Acquiring Fund’s Prospectus, which is attached to this ProxyStatement and Prospectus as Exhibit B and incorporated herein by reference.

General

This Proxy Statement and Prospectus is being furnished to Shareholders of the Acquired Fund, an open-endmanagement investment company, in connection with the solicitation by the Board of Trustees of the AcquiredFund (the “Board” or “Board of Trustees”), of proxies (“Proxies”) to be used at the Meeting to consider theReorganization. It is expected that the first mailing of this Proxy Statement and Prospectus will be made on orabout December 17, 2013.

Pursuant to the Reorganization, Class A and Class B Shareholders of the Acquired Fund will receive Class Ashares of the Acquiring Fund, while Class I Shareholders of the Acquired Fund will receive Class I shares of theAcquiring Fund and Class L Shareholders of the Acquired Fund will receive Class L shares of the Acquiring Fund.The shares to be issued by the Acquiring Fund in connection with the Reorganization (the “Acquiring Fund Shares”)will be issued at NAV without any sales charges. Any subsequent purchases of Class A shares of the AcquiringFund after the Reorganization by the former Class A and Class B Shareholders of the Acquired Fund will be subjectto the initial sales charge schedule. See “Synopsis—Comparison of Acquired Fund and Acquiring Fund—Purchases,Exchanges and Redemptions” below. Further information relating to the Acquiring Fund is set forth herein and inthe Acquiring Fund’s Prospectus, attached to this Proxy Statement and Prospectus as Exhibit B and incorporatedherein by reference.

As of the close of business on February 25, 2013, the Acquired Fund suspended the offering of its Class Bshares to new investments. Class B Shareholders of the Acquired Fund do not have the option of purchasingadditional Class B shares. However, the existing Class B Shareholders of the Acquired Fund may be able to investthrough dividend reinvestments. The Board of Directors of the Company, on behalf of the Acquiring Fund (the“Board of Directors”), has authorized the issuance of the Acquiring Fund Shares to Shareholders of the AcquiredFund in connection with the Reorganization.

The information concerning the Acquired Fund contained herein has been supplied by the Acquired Fund.The information concerning the Acquiring Fund contained herein has been supplied by the Company.

The Reorganization

The Reorganization is being proposed because the Board has determined that the Reorganization is in the bestinterests of the Acquired Fund and its Shareholders. The Reorganization will allow Shareholders of the AcquiredFund to be invested in a fund that is managed according to similar investment objectives, strategies and restrictionsand that is managed by the members of the same investment team. In addition, while Shareholders of the AcquiredFund will experience an increase in contractual management fees given differences in the Acquiring Fund’s advisoryfee breakpoint schedule, the Reorganization is expected to result in the same or lower total operating expenses forShareholders of the Acquired Fund and shareholders of the surviving combined fund (MSIF Growth) (the “CombinedFund”) as a result of economies of scale and proposed advisory fee waivers and/or expense reimbursements. Theproposed fee waivers and/or expense reimbursements will continue for at least two years from the date of theReorganization or until such time as the Company’s Board of Directors acts to discontinue all or a portion of suchwaivers and/or reimbursements when it deems such action is appropriate. Following the two year period from thedate of the Reorganization, the expense caps applicable to the classes of shares of the Combined Fund will increaseand therefore the total expense ratios of the Combined Fund may be higher in the future. See “TheReorganization—The Board’s Considerations.”

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The Reorganization Agreement provides for the transfer of substantially all the assets and the liabilities of theAcquired Fund to the Acquiring Fund in exchange for Acquiring Fund Shares. The aggregate NAV of the AcquiringFund Shares issued in the exchange will equal the aggregate value of the net assets of the Acquired Fund receivedby the Acquiring Fund. On or after the closing date scheduled for the Reorganization (the “Closing Date”), theAcquired Fund will distribute the Acquiring Fund Shares received by the Acquired Fund to its Shareholders as ofthe Valuation Date (as defined below) in complete liquidation of the Acquired Fund and, without further notice, theoutstanding shares of the Acquired Fund held by the Shareholders will then be redeemed and canceled as permittedby the organizational documents of the Acquired Fund and applicable law. The Acquired Fund thereafter will bederegistered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”).As a result of the Reorganization, each Shareholder will receive that number of full and fractional Acquiring FundShares equal in value to such Shareholder’s pro rata interest in the net assets of the Acquired Fund transferred tothe Acquiring Fund. Pursuant to the Reorganization, Class A and Class B Shareholders of the Acquired Fund willreceive Class A shares of the Acquiring Fund, while Class L Shareholders of the Acquired Fund will receive Class Lof the Acquiring Fund and Class I Shareholders of the Acquired Fund will receive Class I shares of the AcquiringFund. The Board has determined that the interests of the Shareholders will not be diluted as a result of theReorganization. The “Valuation Date” is the third business day following the receipt of the requisite approval ofthis Reorganization Agreement by Shareholders of the Acquired Fund or at such time on such earlier or later dateafter such approval as may be mutually agreed upon in writing.

For the reasons set forth below under “The Reorganization—The Board’s Considerations,” the Board,including the Trustees who are not “interested persons” of the Acquired Fund (“Independent BoardMembers”), as that term is defined in the 1940 Act, has concluded that the Reorganization is advisable andin the best interests of the Acquired Fund and its Shareholders and recommends approval of theReorganization.

Fee Tables

The following tables briefly describe the shareholder fees and annual Fund operating expenses that Shareholdersof the Funds bear directly and indirectly from an investment in the Funds. Shareholder fees will not be charged onthose Acquiring Fund Shares received in connection with the Reorganization. Each Fund pays expenses formanagement of its assets, distribution of its shares and other services, and those expenses are reflected in the NAVper share of each Fund. These expenses are deducted from each respective Fund’s assets and are based on actualexpenses incurred by each of the Acquiring Fund and Acquired Fund for its fiscal year ended December 31, 2012.The tables also set forth pro forma fees for the Combined Fund reflecting what the fee schedule would have beenon December 31, 2012, if the Reorganization had been consummated twelve (12) months prior to that date.

The Class A shares of the Funds are subject to the same sales charges. For purchases of Class A shares of eachFund, you may qualify for a sales charge discount if the cumulative NAV of Class A shares of the Fund purchasedin a single transaction, together with the NAV of all Class A shares of other Morgan Stanley Multi-Class Funds (asdefined herein) held in related accounts, amounts to $25,000 or more. More information about this combinedpurchase discount and other discounts is available from your financial advisor and in the section of this ProxyStatement and Prospectus entitled “Synopsis—Comparison of Acquired Fund and Acquiring Fund—Purchases,Exchanges and Redemptions—Class A and Class B Shares of Acquired Funds/Class A Shares of AcquiringFund—Sales Charges.”

Shareholder Fees(fees paid directly from your investment)

MS Focus Growth (Acquired Fund) Class A Class B Class L* Class I

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.25% None None None

Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or net asset value at redemption) None 5.00%(1) None None

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MSIF Growth (Acquiring Fund) Class A† Class L Class I

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.25% None None

Pro Forma Combined Fund (MSIF Growth) Class A† Class L Class I

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.25% None None

* Effective February 25, 2013, Class C shares of the Acquired Fund were renamed Class L shares.

† Effective September 9, 2013, Class P shares of the Acquiring Fund were renamed Class A shares.

(1) The Class B contingent deferred sales charge (“CDSC”) is scaled down to 1.00% during the sixth year,reaching zero thereafter.

Annual Fund Operating Expenses(expenses that are deducted from Fund assets)

MS Focus Growth (Acquired Fund) Class A Class B Class L* Class I

Advisory Fees 0.44% 0.44% 0.44% 0.44%

Distribution and/or Shareholder Service (12b-1) Fee‡ 0.25% 1.00% 0.75% None

Other Expenses 0.27% 0.27% 0.27% 0.27% Total Annual Fund Operating Expenses+ 0.96% 1.71% 1.46% 0.71%

Fee Waiver and/or Expense Reimbursement+ 0.00% 0.00% 0.00% 0.01% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement+ 0.96% 1.71% 1.46% 0.70%

MSIF Growth (Acquiring Fund) Class A† Class L Class I

Advisory Fees 0.50% 0.50% 0.50%

Distribution and/or Shareholder Service (12b-1) Fee 0.25% 0.75% None

Other Expenses 0.22% 0.22% 0.22% Total Annual Fund Operating Expenses 0.97% 1.47% 0.72% Pro Forma Combined Fund (MSIF Growth) Class A† Class L Class I

Advisory Fees 0.46% 0.46% 0.46%

Distribution and/or Shareholder Service (12b-1) Fee 0.25% 0.75% None

Other Expenses 0.25% 0.25% 0.25% Total Annual Fund Operating Expenses^ 0.96% 1.46% 0.71%

Fee Waiver and/or Expense Reimbursement^ 0.00% 0.00% 0.01% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement^ 0.96% 1.46% 0.70%



‡ The Board of Trustees approved an amendment to the Plan of Distribution reducing the distribution andshareholder services (12b-1) fee for the Acquired Fund’s Class L shares from 1.00% to 0.75% of the average

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daily net assets of such Class, effective February 25, 2013. The Distribution and/or Shareholder Service(12b-1) Fee shown in the table above has been restated to reflect such change.

+ Morgan Stanley Investment Management Inc. (“MSIM”), the Acquiring Fund’s and Acquired Fund’s adviser,and Morgan Stanley Services Company Inc. (“MSSC”), the Acquired Fund’s administrator, have agreed toreduce its advisory fee, its administration fee and/or reimburse the Acquired Fund so that Total Annual FundOperating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinaryexpenses (including litigation), will not exceed 1.05% for Class A, 1.80% for Class B, 1.55% for Class L and0.70% for Class I. The fee waivers and/or expense reimbursements will continue for at least one year or untilsuch time as the Acquired Fund’s Board of Trustees acts to discontinue all or a portion of such waivers and/orreimbursements when it deems such action is appropriate.

^ MSIM has agreed to reduce its advisory fee and/or reimburse the Combined Fund so that Total Annual FundOperating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinaryexpenses (including litigation), will not exceed 1.05% for Class A, 1.55% for Class L and 0.70% for Class I.The fee waivers and/or expense reimbursements will continue for at least two years from the date of theReorganization or until such time as the Company’s Board of Directors acts to discontinue all or a portion ofsuch waivers and/or reimbursements when it deems such action is appropriate. In addition, in connectionwith the Reorganization, for at least two years from the date of the Reorganization or until such time as theCompany’s Board of Directors acts to discontinue all or a portion of such reimbursement when it deems suchaction is appropriate, MSIM has agreed to reimburse 0.01% of expenses of the Class A shares of the CombinedFund to the extent that Total Annual Fund Operating Expenses of the Class A shares of the Combined Fundexceed 0.96%. Following the two year period from the date of the Reorganization, MSIM has agreed to reduceits advisory fee and/or reimburse the Combined Fund so that Total Annual Fund Operating Expenses, excludingcertain investment related expenses, taxes, interest and other extraordinary expenses (including litigation),will not exceed 1.15% for Class A, 1.65% for Class L and 0.80% for Class I. These fee waivers and/or expensereimbursements will continue for at least one year or until such time as the Combined Fund’s Board ofDirectors acts to discontinue all or a portion of such waivers and/or reimbursements when it deems suchaction is appropriate.

Example

To attempt to show the effect of these expenses on an investment over time, the hypothetical shown below hasbeen created. The example assumes that an investor invests $10,000 in either the Acquired Fund or Acquiring Fundfor the time periods indicated and that an investor then redeems all of his or her shares at the end of those periods.The example also assumes that the investment has a 5% return each year and that the operating expenses for eachFund remain the same (as set forth in the chart above). Although a Shareholder’s actual costs may be higher orlower, the table below shows a Shareholder’s costs at the end of each period based on these assumptions.

MS Focus Growth (Acquired Fund) 1 Year 3 Years 5 Years 10 Years Class A $618 $815 $1,028 $1,641Class B $674 $839 $1,128 $1,821Class L* $149 $462 $ 797 $1,746Class I $ 72 $224 $ 390 $ 871

MSIF Growth (Acquiring Fund)Class A† $619 $818 $1,033 $1,652Class L $150 $465 $ 803 $1,757Class I $ 74 $230 $ 401 $ 894

Pro Forma Combined Fund (MSIF Growth)Class A† $618 $815 $1,028 $1,641Class L $149 $462 $ 797 $1,746Class I $ 72 $224 $ 390 $ 871


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† Effective September 9, 2013, Class P shares of the Acquiring Fund were renamed Class A shares. The figuresshown reflect the maximum sales charge of 5.25% applicable to purchases of Class A shares.

Annual Fund Operating Expenses

The purpose of the foregoing fee tables is to assist Shareholders in understanding the various costs and expensesthat a Shareholder in each Fund will bear directly or indirectly. For a more complete description of these costs andexpenses, see “Comparison of Acquired Fund and Acquiring Fund—Investment Advisory Fees,” “—DistributionPlan and Shareholder Services Plan Fees,” “—Other Significant Fees” and “—Purchases, Exchanges andRedemptions” below.

Portfolio Turnover

Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxeswhen Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund OperatingExpenses or in the Example, affect Fund performance. During the most recent fiscal year, the Acquiring Fund’sportfolio turnover rate was 49% of the average value of its portfolio and the Acquired Fund’s portfolio turnover ratewas 44% of the average value of its portfolio.

Tax Consequences of the Reorganization

As a condition to the Reorganization, the Acquired Fund has requested an opinion of Dechert LLP to theeffect that, based upon certain facts, assumptions and representations, the Reorganization will constitute a tax-freereorganization for federal income tax purposes, and no gain or loss will be recognized by the Acquired Fund, theAcquiring Fund or the Acquired Fund’s Shareholders for federal income tax purposes as a result of the transactionsincluded in the Reorganization. Receipt of such opinion is a condition to the Reorganization. For further informationabout the tax consequences of the Reorganization, see “The Reorganization—Tax Aspects of the Reorganization”below.

Comparison of Acquired Fund and Acquiring Fund

Investment Objectives and Principal Investment Policies. The investment objective and principal investmentpolicies of the Acquired Fund are similar to those of the Acquiring Fund and are set forth below. The AcquiredFund is a non-diversified fund and the Acquiring Fund is a diversified fund. The principal differences between theprincipal investment policies of the Acquired Fund and the Acquiring Fund are more fully described under“Comparison of Investment Objectives, Principal Policies and Restrictions” below. Each of the Acquired Fund’sand Acquiring Fund’s investment objectives is a fundamental policy and may not be changed without shareholderapproval of a majority of the Fund’s outstanding voting securities, as defined in the 1940 Act.

MS Focus Growth (Acquired Fund) MSIF Growth (Acquiring Fund)

Investment Objective Investment Objective

Principal Investment Policies Principal Investment Policies

• seeks long-term capital growth • seeks long-term capital appreciation by investingprimarily in growth-oriented equity securities of largecapitalization companies

• under normal market conditions, MSIM seeks toachieve the Portfolio’s investment objective byinvesting primarily in established and emergingcompanies, with capitalizations within the range ofcompanies included in the Russell 1000® GrowthIndex

• normally invests at least 65% of its assets in aportfolio of common stocks (including depositaryreceipts)

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Fund Management. The Acquiring Fund and Acquired Fund are both managed within MSIM’s Growthteam, and, if the Reorganization is approved, the Acquiring Fund is expected to continue to be managed withinMSIM’s Growth team. The team consists of portfolio managers and analysts. Current members of the team jointlyand primarily responsible for the day-to-day management of the Acquiring Fund are Dennis P. Lynch, David S.Cohen, Sam G. Chainani, Alexander T. Norton, Jason C. Yeung and Armistead B. Nash.

Mr. Lynch has been associated with MSIM in an investment management capacity since 1998. Mr. Cohen hasbeen associated with MSIM in an investment management capacity since 1993. Mr. Chainani has been associatedwith MSIM in an investment management capacity since 1996. Mr. Norton has been associated with MSIM in aninvestment management capacity since 2000. Messrs. Yeung and Nash have been associated with MSIM in aninvestment management capacity since 2002.

Mr. Lynch is the lead portfolio manager of the Acquiring Fund. Messrs. Cohen, Chainani, Norton, Yeung andNash are co-portfolio managers. Members of the team collaborate to manage the assets of the Acquiring Fund.

Additional information about the portfolio managers’ compensation structure, other accounts managed by theportfolio managers and the portfolio managers’ ownership of securities in the Funds is provided in each of theCompany’s and Acquired Fund’s Statements of Additional Information.

Investment Advisory Fees. The Acquiring Fund and Acquired Fund currently obtain advisory services fromMSIM. MSIM is a wholly-owned subsidiary of Morgan Stanley (NYSE: “MS”) with its principal office located at

• seeks to invest primarily in established and emerginghigh quality companies it believes have sustainablecompetitive advantages and the ability to redeploycapital at high rates of return

• seeks to invest in high quality companies it believeshave sustainable competitive advantages and theability to redeploy capital at high rates of return

• typically favors companies with rising returns oninvested capital, above average business visibility,strong free cash flow generation and an attractiverisk/reward

• typically favors companies with rising returns oninvested capital, above average business visibility,strong free cash flow generation and an attractiverisk/reward

• may invest in privately placed and restricted securities • may invest in privately placed and restricted securities

• equity securities may include common stock,preferred stock, convertible securities, depositaryreceipts, rights, warrants and limited partnershipinterests

• equity investments may include common andpreferred stocks, convertible securities and equity-linked securities, rights and warrants to purchasecommon stocks, depositary receipts, exchange-tradedfunds (“ETFs”), limited partnership interests andother specialty securities having equity features

• may invest up to 25% of its net assets in foreignsecurities (including depositary receipts), which mayinclude emerging market securities. This percentagelimitation, however, does not apply to securities offoreign companies that are listed in the United Stateson a national securities exchange

• may invest up to 25% of its net assets in foreignsecurities, including emerging market securities, andsecurities classified as American Depositary Receipts(“ADRs”), Global Depositary Receipts (“GDRs”),American Depositary Shares (“ADSs”) or GlobalDepositary Shares (“GDSs”), foreign U.S. dollar-denominated securities that are traded on a U.S.exchange or local shares of non-U.S. issuers

• may utilize foreign currency forward exchangecontracts, which are derivatives, in connection withits investments in foreign securities

• may utilize foreign currency forward exchangecontracts, which are derivatives, in connection withits investments in foreign securities

• a non-diversified fund • a diversified fund

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522 Fifth Avenue, New York, NY 10036. Morgan Stanley is a preeminent global financial services firm engaged insecurities trading and brokerage activities, as well as providing investment banking, research and analysis, financingand financial advisory services.

The annual advisory fee (as a percentage of daily net assets) payable by the Funds is set forth below. TheAcquiring Fund pays its advisory fee on a quarterly basis while the Acquired Fund pays its advisory fee on amonthly basis.

MS Focus Growth (Acquired Fund)*: 0.545% of the portion of the daily net assets not exceeding $250 million;0.42% of the portion of the daily net assets exceeding $250 million butnot exceeding $2.5 billion; 0.395% of the portion of the daily net assetsexceeding $2.5 billion but not exceeding $3.5 billion; 0.37% of theportion of the daily net assets exceeding $3.5 billion but not exceeding$4.5 billion; and 0.345% of the portion of the daily net assets exceeding$4.5 billion

MSIF Growth (Acquiring Fund)**: 0.50% of the portion of the daily net assets not exceeding $1 billion;0.45% of the portion of the daily net assets exceeding $1 billion but notexceeding $2 billion; 0.40% of the portion of the daily net assetsexceeding $2 billion but not exceeding $3 billion; 0.35% of the portionof the daily net assets exceeding $3 billion

* MSIM and MSSC have agreed to reduce its advisory fee, its administration fee and/or reimburse the AcquiredFund so that Total Annual Fund Operating Expenses, excluding certain investment related expenses, taxes,interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class A, 1.80% forClass B, 1.55% for Class L and 0.70% for Class I. The fee waivers and/or expense reimbursements willcontinue for at least one year or until such time as the Acquired Fund’s Board of Trustees acts to discontinueall or a portion of such waivers and/or reimbursements when it deems such action is appropriate.

** MSIM has agreed to reduce its advisory fee and/or reimburse the Acquiring Fund so that Total Annual FundOperating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinaryexpenses (including litigation), will not exceed 1.15% for Class A, 1.65% for Class L and 0.80% for Class I.The fee waivers and/or expense reimbursements will continue for at least one year or until such time as theCompany’s Board of Directors acts to discontinue all or a portion of such waivers and/or reimbursementswhen it deems such action is appropriate.

While contractual management fees are higher for the Acquiring Fund given differences in the AcquiringFund’s advisory fee breakpoint schedule, the Combined Fund is expected to have lower (in the case of Class BShareholders of the Acquired Fund) or the same (in the case of Class A, Class L and Class I Shareholders of theAcquired Fund) total operating expenses as the Acquired Fund. In addition, MSIM has agreed to reduce its advisoryfee and/or reimburse the Combined Fund so that Total Annual Fund Operating Expenses, excluding certaininvestment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed1.05% for Class A, 1.55% for Class L and 0.70% for Class I. The fee waivers and/or expense reimbursements willcontinue for at least two years from the date of the Reorganization or until such time as the Company’s Board ofDirectors acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action isappropriate. In addition, in connection with the Reorganization, for at least two years from the date of theReorganization or until such time as the Company’s Board of Directors acts to discontinue all or a portion of suchreimbursement when it deems such action is appropriate, MSIM has agreed to reimburse 0.01% of expenses of theClass A shares of the Combined Fund to the extent that Total Annual Fund Operating Expenses of the Class Ashares of the Combined Fund exceed 0.96%. Following the two year period from the date of the Reorganization,MSIM has agreed to reduce its advisory fee and/or reimburse the Combined Fund so that Total Annual FundOperating Expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses(including litigation), will not exceed 1.15% for Class A, 1.65% for Class L and 0.80% for Class I. These feewaivers and/or expense reimbursements will continue for at least one year or until such time as the Combined

7



Fund’s Board of Directors acts to discontinue all or a portion of such waivers and/or reimbursements when it deemssuch action is appropriate.

Comparison of Other Service Providers. The Acquired Fund and Acquiring Fund have the same transferagent, custodian, distributor and independent registered public accounting firm. For each Fund, the transfer agentis Boston Financial Data Services, Inc., the custodian is State Street Bank and Trust Company, the distributor isMorgan Stanley Distribution, Inc., and the independent registered public accounting firm is Ernst & Young LLP.The Acquired Fund’s administrator is MSSC. The Acquiring Fund’s administrator is MSIM.

Distribution Plan and Shareholder Services Plan Fees.

Descriptions of the Plans. The Acquired Fund has adopted a plan of distribution with respect to each of itsClass A shares, Class B shares and Class L shares, pursuant to Rule 12b-1 under the 1940 Act (the “MS RetailPlans”). Under the MS Retail Plans, the Acquired Fund pays distribution and/or shareholder services fees inconnection with the sale and distribution of its shares and the provision of ongoing services to Shareholders of eachsuch class and the maintenance of shareholder accounts. For a complete description of these arrangements withrespect to the Acquired Fund, see the section of the Acquired Fund’s prospectus entitled “Shareholder Information—Share Class Arrangements” and the section of the Acquired Fund’s Statement of Additional Information entitled“Rule 12b-1 Plan.”

The Company has adopted a shareholder services plan (the “MSIF Service Plan”) with respect to Class Ashares of the Acquiring Fund and a distribution and shareholder services plan (the “MSIF Distribution Plan” and,together with the MSIF Service Plan, the “MSIF Plans”) with respect to Class L shares of the Acquiring Fundpursuant to Rule 12b-1 under the 1940 Act.

Class A and Class B Shares of Acquired Fund/Class A Shares of Acquiring Fund. Under the MS Retail Plans,the Acquired Fund may pay up to 0.25% and 1.00% of its average daily net assets attributable to each of Class Ashare and Class B shares, respectively, for distribution-related expenses and for the provision of ongoing servicesto Shareholders.

Under the MSIF Service Plan, the Acquiring Fund may pay a shareholder services fee of up to 0.25% ofClass A shares’ average daily net assets on an annualized basis. The “Distributor,” Morgan Stanley Distribution,Inc., may compensate other parties for providing shareholder support services to investors who purchase Class Ashares. For further information relating to shareholder services applicable to Class A shares of the Acquiring Fund,see the section entitled “Shareholder Information—Distribution of Portfolio Shares” in the Acquiring Fund’sProspectus attached hereto as Exhibit B.

Class L Shares of Acquired Fund/Class L Shares of Acquiring Fund. Under the MS Retail Plans, the AcquiredFund may pay up to 0.75% of its average daily net assets attributable to Class L shares for distribution-relatedexpenses and for the provision of ongoing services to Shareholders.

Under the MSIF Distribution Plan, the Acquiring Fund may pay a shareholder services fee of up to 0.25% ofthe Class L shares’ average daily net assets on an annualized basis and a distribution fee of 0.50% of the Class Lshares’ average daily net assets on an annualized basis. The Distributor may compensate other parties for providingshareholder support services to investors who purchase Class L shares. For further information relating to theshareholder services and distribution fees applicable to Class L shares of the Acquiring Fund, see the section entitled“Shareholder Information—Distribution of Portfolio Shares” in the Acquiring Fund’s Prospectus attached heretoas Exhibit B.

Class I Shares of Acquired Fund/Class I Shares of Acquiring Fund. Class I shares of the Acquired Fund arenot subject to the MS Retail Plans and Class I shares of the Acquiring Fund are not subject to the MSIF Plans.

Other Significant Fees. Each of the Acquiring Fund and Acquired Fund pay additional fees in connectionwith their operations, including legal, auditing, transfer agent and custodial fees. See “Synopsis—Fee Tables” abovefor the percentage of average net assets represented by such “Other Expenses.”

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Purchases, Exchanges and Redemptions. The Company’s Board of Directors has authorized the issuanceof the Acquiring Fund Shares in connection with the Reorganization.

Class A and Class B Shares of Acquired Funds/Class A Shares of Acquiring Fund

Minimum Investments. The minimum initial investment amount for Class A and Class B shares of theAcquired Fund is $1,000 for regular accounts and individual retirement accounts; and $100 for purchase plans thatallow you to transfer money automatically from your checking or savings account or from a Morgan Stanley MoneyMarket Fund on a semi-monthly, monthly or quarterly basis (“EasyInvest®”). The minimum subsequent investmentamount for Class A and Class B shares of the Acquired Fund is $100 for all account types, except for an accountopened through EasyInvest®, which requires a Shareholder’s schedule of investments to total $1,000 in 12 months.

The minimum initial investment for Class A shares of the Acquiring Fund generally is $1,000. If the value ofan investor’s account falls below the minimum initial investment amount for Class A shares as a result of shareredemptions or if such investor no longer meets one of the waiver criteria, the investor’s account may be subject toinvoluntary redemption. Shareholders will be notified prior to any such redemption. For further information relatingto the minimum investment amounts for Class A shares of the Acquiring Fund, please see the section entitled“Shareholder Information—Minimum Investment Amounts” in the Acquiring Fund’s Prospectus attached hereto asExhibit B.

Sales Charges. Class A shares of the Acquired Fund are subject to an initial sales charge of up to 5.25%calculated as a percentage of the offering price on a single transaction. For purchases of Class A shares of theAcquired Fund, you may benefit from a reduced sales charge if the cumulative NAV of Class A shares of theAcquired Fund purchased in a single transaction, together with the NAV of any Class A shares of the AcquiredFund and any other Morgan Stanley Multi-Class Fund (as defined below) (including shares of Morgan StanleyMoney Market Funds (as defined in the Acquired Fund’s prospectus) and Advisor Class shares of Morgan StanleyLimited Duration U.S. Government Trust which you acquired in an exchange from Class A shares of the AcquiredFund or Class A shares of another Morgan Stanley Multi-Class Fund) held in related accounts, amounts to $25,000or more. In addition, you will have the benefit of a reduced sales charge by combining your purchase of Class Ashares of the Acquired Fund in a single transaction with your purchase of Class A shares of any other MorganStanley Multi-Class Fund for any related account. Investments of $1 million or more are not subject to an initialsales charge.

Class B shares of the Acquired Fund are offered at NAV with no initial sales charge but are subject to a CDSC.The CSDC decreases to 0% after six years as follows: Year 1—5.00%; Year 2—4.00%; Year 3—3.00%;Year 4—2.00%; Year 5—2.00%; Year 6—1.00%; Year 7 and thereafter—None. The CDSC is assessed on an amountequal to the lesser of the then market value of the Class B shares or the historical cost of the Class B shares (whichis the amount actually paid for the Class B shares at the time of original purchase) being redeemed.

Class A shares of the Acquiring Fund are offered at NAV and are subject to an initial sales charge equal to amaximum of 5.25% calculated as a percentage of the offering price on a single transaction. You may benefit froma reduced sales charge if the cumulative NAV of Class A shares of the Acquiring Fund purchased in a singletransaction, together with the NAV of any Class A shares of the Acquiring Fund and any other Morgan StanleyMulti-Class Fund (including shares of Morgan Stanley Money Market Funds and Advisor Class shares of MorganStanley Limited Duration U.S. Government Trust which you acquired in an exchange from Class A shares of theAcquiring Fund or Class A shares of another Morgan Stanley Multi-Class Fund) held in related accounts, amountsto $25,000 or more. In addition, you will have the benefit of a reduced sales charge by combining your purchase ofClass A shares of the Acquiring Fund in a single transaction with your purchase of Class A shares of any otherMorgan Stanley Multi-Class Fund for any related account. Investments of $1 million or more are not subject to aninitial sales charge. Class A shares are not subject to a CDSC. For further information relating to the initial salescharge for Class A shares of the Acquiring Fund, please see the section entitled “Shareholder Information—HowTo Purchase Class A Shares” in the Acquiring Fund’s Prospectus attached hereto as Exhibit B.

The initial sales charge applicable to Class A shares of the Acquiring Fund will be waived for Class Ashares acquired in the Reorganization. Any subsequent purchases of Class A shares of the Acquiring Fund

9



after the Reorganization by the former Class A and Class B Shareholders of the Acquired Fund will be subjectto the initial sales charge schedule. No CDSCs will be imposed on Class B shares of the Acquired Fund thatare exchanged for Class A shares of the Acquiring Fund in connection with the Reorganization.

Exchange Privileges. Class A shares and Class B shares of the Acquired Fund may be exchanged for sharesof the same class of any other continuously offered Morgan Stanley Retail Fund (as defined in the Acquired Fund’sprospectus), if available, without the imposition of an exchange fee. Class A shares and Class B shares of theAcquired Fund may also be exchanged for the same class of shares of any portfolio of the Company or MorganStanley Institutional Fund Trust (“MSIFT” and, collectively with the Company and the Morgan Stanley RetailFunds, the “Morgan Stanley Multi-Class Funds”), if available, without the imposition of an exchange fee. Front-end sales charges (loads) are not imposed on exchanges of Class A shares of the Acquired Fund. Class B shares ofthe Acquired Fund may be exchanged for Class B shares of any Morgan Stanley Retail Fund even though Class Bshares are closed to investors. In addition, Class A shares and Class B shares of the Acquired Fund may be exchangedfor shares of a Morgan Stanley Money Market Fund (as defined in the Acquired Fund’s prospectus, and togetherwith the Morgan Stanley Multi-Class Funds, the “Morgan Stanley Funds”) or for Advisor Class shares of MorganStanley Limited Duration U.S. Government Trust, if available, without the imposition of an exchange fee. Class Bshares of the Acquired Fund that are exchanged for shares of a Morgan Stanley Money Market Fund or AdvisorClass shares of Morgan Stanley Limited Duration U.S. Government Trust may be subsequently re-exchanged forClass B shares of the Acquired Fund or any other Morgan Stanley Retail Fund (even though Class B shares areclosed to investors).

Class A shares of the Acquiring Fund may be exchanged for shares of the same class of any Morgan StanleyMulti-Class Fund, if available, without the imposition of an exchange fee. In addition, Class A shares of the AcquiringFund may be exchanged for shares of a Morgan Stanley Money Market Fund or for Advisor Class shares of MorganStanley Limited Duration U.S. Government Trust, if available, without the imposition of an exchange fee. Front-end sales charges (loads) are not imposed on exchanges of Class A shares of the Acquiring Fund.

Exchanges are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to anyapplicable redemption fee). Upon consummation of the Reorganization, the foregoing exchange privileges willapply to Shareholders of the Combined Fund; however, your transaction will be treated the same as an initialpurchase. You will be subject to the same minimum initial investment and account size as an initial purchase.

Each Fund provides telephone exchange privileges to its Shareholders. For greater details relating to exchangeprivileges applicable to the Acquiring Fund, see the section entitled “Shareholder Information—Exchange Privilege”in the Acquiring Fund’s Prospectus attached hereto as Exhibit B. For greater details relating to exchange privilegesapplicable to the Acquired Fund, see the section entitled “Shareholder Information—How to Exchange Shares” inthe Acquired Fund’s Prospectus, incorporated herein by reference.

Class L Shares of Acquired Fund/Class L Shares of Acquiring Fund

Minimum Investments. The minimum initial investment amount for Class L shares of the Acquired Fund is$1,000 for regular accounts and individual retirement accounts; and $100 for EasyInvest®. The minimum subsequentinvestment amount for Class L shares of the Acquired Fund is $100 for all account types, except for an accountopened through EasyInvest®, which requires a Shareholder’s schedule of investments to total $1,000 in 12 months.

The minimum initial investment for Class L shares of the Acquiring Fund generally is $1,000. If the value ofan investor’s account falls below the minimum initial investment amount for Class L shares as a result of shareredemptions or if such investor no longer meets one of the waiver criteria, the investor’s account may be subject toinvoluntary redemption. Shareholders will be notified prior to any such redemption. For further information relatingto the minimum investment amounts for Class L shares of the Acquiring Fund, please see the section entitled“Shareholder Information—Minimum Investment Amounts” in the Acquiring Fund’s Prospectus attached hereto asExhibit B.

Sales Charges. Class L shares of each of the Acquired Fund and Acquiring Fund are offered at NAV with noinitial sales charge or CDSC.

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Exchange Privileges. Class L shares of the Acquired Fund and the Acquiring Fund may be exchanged forshares of the same class of any Morgan Stanley Multi-Class Fund, if available, or for shares of any Morgan StanleyMoney Market Fund or for Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust, ifavailable, without the imposition of an exchange fee.



Class I Shares of Acquired Fund/Class I Shares of Acquiring Fund

Minimum Investments. Class I shares of the Acquired Fund are offered only to investors meeting an initialinvestment minimum of $5,000,000 and are available only to limited categories of investors.

The minimum initial investment for Class I shares of the Acquiring Fund generally is $5,000,000. If the valueof an investor’s account falls below the minimum initial investment amount for Class I shares as a result of shareredemptions or if such investor no longer meets one of the waiver criteria, the investor’s account may be subject toinvoluntary conversion (to another class of shares offered by the Acquired Fund (if an account meets the minimuminvestment amount for such class)) or involuntary redemption. Shareholders will be notified prior to any suchconversion or redemption. For further information relating to minimum investment requirements for Class I sharesof the Acquiring Fund, please see the section entitled “Shareholder Information—Minimum Investment Amounts”in the Acquiring Fund’s Prospectus attached hereto as Exhibit B.

Sales Charges. Class I shares of each of the Acquired Fund and Acquiring Fund are not subject to either aninitial sales charge or a CDSC.

Exchange Privileges. Class I shares of the Acquired Fund and the Acquiring Fund may be exchanged forshares of the same class of any Morgan Stanley Multi-Class Fund, if available, or for shares of a Morgan StanleyMoney Market Fund or for Advisor Class shares of Morgan Stanley Limited Duration U.S. Government Trust, ifavailable, without the imposition of an exchange fee.



Dividends. Each Fund declares dividends separately for each of its classes. The Acquiring Fund’s policy isto distribute to shareholders substantially all of its net investment income, if any, in the form of an annual dividendand to distribute net realized capital gains, if any, at least annually. Normally, the Acquired Fund pays incomedividends semi-annually and capital gains, if any, are usually distributed in June and December. Dividends andcapital gains distributions are automatically reinvested in additional shares of the same class of shares of such Fundat NAV unless the shareholder instructs otherwise.

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PRINCIPAL RISK FACTORS

The principal risks of investing in the Acquiring Fund are substantially similar to those of investing in theAcquired Fund. The value of an investment in each Fund is based on the market prices of the securities such Fundholds. These prices change daily due to economic and other events that affect markets generally, as well as thosethat affect particular regions, countries, industries, companies or governments.

Equity Securities. Each Fund may invest in equity securities. Equity securities may include common andpreferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks,depositary receipts, ETFs, limited partnership interests and other specialty securities having equity features. Theprices of equity securities will rise and fall in response to a number of different factors. In particular, prices ofequity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of thesecurity as well as factors unrelated to the fundamental condition of the issuer, including general market, economicand political conditions. In addition, at times, large capitalization growth-oriented equity securities mayunderperform relative to the overall market.

The Funds may invest in equity securities that are publicly-traded on securities exchanges or over-the-counter(“OTC”) or in equity securities that are not publicly traded. Securities that are not publicly traded may be moredifficult to sell and their value may fluctuate more dramatically than other securities.

Depositary receipts involve many of the same risks as those associated with direct investment in foreignsecurities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistereddepositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts,or to pass through to them any voting rights with respect to the deposited securities.

A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may beconverted into or exchanged for a prescribed amount of common stock or other security of the same or a differentissuer or into cash within a particular period of time at a specified price or formula. A convertible security generallyentitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock untilthe convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securitiesgenerally have characteristics similar to both debt and equity securities. The value of convertible securities tends todecline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the marketvalue of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higheryields than those of common stock of the same or similar issuers. Convertible securities generally rank senior tocommon stock in a corporation’s capital structure but are usually subordinated to comparable nonconvertiblesecurities. Convertible securities generally do not participate directly in any dividend increases or decreases of theunderlying securities although the market prices of convertible securities may be affected by any dividend changesor other changes in the underlying securities.

Foreign Securities. Each Fund may invest in foreign securities. Foreign issuers generally are subject todifferent accounting, auditing and financial reporting standards than U.S. issuers. There may be less informationavailable to the public about foreign issuers. Securities of foreign issuers can be less liquid and experience greaterprice movements. In addition, the prices of such securities may be susceptible to influence by large traders, due tothe limited size of many foreign securities markets. In addition, investments in certain foreign markets, which havehistorically been considered stable, may become more volatile and subject to increased risk due to ongoingdevelopments and changing conditions in such markets. Moreover, the growing interconnectivity of global economiesand financial markets has increased the probability that adverse developments and conditions in one country orregion will affect the stability of economies and financial markets in other countries or regions. In some foreigncountries, there is also the risk of government expropriation, excessive taxation, political or social instability, theimposition of currency controls or diplomatic developments that could affect a Fund’s investment. There also canbe difficulty obtaining and enforcing judgments against issuers in foreign countries. Foreign stock exchanges,broker-dealers and listed issuers may be subject to less government regulation and oversight. The cost of investingin foreign securities, including brokerage commissions and custodial expenses, can be higher than in the UnitedStates.

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In connection with their investments in foreign securities, the Funds also may enter into contracts with banks,brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forwardexchange contract is a negotiated agreement between the contracting parties to exchange a specified amount ofcurrency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between thecurrencies that are the subject of the contract. Foreign currency forward exchange contracts may be used to protectagainst uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particularcurrency. In addition, the Funds may use cross currency hedging or proxy hedging with respect to currencies inwhich the Funds have or expect to have portfolio or currency exposure. Cross currency hedges involve the sale ofone currency against the positive exposure to a different currency and may be used for hedging purposes or toestablish an active exposure to the exchange rate between any two currencies.

Emerging Market Risks. Each Fund may invest in emerging market or developing countries, which arecountries that major international financial institutions, such as the World Bank, generally consider to be lesseconomically mature than developed nations, such as the United States or most nations in Western Europe. Emergingmarket or developing countries can include every nation in the world except the United States, Canada, Japan,Australia, New Zealand and most countries located in Western Europe. Emerging market or developing countriesmay be more likely to experience political turmoil or rapid changes in economic conditions than more developedcountries, and the financial condition of issuers in emerging market or developing countries may be more precariousthan in other countries. In addition, emerging market securities generally are less liquid and subject to wider priceand currency fluctuations than securities issued in more developed countries. These characteristics result in greaterrisk of price volatility in emerging market or developing countries, which may be heightened by currency fluctuationsrelative to the U.S. dollar.

Privately Placed and Restricted Securities. Each Fund’s investments may also include privately placedsecurities, which are subject to resale restrictions. These securities will have the effect of increasing the level ofFund illiquidity to the extent a Fund may be unable to sell or transfer these securities due to restrictions on transfersor on the ability to find buyers interested in purchasing the securities. The illiquidity of the market, as well as thelack of publicly available information regarding these securities, may also adversely affect the ability to arrive at afair value for certain securities at certain times and could make it difficult for a Fund to sell certain securities.

Non-Diversified Status. The Acquired Fund is a “non-diversified” mutual fund and, as such, its investmentsare not required to meet certain diversification requirements under federal law. Compared with “diversified” funds,such as the Acquiring Fund, the Acquired Fund may invest a greater percentage of its assets in the securities of anindividual corporation or governmental entity. Thus, the Acquired Fund’s assets may be concentrated in fewersecurities than other funds. A decline in the value of those investments would cause the Acquired Fund’s overallvalue to decline to a greater degree.

The foregoing discussion is a summary of the principal risk factors. For a more complete discussion of therisks of the Acquiring Fund, see “Details of the Portfolios—Growth Portfolio—Risks,” and “Additional InformationAbout the Portfolios’ Investment Strategies and Related Risks” in the Acquiring Fund’s Prospectus attached heretoas Exhibit B. For a more complete discussion of the risks of the Acquired Fund, see “Fund Details—AdditionalInformation about the Fund’s Investment Objective, Strategies and Risks—Principal Risks” in the Acquired Fund’sprospectus, incorporated herein by reference.

VOTING INFORMATION

Record Date

The Board has fixed the close of business on November 21, 2013 as the record date (the “Record Date”) forthe determination of Shareholders of the Acquired Fund entitled to notice of, and to vote at, the Meeting. As of theRecord Date, there were 36,005,107.435 shares of the Acquired Fund issued and outstanding.

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Quorum

Shareholders of record as of the close of business on the Record Date are entitled to one vote per share and afractional vote for a fractional share on each matter submitted to a vote at the Meeting. Shareholders of each classof the Acquired Fund will vote together as a single class in connection with the Reorganization Agreement. Theholders of a majority of the shares issued and outstanding and entitled to vote of the Acquired Fund, represented inperson or by proxy, will constitute a quorum at the Meeting.

In the event that the necessary quorum to transact business or the vote required to approve or reject theReorganization is not obtained at the Meeting, the persons named as Proxies may propose one or more adjournmentsof the Meeting to permit further solicitation of Proxies. Any such adjournment will require the affirmative vote ofthe holders of a majority of shares of the Acquired Fund present in person or by Proxy at the Meeting. Where anadjournment is proposed because the necessary quorum to transact business is not obtained at the Meeting, thepersons named as Proxies will vote in favor of such adjournment provided that such persons named as Proxiesdetermine that such adjournment and additional solicitation is reasonable and in the interests of Shareholders basedon all relevant factors, including the nature of the proposal, the percentage of Shareholders present, the nature ofthe proposed solicitation activities and the nature of the reasons for the further solicitation. Where an adjournmentis proposed because the vote required to approve or reject the Reorganization is not obtained at the Meeting, thepersons named as Proxies will vote in favor of such adjournment those Proxies which they are entitled to vote infavor of the Reorganization and will vote against any such adjournment those Proxies required to be voted againstthe Reorganization. Abstentions will not be voted either for or against any such adjournment.

Voting Procedures

The enclosed form of Proxy for the Acquired Fund, if properly executed and returned, will be voted inaccordance with the choice specified thereon. The Proxy will be voted in favor of the Reorganization unless achoice is indicated to vote against or to abstain from voting on the Reorganization. If a Shareholder executes andreturns a Proxy but fails to indicate how the votes should be cast, the Proxy will be voted in favor of theReorganization. The Board knows of no business, other than that set forth in the Notice of Special Meeting ofShareholders, to be presented for consideration at the Meeting. However, the Proxy confers discretionary authorityupon the persons named therein to vote as they determine on other business, not currently contemplated, whichmay come before the Meeting.

Proxies from Shareholders may be revoked at any time prior to the voting thereof by: (i) delivering writtennotice of revocation to the Secretary of Morgan Stanley Focus Growth Fund, 522 Fifth Avenue, New York, NY10036; (ii) completing and returning a new Proxy (whether by mail or, as discussed below, by touchtone telephoneor the Internet) (if returned and received in time to be voted); or (iii) attending the Meeting and voting in person.Attendance at the Meeting will not in and of itself revoke a Proxy; a Shareholder may attend the Meeting in personto revoke a previously provided Proxy and to authorize Proxies to vote their shares in accordance with their newinstructions.

Shareholders will be able to vote their shares by touchtone telephone or by Internet by following the instructionson the Proxy Card or on the Voting Information Card accompanying this Proxy Statement and Prospectus. To voteby Internet or by telephone, Shareholders can access the website or call the toll-free number listed on the ProxyCard or noted in the enclosed voting instructions. To vote by touchtone telephone, Shareholders will need thenumber that appears on the Proxy Card. In certain instances, a proxy solicitor may call Shareholders to ask if theywould be willing to have their votes recorded by telephone. The telephone voting procedure is designed toauthenticate Shareholders’ identities, to allow Shareholders to authorize the voting of their shares in accordancewith their instructions and to confirm that their instructions have been recorded properly. No recommendation willbe made as to how a Shareholder should vote on any proposal other than to refer to the recommendations of theBoard. Shareholders voting by telephone in this manner will be asked for identifying information and will be givenan opportunity to authorize Proxies to vote their shares in accordance with their instructions. To ensure thatShareholders’ instructions have been recorded correctly they will receive a confirmation of their instructions in themail. A special toll-free number set forth in the confirmation will be available in case the information contained in

14



the confirmation is incorrect. Although a Shareholder’s vote may be taken by telephone, each Shareholder willreceive a copy of this Proxy Statement and Prospectus and may vote by mail using the enclosed Proxy Card or bytouchtone telephone or the Internet as set forth above. The last proxy vote received in time to be voted, whether byProxy Card, touchtone telephone or Internet, will be the vote that is counted and will revoke all previous votes byShareholders.

Expenses of Solicitation

Proxies will be solicited primarily by mailing this Proxy Statement and Prospectus and its enclosures. Inaddition to the solicitation of Proxies by mail, employees of MSIM and its affiliates, without additionalcompensation, may solicit proxies in person or by telephone, facsimile or oral communication. The Acquired Fundmay retain Computershare Fund Services, a professional proxy solicitation firm, to assist with any necessarysolicitation of Proxies. The estimated cost of additional telephone solicitation by Computershare Fund Services isapproximately $398,631. The expenses of the Reorganization, including the cost of printing, filing and proxysolicitation (including the aforementioned cost of additional telephone solicitation by Computershare Fund Services)and legal and accounting expenses, are expected to be approximately $1,029,500 (up to $801,600 of which will beborne by the Acquired Fund (which represents the estimated shareholder expense savings during the two year periodfollowing the closing of the Reorganization) (whether or not the Reorganization is approved by Shareholders)). Theremainder of the Reorganization expenses will be borne by MSIM.

Vote Required

Approval of the Reorganization by Shareholders requires the affirmative vote of the lesser of: (1) more than50% of the outstanding shares of the Acquired Fund, or (2) 67% or more of the shares of the Acquired Fundrepresented at the Meeting if the holders of more than 50% of the outstanding shares of the Acquired Fund arepresent or represented by Proxy. Abstentions are not considered votes “FOR” the Reorganization at the Meeting. Asa result, abstentions have the same effect as a vote against the Reorganization because approval of the Reorganizationrequires the affirmative vote of a percentage of the voting securities present or represented by proxy or a percentageof the outstanding voting securities.

If the Reorganization is not approved by Shareholders of the Acquired Fund, the Acquired Fund will continuein existence and the Board will consider alternative actions for such Fund.

PERFORMANCE INFORMATION

For a discussion of the Acquiring Fund’s performance information, see “Portfolio Summary—GrowthPortfolio—Performance Information” in the Acquiring Fund’s Prospectus attached hereto as Exhibit B.

THE REORGANIZATION

The Board’s Considerations

The Board, including the Independent Board Members, unanimously declared advisable and approved theReorganization on behalf of the Acquired Fund and determined to recommend that Shareholders of the AcquiredFund approve the Reorganization. In connection with the Board’s review of the Reorganization, MSIM advised theBoard about a variety of matters, including, but not limited to:

1. the similarities of the investment objectives, policies and risks of the Acquiring Fund as compared to theAcquired Fund;

2. the continuity of the portfolio management teams;

3. the asset base of the Acquiring Fund as compared to the Acquired Fund;

4. the current and future sales and asset growth potential of the Acquiring Fund as compared to the AcquiredFund;

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5. while Shareholders of the Acquired Fund will experience an increase in contractual management feesgiven differences in the Acquiring Fund’s advisory fee breakpoint schedule, the Reorganization is expected to resultin the same or lower total operating expenses for Shareholders of the Acquired Fund and shareholder of the CombinedFund as a result of economies of scale and proposed advisory fee waivers and/or expense reimbursements institutedby MSIM for at least two years from the date of the Reorganization or until such time as the Company’s Board ofDirectors acts to discontinue all or a portion of such waivers and/or reimbursements when it deems such action isappropriate;

6. the terms and conditions of the Reorganization, which would affect the price of shares to be issued in theReorganization;

7. that there is not expected to be a significant amount of portfolio turnover as a result of the Reorganization;

8. the estimated expenses of the Reorganization, such as the expenses of this solicitation, including the costof preparing and mailing this Proxy Statement and Prospectus, which will be approximately $1,029,500 (up to$801,600 of which will be borne by the Acquired Fund (which represents the estimated shareholder expense savingsduring the two year period following the closing of the Reorganization) (whether or not the Reorganization isapproved by Shareholders)). The remainder of the Reorganization expenses will be borne by MSIM;

9. the tax-free nature of the Reorganization; and

10. that capital loss carry forwards would not be lost as a result of the Reorganization.

The Board noted that the current investments of the Acquired Fund may be held by the Acquiring Fund inaccordance with the investment guidelines of the Acquiring Fund. The Board and MSIM discussed the overlapamong Morgan Stanley Fund offerings, and the goal of finding a cost effective solution to streamline the MorganStanley fund offerings, reducing costs to shareholders and removing potential point of sale conflicts in themarketplace. The Board and MSIM also discussed the exchangeability among funds within the Morgan Stanleyfund family, the expense caps on the Acquiring Fund and the waivers of sales charges and minimum investmentamounts applicable to the Acquiring Fund for Shareholders of the Acquired Fund in connection with theReorganization.

The Board noted that while the Acquiring Fund’s advisory fee rate is higher than the Acquired Fund’s advisoryfee rate (due to differences in breakpoint schedules), the total annual operating expenses of the Combined Fund areprojected to be the same (in the case of Class A, Class L and Class I Shareholders of the Acquired Fund) or lower(in the case of Class B Shareholders of the Acquired Fund) than the total annual operating expenses of the AcquiredFund as a result of economies of scale. In addition, in order to ensure that shareholders of the Combined Fund arenot adversely affected by the Reorganization, MSIM has agreed to reduce its advisory fee and/or reimburse theCombined Fund, so that total annual operating expenses, excluding certain investment related expenses, taxes,interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class A, 1.55% forClass L and 0.70% for Class I. The fee waivers and/or expense reimbursements will continue for at least two yearsfrom the date of the Reorganization or until such time as the Company’s Board of Directors acts to discontinue allor a portion of such waivers and/or reimbursements when it deems such action is appropriate. In addition, inconnection with the Reorganization, for at least two years from the date of the Reorganization or until such time asthe Company’s Board of Directors acts to discontinue all or a portion of such reimbursement when it deems suchaction is appropriate, MSIM has agreed to reimburse 0.01% of expenses of the Class A shares of the CombinedFund to the extent that Total Annual Fund Operating Expenses of the Class A shares of the Combined Fund exceed0.96%. Following the two year period from the date of the Reorganization, MSIM has agreed to reduce its advisoryfee and/or reimburse the Combined Fund so that Total Annual Fund Operating Expenses, excluding certaininvestment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed1.15% for Class A, 1.65% for Class L and 0.80% for Class I. These fee waivers and/or expense reimbursementswill continue for at least one year or until such time as the Combined Fund’s Board of Directors acts to discontinueall or a portion of such waivers and/or reimbursements when it deems such action is appropriate.

The Board discussed with MSIM the foreseeable short- and long-term effects of the Reorganization on theAcquired Fund and its Shareholders, including the possibility that the Acquiring Fund may experience increased

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redemptions in the period of time that follows the closing of the Reorganization and that if this were to occur, itwould decrease the anticipated net asset size of the Combined Fund.

In its deliberations, the Board considered all information it received, as described above, as well as advice andanalysis from its counsel. The Board considered the Reorganization and the impact of the Reorganization on theAcquired Fund and its Shareholders. The Board concluded, based on all of the information presented, that theReorganization is advisable and in the best interest of the Acquired Fund’s Shareholders and that shareholders willnot be diluted as a result thereof, and decided to recommend that the Acquired Fund’s Shareholders approve theReorganization.

If Shareholders of the Acquired Fund do not approve the Reorganization, the Board will consider other coursesof action for the Acquired Fund.

The Reorganization Agreement

The terms and conditions under which the Reorganization would be consummated, as summarized below, areset forth in the Reorganization Agreement. This summary is qualified in its entirety by reference to the Agreementand Plan of Reorganization, a copy of which is attached as Exhibit A to this Proxy Statement and Prospectus.

The Reorganization Agreement provides that (i) the Acquired Fund will transfer substantially all of its assets,including portfolio securities, cash, cash equivalents and receivables, to the Acquiring Fund on the Closing Date inexchange for the assumption by the Acquiring Fund of all liabilities of the Acquired Fund, including all expenses,costs, charges and reserves, as reflected on an unaudited statement of assets and liabilities of Acquired Fund preparedby the Treasurer of the Acquired Fund as of the Valuation Date in accordance with generally accepted accountingprinciples consistently applied from the prior audited period, and the delivery of the Acquiring Fund Shares; (ii) suchAcquiring Fund Shares would be distributed to Shareholders on the Closing Date or as soon as practicable thereafter;(iii) the Acquired Fund would be liquidated and terminated; and (iv) the outstanding shares of the Acquired Fundwould be canceled.

The number of Acquiring Fund Shares to be delivered to the Acquired Fund will be determined by dividingthe aggregate NAV of each class of shares of the Acquired Fund, acquired by the Acquiring Fund, by the NAV pershare of the corresponding class of shares of the Acquiring Fund; these values will be calculated as of the ValuationDate. As an illustration, assume that on the Valuation Date, Class I shares of the Acquired Fund had an aggregateNAV of $100,000. If the NAV per Class I share of the Acquiring Fund were $10 per share at the close of businesson the Valuation Date, the number of Class I shares of the Acquiring Fund to be issued would be 10,000 ($100,000 ÷$10). These 10,000 Class I shares of the Acquiring Fund would be distributed to the former Class I shareholders ofthe Acquired Fund. This example is given for illustration purposes only and does not bear any relationship to thedollar amounts or shares expected to be involved in the Reorganization.

On the Closing Date or as soon as practicable thereafter, the Acquired Fund will distribute pro rata to itsShareholders of record as of the close of business on the Valuation Date, the Acquiring Fund Shares it receives.Each Shareholder will receive the class of shares of the Acquiring Fund that corresponds to the class of shares ofthe Acquired Fund currently held by that Shareholder. Accordingly, the Acquiring Fund Shares will be distributedas follows: each of the Class I shares of the Acquiring Fund will be distributed to holders of the Class I shares ofthe Acquired Fund, each of the Class A shares of the Acquiring Fund will be distributed to holders of Class A andClass B shares of the Acquired Fund and each of the Class L shares of the Acquiring Fund will be distributed toholders of Class L shares of the Acquired Fund. The Acquiring Fund will cause its transfer agent to credit andconfirm an appropriate number of the Acquiring Fund’s Shares to each Shareholder.

The consummation of the Reorganization is contingent upon the approval of the Reorganization by theShareholders and the receipt of the other opinions and certificates set forth in Sections 6, 7 and 8 of theReorganization Agreement and the occurrence of the events described in those Sections, certain of which may bewaived by a Fund. The Reorganization Agreement may be amended in any mutually agreeable manner.

The Reorganization Agreement may be terminated and the Reorganization abandoned at any time, before orafter approval by Shareholders, by mutual consent of the Company, on behalf of the Acquiring Fund, and the

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Acquired Fund. In addition, either party may terminate the Reorganization Agreement upon the occurrence of amaterial breach of the Reorganization Agreement by the other party or if, by October 3, 2014, any condition setforth in the Reorganization Agreement has not been fulfilled or waived by the party entitled to its benefits.

Under the Reorganization Agreement, within one year after the Closing Date, the Acquired Fund shall eitherpay or make provision for all of its liabilities to former Shareholders of the Acquired Fund that received AcquiringFund Shares. The Acquired Fund shall be liquidated and terminated following the distribution of the AcquiringFund Shares to Shareholders of record of the Acquired Fund.

The effect of the Reorganization is that Shareholders who vote their shares in favor of the ReorganizationAgreement are electing to sell their shares of the Acquired Fund and reinvest the proceeds in the Acquiring FundShares at NAV and without recognition of taxable gain or loss for federal income tax purposes. See “Tax Aspects ofthe Reorganization” below. As noted in “Tax Aspects of the Reorganization,” if the Acquired Fund recognizes net gainfrom the sale of securities prior to the Closing Date, such gain, to the extent not offset by capital loss carry-forwards,will be distributed to Shareholders prior to the Closing Date and will be taxable to Shareholders as capital gains.

Shareholders will continue to be able to redeem their shares of the Acquired Funds at NAV next determinedafter receipt of the redemption request until the close of business on the business day next preceding the ClosingDate. Redemption requests received by the Acquired Fund thereafter will be treated as requests for redemption ofshares of the Acquiring Fund.

Tax Aspects of the Reorganization

The following is a general summary of the material federal income tax consequences of the Reorganizationand is based upon the current provisions of the Code, the existing U.S. Treasury Regulations thereunder, currentadministrative rulings of the Internal Revenue Service (“IRS”) and published judicial decisions, all of which aresubject to change. This discussion is limited to U.S. persons who hold shares of the Acquired Fund as capital assetsfor federal income tax purposes. This summary does not address all of the U.S. federal income tax consequencesthat may be relevant to a particular shareholder or to Shareholders who may be subject to special treatment underfederal income tax laws.

Tax Consequences of the Reorganization to Shareholders. The Reorganization is intended to qualify forfederal income tax purposes as a tax-free reorganization under Section 368(a)(1) of the Code.

As a condition to the Reorganization, the Acquired Fund and the Acquiring Fund have requested an opinionof Dechert LLP substantially to the effect that, based on certain assumptions, facts, the terms of the ReorganizationAgreement and representations set forth in the Reorganization Agreement or otherwise provided by the AcquiredFund and the Acquiring Fund:

1. The transfer of substantially all of the assets of the Acquired Fund in exchange solely for the AcquiringFund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund followed by thedistribution by the Acquired Fund of the Acquiring Fund Shares to Shareholders in exchange for their AcquiredFund shares pursuant to and in accordance with the terms of the Reorganization Agreement will constitute a“reorganization” within the meaning of Section 368(a)(1) of the Code;

2. No gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the AcquiredFund solely in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilitiesof the Acquired Fund;

3. No gain or loss will be recognized by the Acquired Fund upon the transfer of substantially all of theassets of the Acquired Fund to the Acquiring Fund solely in exchange for the Acquiring Fund Shares and theassumption by the Acquiring Fund of the liabilities or upon the distribution of the Acquiring Fund Shares toShareholders in exchange for their Acquired Fund Shares, except that the Acquired Fund may be required torecognize gain or loss with respect to contracts described in Section 1256(b) of the Code or stock in a passiveforeign investment company, as defined in Section 1297(a) of the Code;

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4. No gain or loss will be recognized by Shareholders upon the exchange of the shares of the AcquiredFund solely for the Acquiring Fund Shares;

5. The aggregate tax basis for the Acquiring Fund Shares received by each Shareholder pursuant to theReorganization will be the same as the aggregate tax basis for the Acquired Fund shares surrendered by each suchShareholder in exchange therefor;

6. The holding period of the Acquiring Fund Shares to be received by each Shareholder will include theperiod during which the Acquired Fund shares surrendered in exchange therefor were held (provided such shares inthe Acquired Fund were held as capital assets on the date of the Reorganization);

7. The tax basis of the assets of the Acquired Fund acquired by the Acquiring Fund will be the same as thetax basis of such assets of the Acquired Fund immediately prior to the Reorganization; and

8. The holding period of the assets of the Acquired Fund in the hands of the Acquiring Fund will includethe period during which those assets were held by the Acquired Fund (except where the investment activities of theAcquiring Fund have the effect of reducing or eliminating such period with respect to an asset).

Prior to the closing of the Reorganization, the Acquired Fund will distribute to its shareholders any undistributedincome and gains to the extent required to avoid entity level tax or as otherwise deemed desirable. The advice ofcounsel is not binding on the IRS or the courts and neither the Acquired Fund nor the Acquiring Fund has sought aruling with respect to the tax treatment of the Reorganization. The opinion of counsel, if delivered, will be based onthe Code, regulations issued by the Treasury Department under the Code, court decisions, and administrativepronouncements issued by the IRS with respect to all of the foregoing, all as in effect on the date of the opinion,and all of which may be repealed, revoked or modified thereafter, possibly on a retroactive basis.

After the Reorganization, you will continue to be responsible for tracking the adjusted tax basis and holdingperiod of your shares for federal income tax purposes.

Shareholders should consult their tax advisors regarding the effect, if any, of the proposed Reorganization inlight of their individual circumstances. Because the foregoing discussion only relates to the federal income taxconsequences of the proposed Reorganization, Shareholders should also consult their tax advisors as to state andlocal tax consequences, if any, of the proposed Reorganization.

Description of Shares

The Acquiring Fund Shares to be issued pursuant to the Reorganization Agreement will, when issued inexchange for the consideration therefor, be fully paid and non-assessable by the Acquiring Fund and transferablewithout restrictions and will have no preemptive rights. For greater details regarding the Acquiring Fund Shares,see “Shareholder Information” in the Acquiring Fund’s Prospectus attached hereto as Exhibit B.

Capitalization Tables (unaudited)

The following tables set forth the capitalization of the Acquired Fund as of September 30, 2013 and theAcquiring Fund on a pro forma combined basis as if the Reorganization had occurred on that date:

MS Focus Growth Fund (Acquired Fund) Class A Class B Class L* Class I Total

Net Assets $1,254,811,581 $33,867,037 $81,153,736 $456,291,010 $1,826,123,364Pro Forma Adjustments‡ $ (550,815) $ (14,866) $ (35,624) $ (200,295) $ (801,600)Net Assets minusPro Forma Adjustments $1,254,260,766 $33,852,171 $81,118,112 $456,090,715 $1,825,321,764

Shares Outstanding 25,094,425 764,780 1,847,998 8,772,731 36,479,934Net Asset Value Per Share $ 49.98 $ 44.26 $ 43.90 $ 51.99 —

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MSIF Growth (Acquiring Fund) Class A† Class L Class I Total

Net Assets $167,277,379 $211,965 $847,437,143 $1,014,926,487Shares Outstanding 4,805,931 6,135 23,894,894 28,706,960Net Asset Value Per Share $ 34.81 $ 34.55 $ 35.47 —

Pro Forma Combined Fund (MSIF Growth) Class A† Class L Class I Total

Net Assets $1,455,390,316 $81,330,077 $1,303,527,858 $2,840,248,251Shares Outstanding 41,810,037 2,353,982 36,753,386 80,917,405Net Asset Value Per Share $ 34.81 $ 34.55 $ 35.47 —


‡ Reflects the charge for estimated reorganization expenses of $550,815, $14,866, $35,624 and $200,295 byClass A shares, Class B shares, Class L shares and Class I shares, respectively, of the Acquired Fund.


Appraisal Rights

Shareholders will have no appraisal rights in connection with the Reorganization.

COMPARISON OF INVESTMENT OBJECTIVES, PRINCIPAL POLICIES AND RESTRICTIONS

Investment Objectives and Policies

The investment objectives of the Acquired Fund and the Acquiring Fund are set forth in the table below:


MS Focus Growth (Acquired Fund)

The Fund normally invests at least 65% of its assets in a portfolio of common stocks (including depositaryreceipts).

MSIM emphasizes a bottom-up stock selection process, seeking attractive investments on an individualcompany basis. In selecting securities for investment, MSIM seeks to invest primarily in established and emerginghigh quality companies it believes have sustainable competitive advantages and the ability to redeploy capital athigh rates of return. MSIM typically favors companies with rising returns on invested capital, above average businessvisibility, strong free cash flow generation and an attractive risk/reward. MSIM generally considers selling aninvestment when it determines the company no longer satisfies its investment criteria.

Up to 25% of the Fund’s net assets may be invested in foreign securities (including depositary receipts), whichmay include emerging market securities. This percentage limitation, however, does not apply to securities of foreigncompanies that are listed in the United States on a national securities exchange. A depositary receipt is generallyissued by a bank or financial institution and represents an ownership interest in the common stock or other equitysecurities of a foreign company.

InvestmentObjective

• seeks long-term capital growth • seeks long-term capital appreciation byinvesting primarily in growth-oriented equitysecurities of large capitalization companies

• the Acquired Fund’s investment objective isa fundamental policy and may not bechanged without shareholder approval of amajority of the Acquired Fund’s outstandingvoting securities, as defined in the 1940 Act

• the Acquiring Fund’s investment objective isa fundamental policy and may not bechanged without shareholder approval of amajority of the Acquiring Fund’s outstandingvoting securities, as defined in the 1940 Act

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Equity securities in which the Fund may invest include common stock, preferred stock, convertible securities,depositary receipts, rights, warrants and limited partnership interests. The Fund may invest in equity securities thatare publicly-traded on securities exchanges or OTC. The Fund may invest in privately placed and restricted securities.

The Fund may also utilize derivative instruments. These derivative instruments will be counted toward theFund’s 65% policy discussed above to the extent they have economic characteristics similar to the securities includedwithin that policy. The Fund may use foreign currency forward exchange contracts, which are derivatives, inconnection with its investments in foreign securities.

In pursuing the Fund’s investment objective, MSIM has considerable leeway in deciding which investments itbuys, holds or sells on a day-to-day basis and which trading strategies it uses. For example, the Adviser in itsdiscretion may determine to use some permitted trading strategies while not using others.

MSIF Growth (Acquiring Fund)

Under normal market conditions, MSIM seeks to achieve the Fund’s investment objective by investing primarilyin established and emerging companies, with capitalizations within the range of companies included in the Russell1000® Growth Index. As of November 30, 2013, these market capitalizations ranged between $717 million to $500billion. The Fund deems an issuer to be a U.S. issuer if (i) its principal securities trading market (i.e., a U.S. stockexchange or OTC markets) is in the United States; (ii) alone or on a consolidated basis it derives 50% or more of itsannual revenue from either goods produced, sales made or services performed in the United States; or (iii) it isorganized under the laws of, or has a principal office in the United States. The Fund invests primarily in companiesthat MSIM believes exhibit, among other things, strong free cash flow and compelling business strategies. MSIMemphasizes individual security selection.

MSIM emphasizes a bottom-up stock selection process, seeking attractive investments on an individualcompany basis. In selecting securities for investment, MSIM seeks to invest in high quality companies it believeshave sustainable competitive advantages and the ability to redeploy capital at high rates of return. MSIM typicallyfavors companies with rising returns on invested capital, above average business visibility, strong free cash flowgeneration and an attractive risk/reward.

Fundamental research drives the investment process. MSIM studies on an ongoing basis companydevelopments, including business strategy and financial results. MSIM generally considers selling an investmentwhen it determines the company no longer satisfies its investment criteria.

MSIM may invest up to 25% of the Fund’s net assets in foreign securities, including emerging market securities,and securities classified as ADRs, GDRs, ADSs or GDSs, foreign U.S. dollar-denominated securities that are tradedon a U.S. exchange or local shares of non-U.S. issuers.

The Fund’s equity investments may include common and preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase common stocks, depositary receipts, ETFs, limited partnershipinterests and other specialty securities having equity features. The Fund may invest in privately placed and restrictedsecurities.

The Fund may utilize foreign currency forward exchange contracts, which are derivatives, in connection withits investments in foreign securities. Derivative instruments used by the Fund will be counted toward the Fund’sexposure in the types of securities listed above to the extent they have economic characteristics similar to suchsecurities.

Investment Restrictions

The investment restrictions adopted by the Acquired Fund and Acquiring Fund as fundamental policies aresubstantially similar. The Acquiring Fund’s investment restrictions are summarized under the caption “InvestmentLimitations” in the Company’s Statement of Additional Information dated April 30, 2013, as it may be amendedand supplemented from time to time, with respect to the Acquiring Fund. The Acquired Fund’s investment restrictionsare summarized under the caption “II. Description of the Fund and Its Investments and Risks—Fund

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Policies/Investment Restrictions” in the Acquired Fund’s Statement of Additional Information, dated April 30, 2013,as may be amended and supplemented from time to time. A fundamental investment restriction cannot be changedwithout the vote of the majority of the outstanding voting securities of a Fund, which is defined by the 1940 Act asthe lesser of (i) at least 67% of the voting securities of a fund or portfolio present at a meeting if the holders of morethan 50% of the outstanding voting securities of a fund or portfolio are present or represented by proxy; or (ii) morethan 50% of the outstanding voting securities of a fund or portfolio.

The differences in the investment restrictions adopted by the Funds as fundamental policies are discussedbelow:

1. The Acquiring Fund may not invest in a manner inconsistent with its classification as a “diversifiedcompany” as provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgatedby the Commission under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicableto the Portfolio from the provisions of the 1940 Act, as amended from time to time. The Acquired Fund is notsubject to this investment restriction.

2. The Acquiring Fund may not write or acquire options or interests in oil, gas or other mineral explorationor development. The Acquired Fund is not subject to this investment restriction.

The differences in the investment restrictions adopted by the Funds as non-fundamental policies are discussedbelow:

1. The Acquired Fund will not make short sales of securities, except short sales against the box. TheAcquiring Fund will not purchase on margin or sell short except (i) that the Acquiring Fund may enter into optiontransactions and futures contracts as described in its Prospectus; and (ii) that the Acquiring Fund may purchase andsell options, futures contracts and related options thereon, forward contracts, swaps, caps, floors, collars and anyother financial instruments, as described in its fundamental investment restrictions; and

2. The Acquired Fund will not invest its assets in the securities of any investment company except as maybe permitted by (i) the 1940 Act, as amended from time to time; (ii) the rules and regulations promulgated by theCommission under the 1940 Act, as amended from time to time; or (iii) an exemption or other relief applicable tothe Acquired Fund from the provisions of the 1940 Act, as amended from time to time. The Acquiring Fund, however,will not invest in other investment companies in reliance on Sections 12(d)(1)(F), 12(d)(1)(G) or 12(d)(1)(J) of the1940 Act.

The following non-fundamental investment restrictions apply only to the Acquiring Fund:

1. The Acquiring Fund will not make loans except (i) by purchasing bonds, debentures or similar obligations(including repurchase agreements, subject to the limitations as described in the Acquiring Fund’s Prospectus) thatare publicly distributed; and (ii) by lending its portfolio securities to banks, brokers, dealers and other financialinstitutions so long as such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretationsof the Commission thereunder; and

2. The Acquiring Fund will not borrow money, except from banks for extraordinary or emergency purposes,and then only in amounts up to 10% of the value of the Acquiring Fund’s total assets (including, in each case, theamount borrowed less liabilities (other than borrowings)), or purchase securities while borrowings exceed 5% of itstotal assets.

ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND AND THE ACQUIRED FUND

General

For a discussion of the organization and operation of the Acquiring Fund, see “Portfolio Summary—GrowthPortfolio,” “Details of the Portfolios—Growth Portfolio” and “Fund Management” in the Acquiring Fund’sProspectus attached hereto as Exhibit B. For a discussion of the organization and operation of the Company, see“General Information—Fund History” in the Company’s Statement of Additional Information relating to theAcquiring Fund.

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For a discussion of the organization and operation of the Acquired Fund, see “Fund Summary” and “FundManagement” in the Acquired Fund’s prospectus and “Fund History” in the Acquired Fund’s statement of additionalinformation.

Rights of Acquired Fund Shareholders and Acquiring Fund Shareholders

The Acquiring Fund is organized as a separate portfolio of the Company, a Maryland corporation that isgoverned by its Charter, as amended, Amended and Restated By-Laws, as may be amended from time to time, andMaryland law. The Acquired Fund is organized as a Massachusetts business trust that is governed by its Declarationof Trust, as amended, Amended and Restated By-Laws, as may be amended, and Massachusetts law.

While Maryland corporate law contains many provisions specifically applicable to management investmentcompanies and Massachusetts statutory trust law is specifically drafted to accommodate some of the unique corporategovernance needs of management investment companies, certain statutory differences do exist and the Company’sand Acquired Fund’s organizational documents contain certain differences summarized below. Each Fund is alsosubject to federal securities laws, including the 1940 Act and the rules and regulations promulgated by theCommission thereunder.

Consistent with Maryland law, the Company’s Board of Directors, on behalf of the Acquiring Fund, hasauthorized the issuance of a specific number of shares of stock, although the organizational documents authorizesuch Board of Directors to increase or decrease, from time to time, as it considers necessary, the aggregate numberof shares of stock or of any class of stock which the Company has the authority to issue. Consistent withMassachusetts law, the Acquired Fund is authorized to issue an unlimited number of shares. The Acquiring Fund’sand the Company’s organizational documents allow the respective Board of Trustees/Directors to create one ormore separate investment portfolios and to establish a separate series or classes of shares for each portfolio, and tofurther subdivide the shares of any series into one or more classes.

Neither the Charter, as amended, nor the Amended and Restated By-Laws of the Company contain specificprovisions regarding the personal liability of shareholders. However, under the Maryland General Corporation Law,shareholders of a Maryland corporation generally will not be held personally liable for the acts or obligations of thecorporation, except that a shareholder may be liable to the extent that (i) consideration for the shares has not beenpaid, (ii) the shareholder knowingly accepts a distribution in violation of the charter or Maryland law, or (iii) theshareholder receives assets of the corporation upon its liquidation and the corporation is unable to meet its debtsand obligations, in which case the shareholder may be liable for such debts and obligations to the extent of theassets received in the distribution.

Under Massachusetts law, shareholders of a business trust may, under certain limited circumstances, be heldpersonally liable as partners for the obligations of the Acquired Fund. However, the Declaration of Trust of theAcquired Fund contains an express disclaimer of shareholder liability for acts or obligations of the Acquired Fund,requires that notice of such Fund obligations include such disclaimer, and provides for indemnification out of theFund’s property for any shareholder held personally liable for the obligations of the Acquired Fund.

No Fund is required, and no Fund anticipates, holding annual meetings of its Shareholders. Each Fund hascertain mechanics whereby shareholders can call a special meeting of their Fund. Shareholders generally have theright to approve investment advisory agreements, elect trustees/directors, change fundamental investment policies,ratify the selection of independent auditors and vote on other matters required by law or the organizational documentsof the Company or Acquired Fund, as applicable, or deemed desirable by the Board of Directors or Board of Trustees,as applicable.

The business of the Acquiring Fund and the Acquired Fund is supervised by the respective Boards of theAcquired Fund and the Company. The responsibilities, powers and fiduciary duties of directors under Marylandlaw are generally similar in certain respects to those for trustees under Massachusetts law, although significantdifferences do exist and shareholders should refer to the provisions of the Company’s and the Acquired Funds’applicable organizational documents and applicable law for a more thorough comparison. For the Acquiring Fundsand the Acquired Fund, director/trustee vacancies generally may be filled by approval of a majority of the

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directors/trustees then in office subject to provisions of the 1940 Act. The term of a director/trustee lasts until theelection of such person’s successor, or until such person’s earlier resignation, removal or death. In addition, theAcquired Fund’s Declaration of Trust specifies that a Trustee’s term will terminate in the event of the death,resignation, removal, bankruptcy, adjudicated incompetence or other incapacity to perform the duties of the officeof a Trustee. Directors of the Company may be removed with or without cause by vote of a majority of the sharespresent in person or by proxy at a meeting, provided a quorum is present. Trustees of the Acquired Fund may beremoved with or without cause by the action of the shareholders of record of not less than two-thirds of the sharesoutstanding or by the action of two-thirds of the remaining Trustees.

The foregoing is only a summary of certain differences between the Acquiring Fund and the Acquired Fundunder applicable law and their organizational documents. It is not intended to be a complete list of differences andshareholders should refer to the provisions of each Fund’s applicable organizational documents for a more thoroughcomparison. Such documents are filed as part of each Fund’s registration statements with the Commission, andshareholders may obtain copies of such documents as described herein.

Financial Information

For certain financial information about each Fund, see “Financial Highlights” with respect to such Fund in itsrespective Prospectus.

Shareholder Proposals

The Funds are not required and do not intend to hold regular shareholder meetings unless shareholder actionis required in accordance with the 1940 Act. Shareholders who would like to submit proposals for consideration atfuture shareholder meetings of the Acquired Fund (in the event the Reorganization is not completed) or the AcquiringFund should send written proposals to Mary E. Mullin, Secretary, 522 Fifth Avenue, New York, NY 10036. To beconsidered for presentation at a shareholders’ meeting, rules promulgated by the Commission require that, amongother things, a shareholder’s proposal must be received at the offices of the applicable Fund within a reasonabletime before a solicitation is made. Timely submission of a proposal does not necessarily mean that such proposalwill be included in the proxy materials for a meeting.

Management

For information about the Board of Directors, MSIM and the distributor of the Acquiring Fund, see “FundManagement” in the Acquiring Fund’s Prospectus attached hereto as Exhibit B and “Management of the Fund” inthe Company’s Statement of Additional Information.

For information about the Board of Trustees, MSIM and the distributor of the Acquired Fund, see “FundManagement” in the Acquired Fund’s prospectus and “Management of the Fund” in the Acquired Fund’s statementof additional information.

Description of Shares and Shareholder Inquiries

For a description of the nature and most significant attributes of shares of the Acquiring Fund, and informationregarding shareholder inquiries, see “General Information” in the Company’s Statement of Additional Informationas well as “Shareholder Information” and “Where to Find Additional Information” in the Acquiring Fund’sProspectus attached hereto as Exhibit B.

For a description of the nature and most significant attributes of shares of the Acquired Fund, and informationregarding Shareholder inquiries, see “Capital Stock and Other Securities” in the Acquired Fund’s statement ofadditional information as well as “Shareholder Information—Additional Information” in the Acquired Fund’sprospectus.

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Dividends, Distributions and Taxes

For a discussion of the Acquiring Fund’s policies with respect to dividends, distributions and taxes, see“Shareholder Information—Dividends and Distributions; Taxes” in the Acquiring Fund’s Prospectus, “ShareholderInformation—Taxes” in the Company’s Statement of Additional Information, and the discussions herein under“Synopsis—Comparison of the Acquired Fund and Acquiring Fund—Dividends,” “Synopsis—Tax Consequencesof the Reorganization” and “The Reorganization—Tax Aspects of the Reorganization.”

For a discussion of the Acquired Fund’s policies with respect to dividends, distributions and taxes, see“Distributions” in the Acquired Fund’s prospectus, “Taxation of the Fund and Shareholders” in the Acquired Fund’sstatement of additional information, and the discussions herein under “Synopsis—Comparison of the AcquiredFund and Acquiring Fund—Dividends,” “Synopsis—Tax Consequences of the Reorganization” and “TheReorganization—Tax Aspects of the Reorganization.”

Purchases, Exchanges and Redemptions

For a discussion of how the Acquiring Fund’s shares may be purchased, exchanged and redeemed, see“Shareholder Information—How To Purchase Class I and Class L Shares; “—How To Purchase Class A Shares”and “—How To Redeem Shares” in the Acquiring Fund’s Prospectus, “Purchase and Redemption of Shares” in theCompany’s Statement of Additional Information, and the discussion herein under “Synopsis—Comparison ofAcquired Fund and Acquiring Fund—Purchases, Exchanges and Redemptions.”

For a discussion of how the Acquired Fund’s shares may be purchased, exchanged and redeemed, see“Shareholder Information—How to Buy Shares,” “—How to Exchange Shares” and “—How to Sell Shares” in theAcquired Fund’s prospectus and “Purchase, Redemption and Pricing of Shares” in the Acquired Fund’s statementof additional information, and the discussion herein under “Synopsis—Comparison of Acquired Fund and AcquiringFund—Purchases, Exchanges and Redemptions.”

For a discussion of the Acquiring Fund’s policies with respect to frequent purchases and redemptions, see“Shareholder Information—Frequent Purchases and Redemptions of Shares” in the Acquiring Fund’s Prospectus.For a discussion of the Acquired Fund’s policies with respect to frequent purchases and redemptions, see“Shareholder Information—Frequent Purchases and Redemptions of Fund Shares” in the Acquired Fund’sprospectus.

SHARE INFORMATION

The following persons were known to own of record or beneficially 5% or more of the outstanding shares ofa class of the Acquired Fund as of October 9, 2013:

Percentage of Shareholder Outstanding Shares

Class A

Morgan Stanley & Co.Harborside Financial CenterPlaza II 3rd FloorJersey City, NJ 07311 72.29%

Class B


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First Clearing, LLC2801 Market StSaint Louis, MO 63103-2523 8.82%

Merrill Lynch Pierce Fenner & Smith Inc.4800 Deer Lake Drive EastJacksonville, FL 32246-6484 6.56%

Class L


First Clearing, LLC2801 Market StSaint Louis, MO 63103-2523 7.35%

Class I


Pershing LLC1 Pershing PlazaJersey City, NJ 07399-0002 10.19%

Charles Schwab & Co. Inc.101 Montgomery StSan Francisco, CA 94104-4151 29.96%

As of October 9, 2013, the trustees and officers of the Acquired Fund, as a group, owned less than 1% of theoutstanding shares of the Acquired Fund.

The following persons were known to own of record or beneficially 5% or more of the outstanding shares ofa class of the Acquiring Fund as of October 9, 2013:


Class A

State of Florida EmployeesDeferred Compensation PlanP.O. Box 182029Columbus, OH 43218-2029 43.06%

DCGT711 High St.Des Moines, IA 50392-0001 12.96%


26




PIMS/Prudential Retirement4000 Wellness DrMidland, MI 48670-0001 8.50%

National Financial Services LLCAttn: Mutual Funds Dept 4th Floor499 Washington BlvdJersey City NJ 07310-2010 7.51%

Nationwide Life Insurance CompanyGPVAc/o IPO Portfolio AccountingPO Box 182029Columbus, OH 43218-2029 5.52%

Class L

Morgan Stanley & Co.Harborside Financial Center201 Plaza Two, 3rd FloorJersey City, NJ 07311 93.88%

Morgan Stanley Investment ManagementAttn Louis Lau485 Lexington Ave. Fl 14New York, NY 10017-2643 5.90%

Class I

Northern Trust CompanyAs trustee FBO Morgan Stanley 401K Savings PlanP.O. Box 92994Chicago, IL 60675-2994 57.38%

Morgan Stanley & Co.Harborside Financial Center201 Plaza Two, 3rd FloorJersey City, NJ 07311 23.84%

National Financial Services LLC499 Washington BlvdJersey City NJ 07310-2010 6.27%

Mac & Co.P.O. Box 3198525 William Penn PlacePittsburgh, PA 15230-3198 6.22%

As of October 9, 2013, the directors and officers of the Acquiring Fund, as a group, owned less than 1% of theoutstanding shares of the Acquiring Fund.

FINANCIAL STATEMENTS AND EXPERTS

The financial statements of the Acquiring Fund and the Acquired Fund, each for the fiscal year endedDecember 31, 2012, that are incorporated by reference in the Statement of Additional Information relating to theRegistration Statement on Form N-14 of which this Proxy Statement and Prospectus forms a part, have been auditedby Ernst & Young LLP, the Acquiring Fund’s and Acquired Fund’s independent registered public accounting firm

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(except that the financial information for the Acquired Fund for the fiscal years ended prior to 2011 was audited bythe Acquired Fund’s previous independent registered public accounting firm). The financial statements for theAcquiring Fund and the Acquired Fund, each for the six-month period ended June 30, 2013, have not been auditedand are also incorporated by reference in the Statement of Additional Information relating to the RegistrationStatement on Form N-14 of which this Proxy Statement and Prospectus forms a part. Each set of audited financialstatements is incorporated herein by reference in reliance upon such reports given upon the authority of saidindependent registered public accounting firms as experts in accounting and auditing.

LEGAL MATTERS

Certain legal matters concerning the issuance of the Acquiring Fund Shares will be passed upon by DechertLLP, New York, NY. Such firm will rely on Maryland counsel as to certain matters of Maryland law.

AVAILABLE INFORMATION

Additional information about each Fund is available, as applicable, in the following documents which areincorporated herein by reference: (i) the Acquiring Fund’s Prospectus dated April 30, 2013, attached to this ProxyStatement and Prospectus as Exhibit B, which Prospectus forms a part of Post-Effective Amendment No. 114 to theCompany’s Registration Statement on Form N-1A (File Nos. 033-23166; 811-05624); (ii) the Acquired Fund’sprospectus dated April 30, 2013, which prospectus forms a part of Post-Effective Amendment No. 44 to the AcquiredFund’s Registration Statement on Form N-1A (File Nos. 2-66269; 811-2978); (iii) the Acquiring Fund’s AnnualReport for its fiscal year ended December 31, 2012; (iv) the Acquired Fund’s Annual Report for its fiscal yearended December 31, 2012; (vii) the Acquiring Fund’s Semi-Annual Report for the six-month period ended June 30,2013; and (vi) the Acquired Fund’s Semi-Annual Report for the six-month period ended June 30, 2013.

Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934, as amended,and in accordance therewith, files reports and other information with the Commission. Proxy materials, reports andother information about the Funds which are of public record can be viewed and copied at the Commission’s PublicReference Room in Washington, D.C. Information about the Reference Room’s operations may be obtained bycalling the Commission at (202) 551-8090. Reports and other information about the Funds and the Company areavailable on the EDGAR Database on the Commission’s Internet site (www.sec.gov) and copies of this informationmay be obtained, after paying a duplicating fee, by electronic request at the following E-mail address:[email protected], or by writing the Public Reference Branch, Office of Consumer Affairs and InformationServices, Securities and Exchange Commission, Washington, D.C. 20549-1520.

OTHER BUSINESS

Management of the Acquired Fund knows of no business other than the matters specified above which will bepresented at the Meeting. Since matters not known at the time of the solicitation may come before the Meeting, theProxy as solicited confers discretionary authority with respect to such matters as properly come before the Meeting,including any adjournment or adjournments thereof, and it is the intention of the persons named as attorneys-in-fact in the Proxy to vote this Proxy in accordance with their judgment on such matters.

By Order of the Board of Trustees,

Mary E. Mullin SecretaryDecember 12, 2013

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Exhibit A

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (“Agreement”) is made as of October 3, 2013,by and between MORGAN STANLEY INSTITUTIONAL FUND, INC. (the “Company”), a Maryland corporation,on behalf of the Growth Portfolio (“Acquiring Fund”), and Morgan Stanley Focus Growth Fund, a Massachusettsbusiness trust (“Acquired Fund”).

This Agreement is intended to be and is adopted as a “plan of reorganization” within the meaning of Treas.Reg. 1.368-2(g), for a reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended(the “Code”). The reorganization (“Reorganization”) will consist of the transfer to Acquiring Fund of substantiallyall of the assets of Acquired Fund in exchange for the assumption by Acquiring Fund of all stated liabilities ofAcquired Fund and the issuance by Acquiring Fund of shares of common stock, par value $0.001 per share (the“Acquiring Fund Shares”), to be distributed, after the Closing Date hereinafter referred to, to the shareholders ofAcquired Fund in liquidation of Acquired Fund as provided herein, all upon the terms and conditions hereinafterset forth in this Agreement.

In consideration of the premises and of the covenants and agreements hereinafter set forth, the parties heretocovenant and agree as follows:

1. The Reorganization and Liquidation of Acquired Fund

1.1. Subject to the terms and conditions herein set forth and on the basis of the representations andwarranties contained herein, Acquired Fund agrees to assign, deliver and otherwise transfer the Acquired FundAssets (as defined in paragraph 1.2) to Acquiring Fund, and the Company, on behalf of Acquiring Fund, agrees inexchange therefor to assume all of Acquired Fund’s stated liabilities on the Closing Date as set forth in paragraph 1.3and to deliver to Acquired Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,determined in the manner set forth in paragraph 2.3. Such transactions shall take place at the closing provided forin paragraph 3.1 (“Closing”).

1.2. (a) The “Acquired Fund Assets” shall consist of all property, including without limitation, all cash,cash equivalents, securities and dividend and interest receivables owned by Acquired Fund, and any deferred orprepaid expenses shown as an asset on Acquired Fund’s books on the Valuation Date.

(b) On or prior to the Valuation Date, Acquired Fund will provide Acquiring Fund with a list of allof Acquired Fund’s assets to be assigned, delivered and otherwise transferred to Acquiring Fund and a list of thestated liabilities to be assumed by Acquiring Fund pursuant to this Agreement. Acquired Fund reserves the right tosell any of the securities on such list but will not, without the prior approval of the Company, on behalf of AcquiringFund, acquire any additional securities other than securities of the type in which Acquiring Fund is permitted toinvest and in amounts agreed to in writing by the Company, on behalf of Acquiring Fund. The Company, on behalfof Acquiring Fund, will, within a reasonable time prior to the Valuation Date, furnish Acquired Fund with a statementof Acquiring Fund’s investment objective, policies and restrictions and a list of the securities, if any, on the listreferred to in the first sentence of this paragraph that do not conform to Acquiring Fund’s investment objective,policies and restrictions. In the event that Acquired Fund holds any investments that Acquiring Fund is not permittedto hold, Acquired Fund will dispose of such securities on or prior to the Valuation Date. In addition, if it is determinedthat the portfolios of Acquired Fund and Acquiring Fund, when aggregated, would contain investments exceedingcertain percentage limitations imposed upon Acquiring Fund with respect to such investments, Acquired Fund ifrequested by the Company, on behalf of Acquiring Fund, will, on or prior to the Valuation Date, dispose of and/orreinvest a sufficient amount of such investments as may be necessary to avoid violating such limitations as of theClosing Date (as defined in paragraph 3.1).

1.3. Acquired Fund will endeavor to discharge all of Acquired Fund’s liabilities and obligations on or priorto the Valuation Date. The Company, on behalf of Acquiring Fund, will assume all stated liabilities, which includes,without limitation, all expenses, costs, charges and reserves reflected on an unaudited Statement of Assets and

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Liabilities of Acquired Fund prepared by the Treasurer of Acquired Fund as of the Valuation Date in accordancewith generally accepted accounting principles consistently applied from the prior audited period.

1.4. In order for the Acquired Fund to comply with Section 852(a)(1) of the Code and to avoid having anyinvestment company taxable income or net capital gain (as defined in Sections 852(b)(2) and 1222(11) of the Code,respectively) in the short taxable year ending with its dissolution, Acquired Fund will on or before the ValuationDate (a) declare a dividend in an amount large enough so that Acquired Fund will have declared dividends ofsubstantially all of its investment company taxable income and net capital gain, if any, for such taxable year(determined without regard to any deduction for dividends paid) and (b) distribute such dividend.

1.5. On the Closing Date or as soon as practicable thereafter, Acquired Fund will distribute Acquiring FundShares received by Acquired Fund pursuant to paragraph 1.1 pro rata to Acquired Fund’s shareholders of recorddetermined as of the close of business on the Valuation Date (“Acquired Fund Shareholders”). Each Acquired FundShareholder will receive the class of shares of Acquiring Fund that corresponds to the class of shares of AcquiredFund currently held by that Acquired Fund shareholder. Accordingly, the Acquiring Fund Shares will be distributedas follows: each of the Class I shares of Acquiring Fund will be distributed to holders of Class I shares of AcquiredFund, each of the Class A shares of Acquiring Fund will be distributed to holders of Class A and Class B shares ofAcquired Fund and each of the Class L shares of Acquiring Fund will be distributed to holders of Class L shares ofAcquired Fund. Such distribution will be accomplished by an instruction, signed by Acquired Fund’s Secretary, totransfer Acquiring Fund Shares then credited to Acquired Fund’s account on the books of Acquiring Fund to openaccounts on the books of Acquiring Fund in the names of the Acquired Fund shareholders and representing therespective pro rata number of Acquiring Fund Shares due such Acquired Fund shareholders. All issued andoutstanding shares of Acquired Fund simultaneously will be canceled on Acquired Fund’s books. There are nooutstanding shares of Class IS of the Acquired Fund.

1.6. Ownership of Acquiring Fund Shares will be shown on the books of Acquiring Fund’s transfer agent.Acquiring Fund Shares will be issued in the manner described in Acquiring Fund’s current Prospectus, assupplemented, and the Company’s Statement of Additional Information.

1.7. Any transfer taxes payable upon issuance of Acquiring Fund Shares in a name other than the registeredholder of Acquiring Fund Shares on Acquired Fund’s books as of the close of business on the Valuation Date shall,as a condition of such issuance and transfer, be paid by the person to whom Acquiring Fund Shares are to be issuedand transferred.

1.8. Any reporting responsibility of Acquired Fund is and shall remain the responsibility of Acquired Fundup to and including the date on which Acquired Fund is dissolved and terminated pursuant to paragraph 1.9.

1.9. Within one year after the Closing Date, Acquired Fund shall pay or make provision for the payment ofall Acquired Fund’s liabilities and taxes. If and to the extent that any trust, escrow account, or other similar entitycontinues after the close of such one-year period in connection either with making provision for payment of liabilitiesor taxes or with distributions to shareholders of Acquired Fund, such entity shall either (i) qualify as a liquidatingtrust under Section 7701 of the Code (and applicable Treasury Regulations thereunder) or other entity which doesnot constitute a continuation of Acquired Fund for federal income tax purposes, or (ii) be subject to a waiver underSection 368(a)(2)(G)(ii) of the complete distribution requirement of Section 368(a)(2)(G)(i) of the Code. AcquiredFund shall be terminated following the making of all distributions pursuant to paragraph 1.5.

1.10. Copies of all books and records maintained on behalf of Acquired Fund in connection with itsobligations under the Investment Company Act of 1940, as amended (the “1940 Act”), the Code, state blue sky lawsor otherwise in connection with this Agreement will promptly be delivered after the Closing to officers of AcquiringFund or their designee, and Acquiring Fund or its designee shall comply with applicable record retentionrequirements to which Acquired Fund is subject under the 1940 Act.

2. Valuation

2.1. The value of the Acquired Fund Assets shall be the value of such assets computed as of 4:00 p.m. onthe New York Stock Exchange on the third business day following the receipt of the requisite approval of this

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Agreement by shareholders of Acquired Fund or at such time on such earlier or later date after such approval asmay be mutually agreed upon in writing (such time and date being hereinafter called the “Valuation Date”), usingthe valuation procedures set forth in Acquiring Fund’s then current Prospectus, as supplemented, and the Company’sStatement of Additional Information.

2.2. The net asset value of an Acquiring Fund Share shall be the net asset value per share computed on theValuation Date, using the valuation procedures set forth in Acquiring Fund’s then current Prospectus, assupplemented, and the Company’s Statement of Additional Information.

2.3. The number of Acquiring Fund Shares (including fractional shares, if any) to be issued hereunder shallbe determined, with respect to each class, by dividing the aggregate net asset value of each class of Acquired Fundshares (determined in accordance with paragraph 2.1) by the net asset value per share of the corresponding class ofshares of Acquiring Fund (determined in accordance with paragraph 2.2).

2.4. All computations of value shall be made by Morgan Stanley Services Company Inc. (“Morgan StanleyServices”) in accordance with its regular practice in pricing Acquiring Fund. The Company, on behalf of AcquiringFund, shall cause Morgan Stanley Services to deliver a copy of Acquiring Fund’s valuation report at the Closing.

3. Closing and Closing Date

3.1. The Closing shall take place on the Valuation Date or on the next business day following the ValuationDate (the “Closing Date”). The Closing shall be held as of 9:00 a.m. Eastern time, or at such other time as theparties may agree. The Closing shall be held in a location mutually agreeable to the parties hereto. All acts takingplace at the Closing shall be deemed to take place simultaneously as of 9:00 a.m. Eastern time on the Closing Dateunless otherwise provided.

3.2. Portfolio securities held by Acquired Fund and represented by a certificate or other written instrumentshall be presented by it or on its behalf to State Street Bank and Trust Company (the “Custodian”), as custodian forAcquiring Fund, for examination no later than five business days preceding the Valuation Date. Such portfoliosecurities (together with any cash or other assets) shall be delivered by Acquired Fund to the Custodian for theaccount of Acquiring Fund on or before the Closing Date in conformity with applicable custody provisions underthe 1940 Act and duly endorsed in proper form for transfer in such condition as to constitute good delivery thereofin accordance with the custom of brokers. The portfolio securities shall be accompanied by all necessary federaland state stock transfer stamps or a check for the appropriate purchase price of such stamps. Portfolio securities andinstruments deposited with a securities depository (as defined in Rule 17f-4 under the 1940 Act) shall be deliveredon or before the Closing Date by book-entry in accordance with customary practices of such depository and theCustodian. The cash delivered shall be in the form of a Federal Funds wire, payable to the order of “State StreetBank and Trust Company, Custodian for Morgan Stanley Institutional Fund, Inc.”

3.3. In the event that on the Valuation Date, (a) the New York Stock Exchange shall be closed to trading ortrading thereon shall be restricted or (b) trading or the reporting of trading on such Exchange or elsewhere shall bedisrupted so that, in the judgment of both the Company, on behalf of Acquiring Fund, and Acquired Fund accurateappraisal of the value of the net assets of Acquiring Fund or the Acquired Fund Assets is impracticable, the ValuationDate shall be postponed until the first business day after the day when trading shall have been fully resumed withoutrestriction or disruption and reporting shall have been restored.

3.4. If requested, Acquired Fund shall deliver to the Company, on behalf of Acquiring Fund, or its designee(a) at the Closing, a list, certified by Acquired Fund’s Secretary, of the names, addresses and taxpayer identificationnumbers of the Acquired Fund shareholders and the number and percentage ownership of outstanding AcquiredFund shares owned by each such Acquired Fund shareholder, all as of the Valuation Date, and (b) as soon aspracticable after the Closing, all original documentation (including Internal Revenue Service forms, certificates,certifications and correspondence) relating to the Acquired Fund shareholders’ taxpayer identification numbersand their liability for or exemption from back-up withholding. The Company, on behalf of Acquiring Fund, shallissue and deliver to such Secretary a confirmation evidencing delivery of Acquiring Fund Shares to be credited onthe Closing Date to Acquired Fund or provide evidence satisfactory to Acquired Fund that such Acquiring FundShares have been credited to Acquired Fund’s account on the books of Acquiring Fund. At the Closing, each party

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shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documentsas such other party or its counsel may reasonably request.

4. Covenants of Acquiring Fund and Acquired Fund

4.1. Except as otherwise expressly provided herein, the Acquired Fund and the Company, on behalf ofAcquiring Fund, will operate in the ordinary course between the date hereof and the Closing Date, it being understoodthat such ordinary course of business will include customary dividends and other distributions.

4.2. The Company will prepare and file with the Securities and Exchange Commission (“Commission”) aregistration statement on Form N-14 under the Securities Act of 1933, as amended (“1933 Act”), relating to AcquiringFund Shares (“Registration Statement”). Acquired Fund, will provide the Proxy Materials as described inparagraph 4.3 below for inclusion in the Registration Statement. The Company, on behalf of the Acquiring Fund,and Acquired Fund agree that each of Acquired Fund and Acquiring Fund will further provide such other informationand documents as are reasonably necessary for the preparation of the Registration Statement.

4.3. Acquired Fund will call a meeting of Acquired Fund’s shareholders to consider and act upon thisAgreement and to take all other action necessary to obtain approval of the transactions contemplated herein. AcquiredFund will prepare the notice of meeting, form of proxy and proxy statement (collectively, “Proxy Materials”) to beused in connection with such meeting; provided that the Company, on behalf of Acquiring Fund, will furnishAcquired Fund with its currently effective prospectus for inclusion in the Proxy Materials and with such otherinformation relating to Acquiring Fund as is reasonably necessary for the preparation of the Proxy Materials.

4.4. Acquired Fund will assist Acquiring Fund in obtaining such information as Acquiring Fund reasonablyrequests concerning the beneficial ownership of Acquired Fund shares.

4.5. Subject to the provisions of this Agreement, the Company, on behalf of the Acquiring Fund, and theAcquired Fund agree that each respective Fund will take, or cause to be taken, all action, and do or cause to bedone, all things reasonably necessary, proper or advisable to consummate and make effective the transactionscontemplated by this Agreement.

4.6. Acquired Fund, shall furnish or cause to be furnished to Acquiring Fund within 30 days after theClosing Date a statement of Acquired Fund’s assets and liabilities as of the Closing Date, which statement shall becertified by the Acquired Fund’s Treasurer and shall be in accordance with generally accepted accounting principlesconsistently applied. As promptly as practicable, but in any case within 60 days after the Closing Date, AcquiredFund shall furnish Acquiring Fund, in such form as is reasonably satisfactory to Acquiring Fund, a statement certifiedby the Acquired Fund’s Treasurer of Acquired Fund’s earnings and profits for federal income tax purposes that willbe carried over to Acquiring Fund pursuant to Section 381 of the Code.

4.7. As soon after the Closing Date as is reasonably practicable, the Company (a) shall prepare and file allfederal and other tax returns and reports of Acquired Fund required by law to be filed with respect to all periodsending on or before the Closing Date but not theretofore filed and (b) shall pay all federal and other taxes shown asdue thereon and/or all federal and other taxes that were unpaid as of the Closing Date, including without limitation,all taxes for which the provision for payment was made as of the Closing Date (as represented in paragraph 5.2(k)).

4.8. The Company agrees to use all reasonable efforts to obtain the approvals and authorizations requiredby the 1933 Act and the 1940 Act and to make such filings required by the state Blue Sky and securities laws as itmay deem appropriate in order to continue the Acquiring Fund’s operations after the Closing Date.

5. Representations and Warranties

5.1. The Company, on behalf of Acquiring Fund, represents and warrants to Acquired Fund, as follows:

(a) Acquiring Fund is a series of the Company, a validly existing Maryland corporation with fullpower to carry on its business as presently conducted;

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(b) The Company is a duly registered, open-end management investment company, and itsregistration with the Commission as an investment company under the 1940 Act and the registration of its sharesunder the 1933 Act are in full force and effect;

(c) All of the issued and outstanding shares of Acquiring Fund have been offered and sold incompliance in all material respects with applicable registration requirements of the 1933 Act and state securitieslaws. Shares of Acquiring Fund are registered in all jurisdictions in which they are required to be registered understate securities laws and other laws, and said registrations, including any periodic reports or supplemental filings,are complete and current, all fees required to be paid have been paid, and Acquiring Fund is not subject to any stoporder and is fully qualified to sell its shares in each state in which its shares have been registered;

(d) The current Prospectus of the Acquiring Fund and Statement of Additional Information of theCompany conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and theregulations thereunder and do not include any untrue statement of a material fact or omit to state any material factrequired to be stated therein or necessary to make the statements therein, in light of the circumstances under whichthey were made, not misleading;

(e) The Company is not in, and the execution, delivery and performance of this Agreement willnot result in a, material violation of any provision of its Articles of Incorporation or By-Laws, each as amended, orof any agreement, indenture, instrument, contract, lease or other undertaking to which Acquiring Fund is a party orby which it is bound;

(f) No litigation or administrative proceeding or investigation of or before any court orgovernmental body is presently pending or, to its knowledge, threatened against the Company, Acquiring Fund orany of their properties or assets which, if adversely determined, would materially and adversely affect AcquiringFund’s financial condition or the conduct of its business; and the Company knows of no facts that might form thebasis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree orjudgment of any court or governmental body which materially and adversely affects, or is reasonably likely tomaterially and adversely affect, its business or its ability to consummate the transactions herein contemplated;

(g) The Statement of Assets and Liabilities, Statement of Operations, Statements of Changes inNet Assets and Financial Highlights for its last completed fiscal year, audited by Ernst & Young LLP (copies ofwhich will be furnished to Acquired Fund), fairly present, in all material respects, Acquiring Fund’s financialcondition as of such date in accordance with generally accepted accounting principles, and its results of suchoperations, changes in its net assets and financial highlights for such period, and as of such date there will be noknown liabilities of Acquiring Fund (contingent or otherwise) not disclosed therein that would be required inaccordance with generally accepted accounting principles to be disclosed therein;

(h) All issued and outstanding Acquiring Fund Shares are, and at the Closing Date will be, dulyand validly issued and outstanding, fully paid and non-assessable with no personal liability attaching to the ownershipthereof. Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchaseany of its shares;

(i) The execution, delivery and performance of this Agreement have been duly authorized by allnecessary action on the part of the Company, and this Agreement constitutes a valid and binding obligation ofAcquiring Fund enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles.No other consents, authorizations or approvals are necessary in connection with Acquiring Fund’s performance ofthis Agreement;

(j) Acquiring Fund Shares to be issued and delivered to Acquired Fund, for the account of theAcquired Fund shareholders, pursuant to the terms of this Agreement will at the Closing Date have been dulyauthorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, and will befully paid and non-assessable with no personal liability attaching to the ownership thereof;

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(k) All material federal and other tax returns and reports of Acquiring Fund required by law to befiled on or before the Closing Date have been filed and are correct, and all federal and other taxes shown as due orrequired to be shown as due on said returns and reports have been paid or provision has been made for the paymentthereof, and to the best of the Company’s knowledge, no such return is currently under audit and no assessment hasbeen asserted with respect to any such return;

(l) For each taxable year since its inception, Acquiring Fund has met the requirements of SubchapterM of the Code for qualification and treatment as a “regulated investment company” and neither the execution ordelivery of nor the performance of the Company’s obligations with respect to Acquiring Fund under this Agreementwill adversely affect, and no other events are reasonably likely to occur which will adversely affect, the ability ofAcquiring Fund to continue to meet the requirements of Subchapter M of the Code;

(m) Since December 31, 2012, there has been no change by Acquiring Fund in accounting methods,principles, or practices, including those required by generally accepted accounting principles;

(n) The information furnished or to be furnished by the Company on behalf of Acquiring Fund foruse in registration statements, proxy materials and other documents which may be necessary in connection with thetransactions contemplated hereby shall be accurate and complete in all material respects and shall comply in allmaterial respects with federal securities and other laws and regulations applicable thereto; and

(o) The Proxy Materials to be included in the Registration Statement (only insofar as they relate toAcquiring Fund) will, on the effective date of the Registration Statement and on the Closing Date, not contain anyuntrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to makethe statements therein, in light of the circumstances under which such statements were made, not materiallymisleading.

5.2. Acquired Fund represents and warrants to the Company, on behalf of Acquiring Fund as follows:

(a) Acquired Fund is a validly existing Massachusetts business trust with full power to carry on itsbusiness as presently conducted;

(b) Acquired Fund is a duly registered, open-end management investment company, and itsregistration with the Commission as an investment company under the 1940 Act and the registration of its sharesunder the 1933 Act are in full force and effect;

(c) All of the issued and outstanding shares of Acquired Fund have been offered and sold incompliance in all material respects with applicable requirements of the 1933 Act and state securities laws. Sharesof Acquired Fund are registered in all jurisdictions in which they are required to be registered and said registrations,including any periodic reports or supplemental filings, are complete and current, all fees required to be paid havebeen paid, and Acquired Fund is not subject to any stop order and is fully qualified to sell its shares in each state inwhich its shares have been registered;

(d) The current Prospectus, as supplemented, of Acquired Fund and Statement of AdditionalInformation of Acquired Fund conform in all material respects to the applicable requirements of the 1933 Act andthe 1940 Act and the regulations thereunder and do not include any untrue statement of a material fact or omit tostate any material fact required to be stated therein or necessary to make the statements therein, in light of thecircumstances under which they were made, not misleading;

(e) Acquired Fund is not in, and the execution, delivery and performance of this Agreement willnot result in a, material violation of any provision of its Declaration of Trust or By-Laws, as amended, or of anyagreement, indenture, instrument, contract, lease or other undertaking to which Acquired Fund is a party or bywhich it is bound;

(f) No litigation or administrative proceeding or investigation of or before any court orgovernmental body is presently pending or, to its knowledge, threatened against Acquired Fund or any of itsproperties or assets which, if adversely determined, would materially and adversely affect Acquired Fund’s financialcondition or the conduct of its business; and Acquired Fund knows of no facts that might form the basis for the

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institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment ofany court or governmental body which materially and adversely affects, or is reasonably likely to materially andadversely affect, its business or its ability to consummate the transactions herein contemplated;

(g) The Statement of Assets and Liabilities, Statement of Operations, Statement of Changes in NetAssets and Financial Highlights of Acquired Fund for its last completed fiscal year, audited by Ernst & Young LLP(except that the financial information for the Acquired Fund for the fiscal years ended prior to 2011 was audited bythe Acquired Fund’s previous independent registered public accounting firm (copies of which have been or will befurnished to Acquiring Fund) fairly present, in all material respects, Acquired Fund’s financial condition as of suchdate, and its results of operations, changes in its net assets and financial highlights for such period in accordancewith generally accepted accounting principles, and as of such date there were no known liabilities of Acquired Fund(contingent or otherwise) not disclosed therein that would be required in accordance with generally acceptedaccounting principles to be disclosed therein;

(h) Acquired Fund has no material contracts or other commitments (other than this Agreement)that will be terminated with liability to it prior to the Closing Date;

(i) All issued and outstanding shares of Acquired Fund are, and at the Closing Date will be, dulyand validly issued and outstanding, fully paid and non-assessable with no personal liability attaching to the ownershipthereof. Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchaseany of its shares, nor is there outstanding any security convertible to any of its shares. All such shares will, at thetime of Closing, be held by the persons and in the amounts set forth in the list of shareholders submitted to AcquiringFund pursuant to paragraph 3.4;

(j) The execution, delivery and performance of this Agreement will have been duly authorizedprior to the Closing Date by all necessary action on the part of Acquired Fund, and subject to the approval ofAcquired Fund’s shareholders, this Agreement constitutes a valid and binding obligation of Acquired Fund,enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization,moratorium and other laws relating to or affecting creditors’ rights and to general equity principles. No otherconsents, authorizations or approvals are necessary in connection with Acquired Fund’s performance of thisAgreement;

(k) All material federal and other tax returns and reports of Acquired Fund required by law to befiled on or before the Closing Date shall have been filed and are correct and all federal and other taxes shown asdue or required to be shown as due on said returns and reports have been paid or provision has been made for thepayment thereof, and to the best of Acquired Fund’s knowledge, no such return is currently under audit and noassessment has been asserted with respect to any such return;

(l) For each taxable year since its inception, Acquired Fund has met all the requirements ofSubchapter M of the Code for qualification and treatment as a “regulated investment company” and neither theexecution or delivery of nor the performance of Acquired Fund’s obligations under this Agreement will adverselyaffect, and no other events are reasonably likely to occur which will adversely affect, the ability of Acquired Fundto continue to meet the requirements of Subchapter M of the Code for its final taxable year ending on the ClosingDate;

(m) At the Closing Date, Acquired Fund will have good and valid title to the Acquired Fund Assets,subject to no liens (other than the obligation, if any, to pay the purchase price of portfolio securities purchased byAcquired Fund which have not settled prior to the Closing Date), security interests or other encumbrances, and fullright, power and authority to assign, deliver and otherwise transfer such assets hereunder, and upon delivery andpayment for such assets, the Company, on behalf of Acquiring Fund, will acquire good and marketable title thereto,subject to no restrictions on the full transfer thereof, including any restrictions as might arise under the 1933 Act;

(n) On the effective date of the Registration Statement, at the time of the meeting of AcquiredFund’s shareholders and on the Closing Date, the Proxy Materials (exclusive of the currently effective AcquiringFund Prospectus contained therein) will (i) comply in all material respects with the provisions of the 1933 Act, theSecurities Exchange Act of 1934, as amended (“1934 Act”), and the 1940 Act and the regulations thereunder and

A-7



(ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated thereinor necessary to make the statements therein not misleading. Any other information furnished by Acquired Fund foruse in the Registration Statement or in any other manner that may be necessary in connection with the transactionscontemplated hereby shall be accurate and complete and shall comply in all material respects with applicable federalsecurities and other laws and regulations thereunder;

(o) Acquired Fund will, on or prior to the Valuation Date, declare one or more dividends or otherdistributions to shareholders that, together with all previous dividends and other distributions to shareholders, shallhave the effect of distributing to the shareholders all of its investment company taxable income and net capital gain,if any, through the Valuation Date (computed without regard to any deduction for dividends paid);

(p) Acquired Fund has maintained or has caused to be maintained on its behalf all books andaccounts as required of a registered investment company in compliance with the requirements of Section 31 of the1940 Act and the rules thereunder; and

(q) Acquired Fund is not acquiring Acquiring Fund Shares to be issued hereunder for the purposeof making any distribution thereof other than in accordance with the terms of this Agreement.

6. Conditions Precedent to Obligations of Acquired Fund

The obligations of Acquired Fund to consummate the transactions provided for herein shall be subject, at itselection, to the performance by the Company, on behalf of Acquiring Fund, of all the obligations to be performedby it hereunder on or before the Closing Date and, in addition thereto, the following conditions:

6.1. All representations and warranties of the Company made on behalf of Acquiring Fund contained inthis Agreement shall be true and correct in all material respects as of the date hereof and, except as they may beaffected by the transactions contemplated by this Agreement, as of the Closing Date with the same force and effectas if made on and as of the Closing Date;

6.2. The Company, on behalf of Acquiring Fund, shall have delivered to Acquired Fund a certificate of theCompany’s President and Treasurer, in a form reasonably satisfactory to Acquired Fund and dated as of the ClosingDate, to the effect that the representations and warranties of the Company, on behalf of Acquiring Fund, made inthis Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactionscontemplated by this Agreement, and as to such other matters as Acquired Fund, shall reasonably request;

6.3. Acquired Fund, shall have received a favorable opinion from Dechert LLP, counsel to Acquiring Fund,dated as of the Closing Date, to the effect that:

(a) The Company is validly existing as a corporation under the laws of the State of Maryland(Maryland counsel may be relied upon in delivering such opinion); (b) the Company has the requisite corporatepower to own its properties and assets and to carry on its business as described in its charter (Maryland counselmay be relied upon in delivering such opinion); (c) the Company is a duly registered, open-end, managementinvestment company, and its registration with the Commission as an investment company under the 1940 Act is infull force and effect; (d) this Agreement has been duly authorized, executed and delivered by the Company and,assuming that the Registration Statement complies with the 1933 Act, the 1934 Act and the 1940 Act and regulationsthereunder and assuming due authorization, execution and delivery of this Agreement by Acquired Fund, is a validand binding agreement of Acquiring Fund enforceable against Acquiring Fund in accordance with its terms; (e) theissuance of the Acquiring Fund Shares has been duly authorized by all necessary corporate action on the part of theCompany, and when such Acquiring Fund Shares are issued and delivered by the Company as contemplated by theRegistration Statement and this Agreement against payment of the consideration therein described, such AcquiringFund Shares will be validly issued, fully paid and non-assessable, and the issuance of the Acquiring Fund Shares bythe Company will not be subject to any preemptive or similar rights arising under the Company’s charter or bylaws,or under the Maryland General Corporation Laws (Maryland counsel may be relied upon in delivering such opinion);(f) the execution and delivery of this Agreement did not, and the consummation of the transactions contemplatedhereby will not, conflict with the Company’s charter or bylaws, each as amended; and (g) to the knowledge of suchcounsel, no consent, approval, authorization or order of any court or governmental authority of the United States or

A-8



the State of New York is required for the consummation by Acquiring Fund of the transactions contemplated herein,except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be requiredunder state securities laws; and

6.4. As of the Closing Date, there shall have been no material change in the investment objective, policiesand restrictions of Acquiring Fund or any increase in the investment management fees or annual fees pursuant toAcquiring Fund’s shareholder services plan from those described in Acquiring Fund’s Prospectus dated April 30,2013, as may be supplemented, and the Company’s Statement of Additional Information dated April 30, 2013, asmay be supplemented.

7. Conditions Precedent to Obligations of Acquiring Fund

The obligations of the Company, on behalf of Acquiring Fund, to complete the transactions provided for hereinshall be subject, at its election, to the performance by Acquired Fund, of all the obligations to be performed by ithereunder on or before the Closing Date and, in addition thereto, the following conditions:

7.1. All representations and warranties of Acquired Fund contained in this Agreement shall be true andcorrect in all material respects as of the date hereof and, except as they may be affected by the transactionscontemplated by this Agreement, as of the Closing Date with the same force and effect as if made on and as of theClosing Date;

7.2. Acquired Fund shall have delivered to Acquiring Fund at the Closing a certificate of Acquired Fund’sPresident and its Treasurer, in form and substance satisfactory to Acquiring Fund and dated as of the Closing Date,to the effect that the representations and warranties of Acquired Fund, made in this Agreement are true and correctat and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement,and as to such other matters as the Company, on behalf of Acquiring Fund, shall reasonably request;

7.3. Acquired Fund shall have delivered to Acquiring Fund a statement of the Acquired Fund Assets and itsliabilities, together with a list of Acquired Fund’s portfolio securities and other assets showing the respective adjustedbases and holding periods thereof for income tax purposes, as of the Closing Date, certified by the Treasurer of theAcquired Fund;

7.4. The Company, on behalf of Acquiring Fund, shall have received at the Closing a favorable opinionfrom Dechert LLP, counsel to Acquired Fund, dated as of the Closing Date to the effect that:

(a) Acquired Fund is a validly existing Massachusetts business trust, and has the power to own allof its properties and assets and to carry on its business as presently conducted; (b) Acquired Fund is a duly registered,open-end, management investment company under the 1940 Act, and its registration with the Commission as aninvestment company under the 1940 Act is in full force and effect; (c) this Agreement has been duly authorized,executed and delivered by Acquired Fund, and, assuming that the Registration Statement complies with the 1933Act, the 1934 Act and the 1940 Act and the regulations thereunder and assuming due authorization, execution anddelivery of this Agreement by the Company, on behalf of Acquiring Fund, is a valid and binding agreement ofAcquired Fund enforceable against Acquired Fund in accordance with its terms; (d) the execution and delivery ofthis Agreement did not, and the consummation of the transactions contemplated hereby will not, conflict withAcquired Fund’s Declaration of Trust or By-Laws, each as amended; and (e) to the knowledge of such counsel, noconsent, approval, authorization or order of any court or governmental authority of the United States or TheCommonwealth of Massachusetts or State of New York is required for the consummation by Acquired Fund of thetransactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the1940 Act and such as may be required under state securities laws; and

7.5. On the Closing Date, the Acquired Fund Assets shall include no assets that the Acquiring Fund, byreason of limitations of the Acquired Fund’s Declaration of Trust, as amended, or otherwise, may not properlyacquire.

A-9



8. Further Conditions Precedent to Obligations of Acquiring Fund and Acquired Fund

The obligations of Acquired Fund and the Company, on behalf of Acquiring Fund, hereunder are each subjectto the further conditions that on or before the Closing Date:

8.1. This Agreement and the transactions contemplated herein shall have been approved by the requisitevote of the holders of the outstanding shares of Acquired Fund in accordance with the provisions of AcquiredFund’s Declaration of Trust, as amended, and certified copies of the resolutions evidencing such approval shallhave been delivered to Acquiring Fund;

8.2. On the Closing Date, no action, suit or other proceeding shall be pending before any court orgovernmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connectionwith, this Agreement or the transactions contemplated herein;

8.3. All consents of other parties and all other consents, orders and permits of federal, state and localregulatory authorities (including those of the Commission and of state Blue Sky and securities authorities, including“no-action” positions of and exemptive orders from such federal and state authorities) deemed necessary by theCompany, on behalf of Acquiring Fund, or Acquired Fund to permit consummation, in all material respects, of thetransactions contemplated herein shall have been obtained, except where failure to obtain any such consent, orderor permit would not involve risk of a material adverse effect on the assets or properties of Acquiring Fund orAcquired Fund;

8.4. The Registration Statement shall have become effective under the 1933 Act, no stop orders suspendingthe effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation orproceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933Act;

8.5. Acquired Fund, shall have declared and paid a dividend or dividends and/or other distribution ordistributions that, together with all previous such dividends or distributions, shall have the effect of distributing tothe Acquired Fund shareholders all of Acquired Fund’s investment company taxable income (computed withoutregard to any deduction for dividends paid) and all of its net capital gain (after reduction for any capital loss carry-forward and computed without regard to any deduction for dividends paid) for all taxable years ending on or beforethe Closing Date; and

8.6. The parties shall have received the opinion of the law firm of Dechert LLP (based on certain facts,assumptions and representations), addressed to Acquiring Fund and Acquired Fund, which opinion may be reliedupon by the shareholders of Acquired Fund, substantially to the effect that, for federal income tax purposes:

(a) The transfer of substantially all of Acquired Fund’s assets in exchange solely for AcquiringFund Shares and the assumption by Acquiring Fund of certain stated liabilities of Acquired Fund followed by thedistribution by Acquired Fund of Acquiring Fund Shares to the Acquired Fund shareholders in exchange for theirAcquired Fund shares pursuant to and in accordance with the terms of the Reorganization Agreement will constitutea “reorganization” within the meaning of Section 368(a)(1) of the Code;

(b) No gain or loss will be recognized by Acquiring Fund upon the receipt of the assets of AcquiredFund solely in exchange for Acquiring Fund Shares and the assumption by Acquiring Fund of the stated liabilitiesof Acquired Fund;

(c) No gain or loss will be recognized by Acquired Fund upon the transfer of substantially all ofthe assets of Acquired Fund to Acquiring Fund in exchange solely for Acquiring Fund Shares and the assumptionby Acquiring Fund of the stated liabilities or upon the distribution of Acquiring Fund Shares to the Acquired Fundshareholders in exchange for their Acquired Fund shares, except that Acquired Fund may be required to recognizegain or loss with respect to contracts described in Section 1256(b) of the Code or stock in a passive foreign investmentcompany, as defined in Section 1297(a) of the Code;

(d) No gain or loss will be recognized by the Acquired Fund shareholders upon the exchange of theAcquired Fund shares for Acquiring Fund Shares;

A-10



(e) The aggregate tax basis for Acquiring Fund Shares received by each Acquired Fund shareholderpursuant to the reorganization will be the same as the aggregate tax basis of the Acquired Fund shares held by eachsuch Acquired Fund shareholder immediately prior to the Reorganization;

(f) The holding period of Acquiring Fund Shares to be received by each Acquired Fund shareholderwill include the period during which the Acquired Fund shares surrendered in exchange therefor were held (providedsuch Acquired Fund shares were held as capital assets on the date of the Reorganization);

(g) The tax basis of the assets of Acquired Fund acquired by Acquiring Fund will be the same asthe tax basis of such assets to Acquired Fund in exchange therefor; and

(h) The holding period of the assets of Acquired Fund in the hands of Acquiring Fund will includethe period during which those assets were held by Acquired Fund (except where the investment activities of AcquiringFund have the effect of reducing or eliminating such periods with respect to an asset).

Notwithstanding anything herein to the contrary, neither the Company, on behalf of Acquiring Fund, norAcquired Fund, may waive the conditions set forth in this paragraph 8.6.

9. Fees and Expenses

Acquired Fund shall bear expenses incurred in connection with the entering into, and carrying out of, theprovisions of this Agreement, including printing, filing and proxy solicitation expenses and legal and accountingexpenses up to an amount equal to $801,600 (whether or not the Reorganization is approved by shareholders ofAcquired Fund). Morgan Stanley Investment Management Inc. shall bear any expenses in excess of such amount.

10. Entire Agreement; Survival of Warranties

10.1. This Agreement constitutes the entire agreement between the parties.

10.2. The representations, warranties and covenants contained in this Agreement or in any document deliveredpursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated herein,except that the representations, warranties and covenants of Acquired Fund hereunder shall not survive the dissolutionand complete liquidation of Acquired Fund in accordance with paragraph 1.9.

11. Termination

11.1. This Agreement may be terminated and the transactions contemplated hereby may be abandoned atany time prior to the Closing:

(a) by the mutual written consent of Acquired Fund and the Company, on behalf of Acquiring Fund;

(b) by either the Company, on behalf of Acquiring Fund, or Acquired Fund, by notice to the other,without liability to the terminating party on account of such termination (providing the terminating party is nototherwise in material default or breach of this Agreement), if the Closing shall not have occurred on or beforeOctober 3, 2014; or

(c) by either the Company, on behalf of Acquiring Fund, or Acquired Fund, in writing withoutliability to the terminating party on account of such termination (provided the terminating party is not otherwise inmaterial default or breach of this Agreement), if (i) the other party shall fail to perform in any material respect itsagreements contained herein required to be performed on or prior to the Closing Date, (ii) the other party materiallybreaches any of its representations, warranties or covenants contained herein, (iii) the Acquired Fund shareholdersfail to approve this Agreement at any meeting called for such purpose at which a quorum was present or (iv) anyother condition herein expressed to be precedent to the obligations of the terminating party has not been met and itreasonably appears that it will not or cannot be met.

11.2. (a) Termination of this Agreement pursuant to paragraphs 11.1(a) or (b) shall terminate allobligations of the parties hereunder and there shall be no liability for damages on the part of the Company, AcquiringFund or Acquired Fund, or the directors or officers of the Company, on behalf of Acquiring Fund, or the trustees orofficers of the Acquired Fund, to any other party or its directors, trustees or officers.

A-11



(b) Termination of this Agreement pursuant to paragraph 11.1(c) shall terminate all obligations ofthe parties hereunder and there shall be no liability for damages on the part of the Company, Acquiring Fund orAcquired Fund, or the directors or officers of the Company, on behalf of Acquiring Fund, or the trustees or officersof Acquired Fund, except that any party in breach of this Agreement shall, upon demand, reimburse the non-breaching party for all reasonable out-of-pocket fees and expenses incurred in connection with the transactionscontemplated by this Agreement, including legal, accounting and filing fees.

12. Amendments

This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed uponin writing by the parties.

13. Miscellaneous

13.1. The article and paragraph headings contained in this Agreement are for reference purposes only andshall not affect in any way the meaning or interpretation of this Agreement.

13.2. This Agreement may be executed in any number of counterparts, each of which shall be deemed anoriginal.

13.3. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

13.4. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successorsand assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by anyparty without the written consent of the other party. Nothing herein expressed or implied is intended or shall beconstrued to confer upon or give any person, firm or corporation, other than the parties hereto and their respectivesuccessors and assigns, any rights or remedies hereunder or by reason of this Agreement.

13.5. The obligations and liabilities of Acquiring Fund hereunder are solely those of Acquiring Fund. It isexpressly agreed that no shareholder, nominee, director, officer, agent, or employee of Acquiring Fund, or thedirectors or officers of the Company, acting on behalf of Acquiring Fund, shall be personally liable hereunder. Theexecution and delivery of this Agreement have been authorized by the directors of Acquiring Fund and signed byauthorized officers of the Company, acting on behalf of Acquiring Fund, and neither such authorization by suchdirectors nor such execution and delivery by such officers shall be deemed to have been made by any of themindividually or to impose any liability on any of them personally.

13.6. The obligations and liabilities of Acquired Fund hereunder are solely those of Acquired Fund. It isexpressly agreed that no shareholder, nominee, trustee, officer, agent, or employee of Acquired Fund, or the trusteesor officers of Acquired Fund shall be personally liable hereunder. The execution and delivery of this Agreementhave been authorized by the trustees of the Acquired Fund and signed by authorized officers of the Acquired Fund,and neither such authorization by such directors nor such execution and delivery by such officers shall be deemedto have been made by any of them individually or to impose any liability on any of them personally.

A-12



IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by a dulyauthorized officer.

MORGAN STANLEY INSTITUTIONAL FUND, INC., on behalf of the Acquiring Fund

MORGAN STANLEY FOCUS GROWTH FUND

By: /s/ John H. GernonName: John H. GernonTitle: President and Principal Executive Officer

By: /s/ John H. GernonName: John H. GernonTitle: President and Principal Executive Officer

A-13



The last paragraph in the section of the Fund’s Prospectus entitled “Portfolio Summary—Global Discovery

Portfolio—Principal Investment Strategies” is hereby deleted and replaced with the following:

The Portfolio may, but it is not required to, use derivative instruments for a variety of purposes,

including hedging, risk management, portfolio management or to earn income. The Portfolio’s use of

derivatives may involve the purchase and sale of derivative instruments such as options and other

related instruments and techniques. The Portfolio may utilize foreign currency forward exchange

contracts, which are also derivatives, in connection with its investments in foreign securities. Derivative

instruments used by the Portfolio will be counted toward the Portfolio’s exposure in the types of

securities listed above to the extent they have economic characteristics similar to such securities.

The following is hereby added as the penultimate paragraph in the section of the Fund’s Prospectus entitled

“Portfolio Summary—Global Discovery Portfolio—Principal Risks:”

• Derivatives. 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 they

relate and risks that the transactions may not be liquid. Certain derivative transactions may give rise

to a form of leverage. Leverage magnifies the potential for gain and the risk of loss.

The penultimate paragraph in the section of the Fund’s Prospectus entitled “Details of the Portfolio—Global

Discovery Portfolio—Process” is hereby deleted and replaced with the following:

The Portfolio may, but it is not required to, use derivative instruments for a variety of purposes,

including hedging, risk management, portfolio management or to earn income. The Portfolio’s use of

derivatives may involve the purchase and sale of derivative instruments such as options and other

related instruments and techniques. The Portfolio may utilize foreign currency forward exchange

contracts, which are also derivatives, in connection with its investments in foreign securities.

The following is hereby added as the penultimate paragraph in the section of the Fund’s Prospectus entitled

“Details of the Portfolio—Global Discovery Portfolio—Risks:”

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 they relate, and risks

that the transactions may not be liquid. Certain derivative transactions may give rise to a form of

leverage. Leverage magnifies the potential for gain and the risk of loss.

The third sentence of the first paragraph of the section of the Fund’s Prospectus entitled “Shareholder

Information—How To Redeem Shares—Redemption Fees” is hereby deleted and replaced with the following:

The redemption fee is not imposed on redemptions made: (i) through systematic withdrawal/exchange

plans, (ii) through asset allocation programs, including redemptions or exchanges that are initiated by

the sponsor of a program as part of a periodic rebalancing, provided that such rebalancing occurs no

more frequently than monthly, (iii) of shares received by reinvesting income dividends or capital gain

distributions, (iv) through certain collective trust funds or other pooled vehicles, including funds of

funds, (v) on behalf of advisory accounts where client allocations are solely at the discretion of the

Morgan Stanley Investment Management investment team, and (vi) through certain types of retirement

Morgan Stanley Institutional Fund, Inc.Supplement datedDecember 12, 2013to the Morgan StanleyInstitutional Fund, Inc.(the “Fund”)Prospectus datedApril 30, 2013 of:

Global DiscoveryPortfolio

Small CompanyGrowth Portfolio

Prospectus Supplement

December 12, 2013

Merrill Corp - MS Institutional Fund Globl Disc-Sm Co Growth Pros Supp N-1A 33-23166 12-12-2013 ED | pweakly | 11-Dec-13 16:49 | 13-26110-2.ba | Sequence: 1CHKSUM Content: 9562 Layout: 22320 Graphics: No Graphics CLEAN


plan account transactions, including: redemptions pursuant to systematic withdrawal programs,

minimum required distributions, loans or hardship withdrawals, return of excess contribution amounts,

redemptions related to payment of plan or custodian fees, forfeiture of assets, and redemptions related

to death, disability, or qualified domestic relations order.

Please retain this supplement for future reference. MSIEQUSPT -1213

Merrill Corp - MS Institutional Fund Globl Disc-Sm Co Growth Pros Supp N-1A 33-23166 12-12-2013 ED | pweakly | 11-Dec-13 16:49 | 13-26110-2.ba | Sequence: 2CHKSUM Content: 41067 Layout: 59576 Graphics: No Graphics CLEAN


The following changes to the Fund’s Prospectus are effective October 1, 2013:

The first paragraph of each Portfolio’s section of the Prospectus entitled “Portfolio Summary—Fees and

Expenses” is hereby deleted and replaced with the following:

The table below describes the fees and expenses that you may pay if you buy and hold shares of the

Portfolio. For purchases of Class A shares, you may qualify for a sales charge discount if the cumulative

net asset value (“NAV”) of Class A shares of the Portfolio purchased in a single transaction, together

with the NAV of all Class A shares of other portfolios of Morgan Stanley Institutional Fund, Inc. (the

“Fund”) or Class A shares of other Morgan Stanley Multi-Class Funds (as defined in the “Shareholder

Information—Exchange Privilege” section on page 30 of this Prospectus) held in Related Accounts (as

defined in the “Shareholder Information—How To Purchase Class A Shares” section on page 26 of

this Prospectus), amounts to $25,000 or more. More information about this combined purchase

discount and other discounts is available from your financial adviser and in the “Shareholder

Information—How To Purchase Class A Shares” section on page 26 of this Prospectus.

The section of the Fund’s Prospectus entitled “Shareholder Information—How To Purchase Class A

Shares—Combined Purchase Privilege” is hereby deleted and replaced with the following:

You will have the benefit of a reduced sales charge by combining your purchase of Class A shares of a

Portfolio in a single transaction with your purchase of Class A shares of any other Morgan Stanley

Multi-Class Fund for any Related Account.


Shares—Right of Accumulation” is hereby deleted and replaced with the following:

You may benefit from a reduced sales charge if the cumulative NAV of Class A shares of a Portfolio

purchased in a single transaction, together with the NAV of any Class A shares of the Portfolio and any

other Morgan Stanley Multi-Class Fund (including shares of Morgan Stanley Money Market Funds

(as defined herein) and Advisor Class shares of Morgan Stanley Limited Duration U.S. Government

Trust which you acquired in an exchange from Class A shares of the Portfolio or Class A shares of

another Morgan Stanley Multi-Class Fund) held in Related Accounts, amounts to $25,000 or more.


Shares—Notification” is hereby deleted and replaced with the following:

You must notify your Financial Intermediary at the time a purchase order is placed, that the purchase

qualifies for a reduced sales charge under any of the privileges discussed above. The reduced sales charge

will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the

records of your Financial Intermediary or the Fund’s transfer agent, Boston Financial Data Services,

Inc. (“BFDS”), does not confirm your represented holdings.

In order to obtain a reduced sales charge for Class A shares of a Portfolio under any of the privileges

discussed above, it may be necessary at the time of purchase for you to inform your Financial

Intermediary of the existence of any Related Accounts in which there are holdings eligible to be

aggregated to meet the sales load breakpoint and/or right of accumulation threshold. In order to verify

your eligibility, you may be required to provide account statements and/or confirmations regarding

your purchases and/or holdings of any Class A shares of the Portfolio or any other Morgan Stanley

Multi-Class Fund (including shares of Morgan Stanley Money Market Funds and Advisor Class shares

of Morgan Stanley Limited Duration U.S. Government Trust which you acquired in an exchange from

Morgan Stanley Institutional Fund, Inc.Supplement datedSeptember 17, 2013to the Morgan StanleyInstitutional Fund, Inc.(the “Fund”)Prospectus datedApril 30, 2013 of:


Growth Portfolio

Small CompanyGrowth Portfolio(collectively,the “Portfolios”)


September 17, 2013

Merrill Corp - MS Institutional Fund Supplement to April 30_ 2013 Pros N-1A 33-23166 09-11-2013 ED | thunt | 17-Sep-13 13:52 | 13-20535-3.bg | Sequence: 1CHKSUM Content: 58896 Layout: 60487 Graphics: No Graphics CLEAN


Class A shares of the Portfolio or any other Morgan Stanley Multi-Class Fund) held in all Related

Accounts at your Financial Intermediary, in order to determine whether you have met the sales load

breakpoint and/or right of accumulation threshold.


Shares—Letter of Intent” is hereby deleted and replaced with the following:

The above schedule of reduced sales charges for larger purchases also will be available to you if you

enter into a written “Letter of Intent.” A Letter of Intent provides for the purchase of Class A shares of

a Portfolio and Class A shares of other Morgan Stanley Multi-Class Funds within a 13-month period.

The initial purchase of Class A shares of the Portfolio under a Letter of Intent must be at least 5% of

the stated investment goal. The Letter of Intent does not preclude the Portfolio (or any other Morgan

Stanley Multi-Class Fund) from discontinuing sales of its shares. To determine the applicable sales

charge reduction, you may also include (1) the cost of Class A shares of the Fund or any other Morgan

Stanley Multi-Class Fund which were previously purchased at a price including a front-end sales charge

during the 90-day period prior to the Distributor receiving the Letter of Intent and (2) the historical

cost of shares of any Morgan Stanley Money Market Fund or Advisor Class shares of Morgan Stanley

Limited Duration U.S. Government Trust which you acquired in an exchange from Class A shares of

the Fund or any other Morgan Stanley Multi-Class Fund purchased during that period at a price

including a front-end sales charge. You may also combine purchases and exchanges by any Related

Accounts during such 90-day period. You should retain any records necessary to substantiate historical

costs because the Fund, BFDS and your Financial Intermediary may not maintain this information.

You can obtain a Letter of Intent by contacting your Financial Intermediary. If you do not achieve the

stated investment goal within the 13-month period, you are required to pay the difference between the

sales charges otherwise applicable and sales charges actually paid, which may be deducted from your

investment. Shares acquired through reinvestment of distributions are not aggregated to achieve the

stated investment goal.

The section of the Fund’s Prospectus entitled “Shareholder Information—Exchange Privilege” is hereby deleted

and replaced with the following:

You may exchange shares of any class of a Portfolio for the same class of shares of other portfolios of

the Fund and portfolios of Morgan Stanley Institutional Fund Trust (“MSIFT”), if available, without

the imposition of an exchange fee. In addition, you may exchange shares of any class of a Portfolio for

the same class of shares of Morgan Stanley European Equity Fund Inc., Morgan Stanley Focus Growth

Fund, Morgan Stanley Global Fixed Income Opportunities Fund, Morgan Stanley Global Infrastructure

Fund, Morgan Stanley Limited Duration U.S. Government Trust, Morgan Stanley Mortgage Securities

Trust, Morgan Stanley Multi Cap Growth Trust and Morgan Stanley U.S. Government Securities

Trust, (each, a “Morgan Stanley Retail Fund” and, together with the Fund and MSIFT, the “Morgan

Stanley Multi-Class Funds”), if available, without the imposition of an exchange fee. Front-end sales

charges (loads) are not imposed on exchanges of Class A shares. In addition, you may exchange shares

of any class of a Portfolio for shares of Morgan Stanley California Tax-Free Daily Income Trust, Morgan

Stanley Liquid Asset Fund Inc., Morgan Stanley New York Municipal Money Market Trust, Morgan

Stanley Tax-Free Daily Income Trust and Morgan Stanley U.S. Government Money Market Trust

(each, a “Morgan Stanley Money Market Fund” and, together with the Morgan Stanley Multi-

Class Funds, the “Morgan Stanley Funds”) or for Advisor Class shares of Morgan Stanley Limited

Duration U.S. Government Trust, if available, without the imposition of an exchange fee. Exchanges

are effected based on the respective NAVs of the applicable Morgan Stanley Fund (subject to any



applicable redemption fee). To obtain a prospectus for another Morgan Stanley Fund, contact your

Financial Intermediary or call the Fund at 1-800-548-7786. If you purchased Portfolio shares through

a Financial Intermediary, certain Morgan Stanley Funds may be unavailable for exchange. Contact

your Financial Intermediary to determine which Morgan Stanley Funds are available for exchange.

The current prospectus for each Morgan Stanley Fund describes its investment objective(s), policies

and investment minimums, and should be read before investment. Since exchanges are available only

into continuously offered Morgan Stanley Funds, exchanges are not available into Morgan Stanley

Funds or classes of Morgan Stanley Funds that are not currently being offered for purchase.

You can process your exchange by contacting your Financial Intermediary. With respect to exchanges

of Class I and Class L shares, you may also send exchange requests to the Fund’s transfer agent, BFDS,

by mail to Morgan Stanley Institutional Fund, Inc., c/o Boston Financial Data Services, Inc., P.O.

Box 219804, Kansas City, MO 64121-9804 or by calling 1-800-548-7786.

When you exchange for shares of another Morgan Stanley Fund, your transaction will be treated the

same as an initial purchase. You will be subject to the same minimum initial investment and account

size as an initial purchase. Your exchange price will be the price calculated at the next Pricing Time

after the Morgan Stanley Fund receives your exchange order. The Morgan Stanley Fund, in its sole

discretion, may waive the minimum initial investment amount in certain cases. An exchange of Class I,

Class A or Class L shares of the Small Company Growth Portfolio held for less than 30 days from the

date of purchase will be subject to the 2% redemption fee described above. The Fund may terminate

or revise the exchange privilege upon required notice or in certain cases without notice. The Fund

reserves the right to reject an exchange order for any reason.

Please retain this supplement for future reference. MSIEQUSPT-0913



All references in the Prospectus to Morgan Stanley Services Company Inc., as transfer agent, are hereby deleted

and replaced with Boston Financial Data Services, Inc.

***

At Joint Special Meetings of Shareholders, Class H shareholders of each Portfolio approved a Plan of

Reclassification for each such Portfolio pursuant to which Class H shares will be reclassified as Class P shares

and the corresponding Articles of Amendment to the Fund’s Articles of Amendment and Restatement. Upon

the reclassification, each Class H shareholder of a Portfolio will own Class P shares of such Portfolio having an

aggregate value equal to the aggregate value of Class H shares of the Portfolio held by that shareholder as of the

close of business of the day of the reclassification. It is expected that the closing date of the reclassification

whereby the Plan of Reclassification will take effect will be September 9, 2013. In addition, the Board of

Directors of the Fund has approved renaming each Portfolio’s Class P shares as “Class A shares.” As a result,

effective September 9, 2013, all references to Class H shares of the Portfolios in the Prospectus are hereby

deleted and all references to Class P shares of the Portfolios in the Prospectus are hereby changed to Class A

shares.

***

The following changes to the Prospectus are effective September 16, 2013:

With respect to the Global Discovery Portfolio:

The following table replaces the “Annual Portfolio Operating Expenses” table in such Portfolio’s section

of the Prospectus entitled “Portfolio Summary—Fees and Expenses—Annual Portfolio Operating Expenses:”

Class I Class A† Class LAdvisory Fee 0.90% 0.90% 0.90%

Distribution and/or Shareholder Service (12b-1) Fee None 0.25% 0.75%

Other Expenses 3.43% 3.43% 3.43%

Total Annual Portfolio Operating Expenses* 4.33% 4.58% 5.08%

Fee Waiver and/or Expense Reimbursement* 2.98% 2.88% 2.88%

Total Annual Portfolio Operating Expenses After


The following table replaces the “Example” table in such Portfolio’s section of the Prospectus entitled

“Portfolio Summary—Example:”

1 Year 3 Years 5 Years 10 YearsClass I $137 $ 428 $ 739 $1,624

Class A† $689 $1,033 $1,400 $2,428

Class L $223 $ 688 $1,180 $2,534

The footnote following such Portfolio’s section of the Prospectus entitled “Portfolio

Summary—Example” is hereby deleted and replaced with the following:

† Effective September 9, 2013, Class P shares were renamed Class A shares.

* The Portfolio’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to

reduce its advisory fee and/or reimburse the Portfolio so that Total Annual Portfolio

Operating Expenses, excluding certain investment related expenses, taxes, interest and

Morgan Stanley Institutional Fund, Inc.Supplement datedAugust 16, 2013 tothe Morgan StanleyInstitutional Fund, Inc.(the “Fund”)Prospectus datedApril 30, 2013 of:

Global DiscoveryPortfolioGrowth PortfolioSmall CompanyGrowth Portfolio(collectively, the“Portfolios”)


August 16, 2013

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other extraordinary expenses (including litigation), will not exceed 1.35% for Class I,

1.70% for Class A and 2.20% for Class L. The fee waivers and/or expense reimbursements

will continue for at least one year or until such time as the Fund’s Board of Directors acts

to discontinue all or a portion of such waivers and/or reimbursements when it deems such

action is appropriate.

With respect to the Small Company Growth Portfolio:

The following table replaces the “Annual Portfolio Operating Expenses” table in such Portfolio’s section

of the Prospectus entitled “Portfolio Summary—Fees and Expenses—Annual Portfolio Operating Expenses:”

Class I Class A† Class LAdvisory Fee 0.90% 0.90% 0.90%

Distribution and/or Shareholder Service (12b-1) Fee None 0.25% 0.75%

Other Expenses 0.22% 0.22% 0.22%

Total Annual Portfolio Operating Expenses* 1.12% 1.37% 1.87%


Total Annual Portfolio Operating Expenses After


The following table replaces the “Example” table in such Portfolio’s section of the Prospectus entitled

“Portfolio Summary—Example:”

1 Year 3 Years 5 Years 10 YearsClass I $107 $334 $ 579 $1,283

Class A† $657 $936 $1,236 $2,085

Class L $190 $588 $1,011 $2,190

The footnote following such Portfolio’s section of the Prospectus entitled “Portfolio

Summary—Example” is hereby deleted and replaced with the following:


* The Portfolio’s “Adviser,” Morgan Stanley Investment Management Inc., has agreed to

reduce its advisory fee and/or reimburse the Portfolio so that Total Annual Portfolio

Operating Expenses, excluding certain investment related expenses, taxes, interest and

other extraordinary expenses (including litigation), will not exceed 1.05% for Class I,

1.40% for Class A and 1.90% for Class L. The fee waivers and/or expense reimbursements

will continue for at least one year or until such time as the Fund’s Board of Directors acts

to discontinue all or a portion of such waivers and/or reimbursements when it deems such

action is appropriate.



The following table replaces the table showing the fee waivers and/or expense reimbursements applicable

to the shares of the Portfolios under the section of the Prospectus entitled “Shareholder Information—Fund

Management—Advisory Fees:”

Expense Cap Expense Cap Expense CapClass I Class A† Class L

Global Discovery Portfolio 1.35% 1.70% 2.20%

Growth Portfolio 0.80% 1.15% 1.65%

Small Company Growth Portfolio 1.05% 1.40% 1.90%


Please retain this supplement for future reference. MSIEQUSPT-0813



The second sentence of the first paragraph under the section of the Prospectus entitled “Shareholder

Information—Minimum Investment Amounts” is hereby deleted and replaced with the following:

The minimum initial investment may be waived for the following categories: (1) sales through banks,

broker-dealers and other financial institutions (including registered investment advisers and financial

planners) purchasing shares on behalf of their clients in (i) discretionary and non-discretionary advisory

programs, (ii) fund supermarkets, (iii) asset allocation programs, (iv) other programs in which the

client pays an asset-based fee for advice or for executing transactions in Portfolio shares or for otherwise

participating in the program or (v) certain other investment programs that do not charge an asset-

based fee; (2) qualified state tuition plans described in Section 529 of the Code and donor-advised

charitable gift funds (subject to all applicable terms and conditions); (3) defined contribution, defined

benefit and other employer-sponsored employee benefit plans, whether or not qualified under the

Code; (4) certain retirement and deferred compensation programs established by Morgan Stanley

Investment Management or its affiliates for their employees or the Fund’s Directors; (5) current or

retired directors, officers and employees of Morgan Stanley and any of its subsidiaries, such persons’

spouses, and children under the age of 21, and trust accounts for which any of such persons is a

beneficiary; (6) current or retired Directors or Trustees of the Morgan Stanley Funds, such persons’

spouses, and children under the age of 21, and trust accounts for which any of such persons is a

beneficiary; (7) certain other registered open-end investment companies whose shares are distributed

by the Distributor; (8) with respect to holders of Class I and Class P shares, respectively, clients who

owned such Portfolio shares as of December 31, 2007, as applicable; (9) investments made in

connection with certain mergers and/or reorganizations as approved by the Adviser; (10) the

reinvestment of dividends in additional Portfolio shares; or (11) certain other institutional investors

based on assets under management or other considerations at the discretion of the Adviser.

Morgan Stanley Institutional Fund, Inc.Supplement datedMay 31, 2013 to theMorgan StanleyInstitutional Fund, Inc.Prospectus datedApril 30, 2013 of:


Growth Portfolio

Small CompanyGrowth Portfolio

(collectively, the“Portfolios”)


May 31, 2013

Please retain this supplement for future reference. MSIEQUSPT0-0513

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INVESTMENT MANAGEMENT

Morgan Stanley

Institutional Fund, Inc.

ProspectusApril 30, 2013

The Securities and Exchange Commission (“SEC”) has not approved ordisapproved these securities or passed upon the adequacy of thisProspectus. Any representation to the contrary is a criminal offense.

Growth PortfoliosGlobal Discovery PortfolioGrowth PortfolioSmall Company Growth Portfolio

Share Class and Ticker SymbolPortfolio Class I Class P Class H Class LGlobal Discovery MLDIX MGDPX MGDHX MGDLX

Growth MSEQX MSEGX MSHHX MSHLX

Small Company Growth MSSGX MSSMX MSSHX MSSLX

e-DELIVERY: GO PAPERLESS It’s faster, easier and greener. Sign up today at: May not be available for all accounts.

www.icsdelivery.com

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JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~note-color 2, ~note-color 3 GRAPHICS: e-del_pro_full.eps, ms_new_k_logo.eps, ms_text_cover_lrg_flat_30k.eps V1.5

Page

Portfolio SummaryGlobal Discovery Portfolio 1Growth Portfolio 5Small Company Growth Portfolio 9

Details of the PortfoliosGlobal Discovery Portfolio 13Growth Portfolio 15Small Company Growth Portfolio 17

Additional Information about the Portfolios’ Investment Strategies and Related Risks 19Fund Management 23Shareholder Information 25Financial Highlights 33Global Discovery Portfolio 33Growth Portfolio 37Small Company Growth Portfolio 41

Table of Contents

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JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~note-color 2 GRAPHICS: none V1.5

ObjectiveThe Global Discovery Portfolio seeks long-term capitalappreciation.

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio. Forshareholders of Class P and Class H shares, you mayqualify for sales charge discounts if the cumulative netasset value (“NAV”) of Class P or Class H shares of thePortfolio purchased in a single transaction, together withthe NAV of all Class P or Class H shares of portfolios ofMorgan Stanley Institutional Fund, Inc. (the “Fund”) orportfolios of Morgan Stanley Institutional Fund Trustheld in related accounts, amounts to $25,000 or morewith respect to Class P and $50,000 or more withrespect to Class H. More information about these andother discounts is available from your financial adviserand in the “Shareholder Information—How To PurchaseClass P and Class H Shares” section on page 26 of thisProspectus.

Shareholder Fees (fees paid directly from your investment) Class I Class P Class H Class LMaximum sales charge (load) imposed on purchases (as a percentage of offering price) None 5.25% 4.75% None

Annual Portfolio Operating Expenses (expenses that youpay each year as a percentage of the value of your investment) Class I Class P Class H Class LAdvisory Fee 0.90% 0.90% 0.90% 0.90%Distribution and/or Shareholder Service (12b-1) Fee None 0.25% 0.25% 0.75%Other Expenses 3.43% 3.43% 3.43% 3.43%Total Annual Portfolio Operating Expenses* 4.33% 4.58% 4.58% 5.08%Fee Waiver and/or ExpenseReimbursement* 2.98% 2.98% 2.98% 2.98%Total Annual Portfolio Operating Expenses After Fee Waiver and/or ExpenseReimbursement* 1.35% 1.60% 1.60% 2.10%

ExampleThe example below is intended to help you compare thecost of investing in the Portfolio with the cost of invest-ing in other mutual funds.

The example assumes that you invest $10,000 in thePortfolio, your investment has a 5% return each year,and that the Portfolio’s operating expenses remain thesame. Although your actual costs may be higher orlower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 YearsClass I $137 $428 $739 $1,624Class P $679 $1,003 $1,350 $2,325Class H $630 $956 $1,304 $2,285Class L $213 $658 $1,129 $2,431

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, taxes, interest and other extraordinary expenses(including litigation), will not exceed 1.35% for Class I,1.60% for Class P, 1.60% for Class H and 2.10% forClass L. The fee waivers and/or expense reimbursementswill continue for at least one year or until such time as theFund’s Board of Directors acts to discontinue all or a portionof such waivers and/or reimbursements when it deems suchaction is appropriate.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commis-sions, when it buys and sells securities (or “turns over”its portfolio). A higher portfolio turnover rate may indi-cate higher transaction costs and may result in highertaxes when Portfolio shares are held in a taxable account.These costs, which are not reflected in Total AnnualPortfolio Operating Expenses or in the Example, affectPortfolio performance. During the most recent fiscalyear, the Portfolio’s portfolio turnover rate was 96% ofthe average value of its portfolio.

Principal Investment StrategiesUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging franchise compa-nies located throughout the world, with capitalizationswithin the range of companies included in the MSCI AllCountry World Index.

The Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in franchises with sustainablecompetitive advantages. The Adviser typically favorscompanies with one or more of the following: strongcash generation, attractive returns on capital, hard-to-replicate assets and a favorable risk/reward. The Advisergenerally considers selling a portfolio holding when itdetermines that the holding no longer satisfies its invest-ment criteria.

The Portfolio’s equity investments may include com-mon and preferred stocks, convertible securities andequity-linked securities, rights and warrants to purchasecommon stocks, depositary receipts, exchange-traded

Global Discovery Portfolio

1

Morgan Stanley Institutional Fund, Inc. Prospectus

Portfolio Summary

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funds (“ETFs”), limited partnership interests and otherspecialty securities having equity features. The Portfoliomay invest in privately placed and restricted securities.

The Portfolio may invest up to 100% of its net assets inforeign securities, which may include emerging marketsecurities. Under normal market conditions, thePortfolio typically invests at least 40% of its assets in thesecurities of issuers located outside of the United States.

The Adviser believes that the number of issuers meetingits investment criteria may be limited, and accordingly,the Portfolio is non-diversified and may focus its hold-ings in a relatively small number of companies and mayinvest up to 25% of its assets in a single issuer. ThePortfolio may invest in privately placed and restrictedsecurities.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connec-tion with its investments in foreign securities.

Principal RisksThere is no assurance that the Portfolio will achieve itsinvestment objective and you can lose money investingin this Portfolio. The principal risks of investing in thePortfolio include:

• Equity Securities. In general, prices of equity securi-ties are more volatile than those of fixed income secu-rities. The prices of equity securities fluctuate, andsometimes widely fluctuate, in response to activitiesspecific to the issuer of the security as well as factorsunrelated to the fundamental condition of the issuer,including general market, economic and politicalconditions. To the extent that the Portfolio invests inconvertible securities, and the convertible security’sinvestment value is greater than its conversion value,its price will be likely to increase when interest ratesfall and decrease when interest rates rise. If the conver-sion value exceeds the investment value, the price ofthe convertible security will tend to fluctuate directlywith the price of the underlying equity security.

• Small and Medium Capitalization Companies.Investments in small and medium capitalization com-panies may involve greater risks than investments inlarger, more established companies. The securitiesissued by small and medium capitalization companiesmay be less liquid, and such companies may havemore limited markets, financial resources and prod-uct lines, and may lack the depth of management oflarger companies.

• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increas-ing the level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer thesesecurities due to restrictions on transfers or on the

ability to find buyers interested in purchasing thesecurities. The illiquidity of the market, as well asthe lack of publicly available information regardingthese securities, may also adversely affect the abilityto arrive at a fair value for certain securities at cer-tain times and could make it difficult for thePortfolio to sell certain securities.

• Foreign and Emerging Market Securities.Investments in foreign markets entail special riskssuch as currency, political, economic and marketrisks. There also may be greater market volatility,less reliable financial information, higher transactionand custody costs, decreased market liquidity andless government and exchange regulation associatedwith investments in foreign markets. In addition,investments in certain foreign markets, which havehistorically been considered stable, may becomemore volatile and subject to increased risk due toongoing developments and changing conditions insuch markets. Moreover, the growing interconnec-tivity of global economies and financial markets hasincreased the probability that adverse developmentsand conditions in one country or region will affectthe stability of economies and financial markets inother countries or regions. The risks of investing inemerging market countries are greater than risksassociated with investments in foreign developedcountries. In addition, the Portfolio’s investmentsmay be denominated in foreign currencies andtherefore, to the extent unhedged, the value of theinvestment will fluctuate with the U.S. dollar exchangerates. To the extent hedged by use of foreign currencyforward exchange contracts, the precise matching offoreign currency forward exchange contract amountsand the value of the securities involved will not gener-ally be possible because the future value of such securi-ties in foreign currencies will change as a consequenceof market movements in the value of those securitiesbetween the date on which the contract is entered intoand the date it matures. There is additional risk thatsuch transactions reduce or preclude the opportunityfor gain if the value of the currency should move inthe direction opposite to the position taken and thatforeign currency forward exchange contracts createexposure to currencies in which the Portfolio’s securi-ties are not denominated. The use of foreign currencyforward exchange contracts involves the risk of lossfrom the insolvency or bankruptcy of the counterpartyto the contract or the failure of the counterparty tomake payments or otherwise comply with the terms ofthe contract.

• Non-Diversification. Because the Portfolio is non-diversified, it may be more susceptible to an adverseevent affecting a portfolio investment than a diversi-fied portfolio and a decline in the value of thatinvestment would cause the Portfolio’s overall valueto decline to a greater degree.

Global Discovery Portfolio (Cont’d)

2



Shares of the Portfolio are not bank deposits and arenot guaranteed or insured by the Federal DepositInsurance Corporation or any other government agency.

Performance InformationThe bar chart and table below provide some indicationof the risks of investing in the Portfolio by showingchanges in the Portfolio’s Class I shares’ performancefrom year-to-year and by showing how the Portfolio’saverage annual returns for the past one year period andsince inception compare with those of a broad measureof market performance, as well as an index that repre-sents a group of similar mutual funds, over time. Theperformance of the other Classes, which is shown in thetable below, will differ because the Classes have differentongoing fees. The Portfolio’s returns in the table includethe maximum applicable sales charge for Class P andClass H and assume you sold your shares at the end ofeach period (unless otherwise noted). The Portfolio’spast performance, before and after taxes, is not necessari-ly an indication of how the Portfolio will perform in thefuture. Updated performance information is availableonline at www.morganstanley.com/im.

Annual Total Returns—Calendar Years

High Quarter 3/31/12 16.98%Low Quarter 9/30/11 –25.14%

Average Annual Total Returns(for the calendar periods ended December 31, 2012)

Past Since One Year InceptionClass I (commenced operations on 12/28/10) Return before Taxes 31.64% 10.01%Return after Taxes on Distributions 30.24% 9.30%Return after Taxes on Distributionsand Sale of Portfolio Shares 22.33% 8.51%Class P† (commenced operations on 12/28/10)Return before Taxes 24.53% 6.86%Class H (commenced operations on 12/28/10)Return before Taxes 25.15% 7.11%Class L (commenced operations on 12/28/10)Return before Taxes 30.62% 9.17%MSCI All Country World Index(reflects no deduction for fees, expenses or taxes)1 16.13% 4.04%Lipper Global Multi-Cap Growth FundsIndex (reflects no deductionfor taxes)2 16.47% 1.62%

† The historical performance of Class P shares has been restatedto reflect the current maximum initial sales charge of 5.25%.

1 The Morgan Stanley Capital International (MSCI) All CountryWorld Index (ACWI) is a free float-adjusted marketcapitalization weighted index designed to measure the equitymarket performance of developed and emerging markets.The term “free float” represents the portion of sharesoutstanding that are deemed to be available for purchase inthe public equity markets by investors. The performance ofthe Index is listed in U.S. dollars and assumes reinvestmentof net dividends. “Net dividends” reflects a reduction individends after taking into account withholding of taxes bycertain foreign countries represented in the Index. It is notpossible to invest directly in an index.

2 The Lipper Global Multi-Cap Growth Funds Index is an equallyweighted performance index of the largest qualifying funds(based on net assets) in the Lipper Global Multi-Cap GrowthFunds classification. There are currently 30 funds representedin this Index.

The after-tax returns shown in the table above are calcu-lated using the historical highest individual federal mar-ginal income tax rates during the period shown and donot reflect the impact of state and local taxes. After-taxreturns for the Portfolio’s other Classes will vary fromClass I shares’ returns. Actual after-tax returns dependon the investor’s tax situation and may differ from thoseshown, and after-tax returns are not relevant to investorswho hold their Portfolio shares through tax deferredarrangements such as 401(k) plans or individual retire-ment accounts. After-tax returns may be higher thanbefore-tax returns due to an assumed benefit from capi-tal losses that would have been realized had Portfolioshares been sold at the end of the relevant periods, asapplicable.

Fund ManagementAdviser. Morgan Stanley Investment Management Inc.

Portfolio Manager. The Portfolio is managed by

members of the Growth team. Information about the

member primarily responsible for the day-to-day man-

agement of the Portfolio is shown below:

Date Began Title with Managing Name Adviser PortfolioBurak Alici Executive Director December 2010

Purchase and Sale of Portfolio SharesThe minimum initial investment generally is

$5,000,000 for Class I shares, $25,000 for Class H

shares and $1,000 for each of Class P and Class L shares

of the Portfolio. The minimum initial investment may

be waived for certain investments. For more informa-

tion, please refer to the “Shareholder Information—

Minimum Investment Amounts” section beginning on

page 25 of this Prospectus.

-20

40

-20%

-10%

40%

30%

0%

20%

10%

2011 2012

31.6431.64

-7.72-7.72


3


Portfolio Summary

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JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~note-color 2 GRAPHICS: 2439-4 Gbl Real Est.eps V1.5

Class I and Class L shares of the Portfolio may be pur-

chased or sold on any day the New York Stock Exchange

(“NYSE”) is open for business directly from the Fund by

mail (c/o Morgan Stanley Services Company Inc.,

P.O. Box 219804, Kansas City, MO 64121-9804) or by

telephone (1-800-548-7786) or by contacting your

authorized financial intermediary. For more information,

please refer to the “Shareholder Information—How To

Purchase Class I and Class L Shares” and “—How To

Redeem Shares—Class I and Class L Shares” sections

beginning on pages 26 and 29, respectively, of this

Prospectus.

Class P and Class H shares of the Portfolio may be pur-

chased or redeemed by contacting your authorized

financial intermediary. For more information, please

refer to the “Shareholder Information—How To

Purchase Class P and Class H Shares” and “—How To

Redeem Shares—Class P and Class H Shares” sections


Prospectus.

Tax InformationThe Portfolio intends to make distributions that may betaxed as ordinary income or capital gains, unless you areinvesting through a tax-deferred arrangement, such as a401(k) plan or an individual retirement account.

Payments to Broker-Dealers and OtherFinancial IntermediariesIf you purchase the Portfolio through a broker-dealeror other financial intermediary (such as a bank), theAdviser and/or the Portfolio’s “Distributor,” MorganStanley Distribution, Inc., may pay the financial inter-mediary for the sale of Portfolio shares and relatedservices. These payments, which may be significant inamount, may create a conflict of interest by influencingthe broker-dealer or other financial intermediary andyour salesperson to recommend the Portfolio overanother investment. Ask your salesperson or visit yourbroker-dealer’s or other financial intermediary’s website for more information.


4



ObjectiveThe Growth Portfolio seeks long-term capital appreciationby investing primarily in growth-oriented equity securities oflarge capitalization companies.

Fees and ExpensesThe table below describes the fees and expenses thatyou may pay if you buy and hold shares of thePortfolio. For shareholders of Class P and Class Hshares, you may qualify for sales charge discounts if thecumulative net asset value (“NAV”) of Class P orClass H shares of the Portfolio purchased in a singletransaction, together with the NAV of all Class P orClass H shares of portfolios of Morgan StanleyInstitutional Fund, Inc. (the “Fund”) or portfolios ofMorgan Stanley Institutional Fund Trust held in relatedaccounts, amounts to $25,000 or more with respect toClass P and $50,000 or more with respect to Class H.More information about these and other discounts isavailable from your financial adviser and in the“Shareholder Information—How To Purchase Class Pand Class H Shares” section on page 26 of thisProspectus.

Shareholder Fees (fees paid directly from your investment) Class I Class P Class H Class LMaximum sales charge (load) imposed on purchases (as a percentage of offering price) None 5.25% 4.75% None

Annual Portfolio Operating Expenses (expenses that youpay each year as a percentage of the value of your investment) Class I Class P Class H Class LAdvisory Fee 0.50% 0.50% 0.50% 0.50%Distribution and/or Shareholder Service (12b-1) Fee None 0.25% 0.25% 0.75%Other Expenses 0.22% 0.22% 0.22% 0.22%Total Annual Portfolio Operating Expenses 0.72% 0.97% 0.97% 1.47%


The example assumes that you invest $10,000 in thePortfolio, your investment has a 5% return each year

and that the Portfolio’s operating expenses remain thesame. Although your actual costs may be higher orlower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 YearsClass I $74 $230 $401 $894Class P $619 $818 $1,033 $1,652Class H $569 $769 $986 $1,608Class L $150 $465 $803 $1,757


Principal Investment StrategiesUnder normal market conditions, the Portfolio’s“Adviser,” Morgan Stanley Investment Management Inc.,seeks to achieve the Portfolio’s investment objective byinvesting primarily in established and emerging compa-nies, with capitalizations within the range of companiesincluded in the Russell 1000® Growth Index. As ofDecember 31, 2012, these market capitalizations rangedbetween $400 million and $500 billion.

The Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality companies itbelieves have sustainable competitive advantages andthe ability to redeploy capital at high rates of return.The Adviser typically favors companies with risingreturns on invested capital, above average business visi-bility, strong free cash flow generation and an attractiverisk/reward. The Adviser generally considers selling aninvestment when it determines the company no longersatisfies its investment criteria.

The Portfolio’s equity investments may include commonand preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase com-mon stocks, depositary receipts, exchange-traded funds(“ETFs”), limited partnership interests and other special-ty securities having equity features. The Portfolio mayinvest in privately placed and restricted securities.

The Adviser may invest up to 25% of the Portfolio’s netassets in foreign securities, including emerging marketsecurities, and securities classified as American DepositaryReceipts (“ADRs”), Global Depositary Receipts


Portfolio Summary

5

Growth Portfolio


JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~HTML color, ~HTML color 2, ~note-color 2 GRAPHICS: none V1.5

(“GDRs”), American Depositary Shares (“ADSs”) orGlobal Depositary Shares (“GDSs”), foreign U.S. dollar-denominated securities that are traded on a U.S.exchange or local shares of non-U.S. issuers.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connectionwith its investments in foreign securities.


• Equity Securities. In general, prices of equity securi-ties are more volatile than those of fixed income securities. The prices of equity securities fluctuate,and sometimes widely fluctuate, in response to activi-ties specific to the issuer of the security as well as fac-tors unrelated to the fundamental condition of theissuer, including general market, economic and politi-cal conditions. To the extent that the Portfolio investsin convertible securities, and the convertible security’sinvestment value is greater than its conversion value,its price will be likely to increase when interest ratesfall and decrease when interest rates rise. If the conversion value exceeds the investment value, theprice of the convertible security will tend to fluctuatedirectly with the price of the underlying equity security.

• Foreign and Emerging Market Securities.Investments in foreign markets entail special riskssuch as currency, political, economic and marketrisks. There also may be greater market volatility, lessreliable financial information, higher transaction andcustody costs, decreased market liquidity and lessgovernment and exchange regulation associated withinvestments in foreign markets. In addition, invest-ments in certain foreign markets, which have histori-cally been considered stable, may become morevolatile and subject to increased risk due to ongoingdevelopments and changing conditions in such mar-kets. Moreover, the growing interconnectivity ofglobal economies and financial markets has increasedthe probability that adverse developments and condi-tions in one country or region will affect the stabilityof economies and financial markets in other coun-tries or regions. The risks of investing in emergingmarket countries are greater than risks associatedwith investments in foreign developed countries. Inaddition, the Portfolio’s investments may be denomi-nated in foreign currencies and therefore, to theextent unhedged, the value of the investment willfluctuate with the U.S. dollar exchange rates. To theextent hedged by use of foreign currency forwardexchange contracts, the precise matching of foreign

currency forward exchange contract amounts and thevalue of the securities involved will not generally bepossible because the future value of such securities inforeign currencies will change as a consequence ofmarket movements in the value of those securitiesbetween the date on which the contract is enteredinto and the date it matures. There is additional riskthat such transactions reduce or preclude the oppor-tunity for gain if the value of the currency shouldmove in the direction opposite to the position takenand that foreign currency forward exchange contractscreate exposure to currencies in which the Portfolio’ssecurities are not denominated. The use of foreigncurrency forward exchange contracts involves the riskof loss from the insolvency or bankruptcy of thecounterparty to the contract or the failure of thecounterparty to make payments or otherwise complywith the terms of the contract.

• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increas-ing the level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer these secu-rities due to restrictions on transfers or on the abilityto find buyers interested in purchasing the securities.The illiquidity of the market, as well as the lack ofpublicly available information regarding these securi-ties, may also adversely affect the ability to arrive at afair value for certain securities at certain times andcould make it difficult for the Portfolio to sell cer-tain securities.


Performance InformationThe bar chart and table below provide some indicationof the risks of investing in the Portfolio by showingchanges in the Portfolio’s Class I shares’ performancefrom year-to-year and by showing how the Portfolio’saverage annual returns for the past one, five and 10 yearperiods compare with those of a broad measure of mar-ket performance, as well as an index that represents agroup of similar mutual funds, over time. The perform-ance of the other Classes, which is shown in the tablebelow, will differ because the Classes have differentongoing fees. The Portfolio’s returns in the table includethe maximum applicable sales charge for Class P andClass H assume you sold your shares at the end of eachperiod (unless otherwise noted). The Portfolio’s past performance, before and after taxes, is not necessarily anindication of how the Portfolio will perform in thefuture. Updated performance information is availableonline at www.morganstanley.com/im.

6

Growth Portfolio (Cont’d)






Past Past Past One Year Five Years Ten YearsClass IReturn before Taxes 15.66% 2.19% 8.38%Return after Taxes on Distributions 15.60% 2.14% 8.33%Return after Taxes on Distributions and Sale ofPortfolio Shares 10.25% 1.86% 7.43%Class P†

Return before Taxes 9.29% 0.87% 7.54%Class H*Return before Taxes N/A N/A N/AClass L*Return before Taxes N/A N/A N/ARussell 1000® Growth Index (reflects no deduction for fees, expenses or taxes)1 15.26% 3.12% 7.52%Lipper Large-Cap Growth Funds Index (reflects no deduction for taxes)2 15.92% 1.01% 6.39%

† The historical performance of Class P shares has beenrestated to reflect the current maximum initial sales charge of5.25%.

* Class H and Class L shares of the Portfolio had notcompleted a full calendar year of operations as ofDecember 31, 2012 and therefore Class H and Class L donot have annualized return information to report. The returnsfor Class H and Class L shares would be lower than thereturns for Class I shares of the Portfolio as expenses ofClass H and Class L are higher. Return information for thePortfolio’s Class H and Class L shares will be shown in futureprospectuses offering the Portfolio’s Class H and Class Lshares after the Portfolio’s Class H and Class L shares havea full calendar year of return information to report.

1 The Russell 1000® Growth Index measures the performanceof the large-cap growth segment of the U.S. equity universe.It includes those Russell 1000® Index companies with higherprice-to-book ratios and higher forecasted growth values. TheRussell 1000® Index is an index of approximately 1,000 ofthe largest U.S. companies based on a combination ofmarket capitalization and current index membership. It is notpossible to invest directly in an index.

2 The Lipper Large-Cap Growth Funds Index is an equallyweighted performance index of the largest qualifying funds

(based on net assets) in the Lipper Large-Cap Growth Fundsclassification. There are currently 30 funds represented inthis Index.



Portfolio Managers. The Portfolio is managed by mem-bers of the Growth team. Information about the members jointly and primarily responsible for the day-to-day management of the Portfolio is shown below:

Date Began Title with ManagingName Adviser PortfolioDennis P. Lynch Managing Director June 2004David S. Cohen Managing Director June 2004Sam G. Chainani Managing Director June 2004Alexander T. Norton Executive Director July 2005Jason C. Yeung Managing Director September 2007Armistead B. Nash Executive Director September 2008

Purchase and Sale of Portfolio SharesThe minimum initial investment generally is$5,000,000 for Class I shares, $25,000 for Class Hshares and $1,000 for each of Class P and Class L sharesof the Portfolio. The minimum initial investment maybe waived for certain investments. For more informa-tion, please refer to the “Shareholder Information—Minimum Investment Amounts section beginning onpage 25 of this Prospectus.

Class I and Class L shares of the Portfolio may be pur-chased or sold on any day the New York StockExchange (“NYSE”) is open for business directly fromthe Fund by mail (c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City, MO64121-9804) or by telephone (1-800-548-7786) or bycontacting your authorized financial intermediary. Formore information, please refer to the “ShareholderInformation—How To Purchase Class I and Class LShares” and “—How To Redeem Shares—Class I and

62.9762.97

-80

80

-80%-60%-40%

80%

40%60%

0%20%

-20%

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’11 ’12’10

4.074.0715.6615.66

-3.01-3.01

26.4126.4115.7215.72 22.2922.29 23.1123.11

-50.47-50.47

7.757.75


Portfolio Summary

7



JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~note-color 2 GRAPHICS: 2439-4 cap gro bar.eps V1.5

Class L Shares” sections beginning on pages 26 and 29,respectively, of this Prospectus.

Class P and Class H shares of the Portfolio may be

purchased or redeemed by contacting your authorized

financial intermediary. For more information, please

refer to the “Shareholder Information—How To

Purchase Class P and Class H Shares” and “—How To

Redeem Shares—Class P and Class H Shares” sections


Prospectus.

Tax InformationThe Portfolio intends to make distributions that may betaxed as ordinary income or capital gains, unless you are

investing through a tax-deferred arrangement, such as a401(k) plan or an individual retirement account.

Payments to Broker-Dealers and OtherFinancial IntermediariesIf you purchase the Portfolio through a broker-dealer orother financial intermediary (such as a bank), the Adviserand/or the Portfolio’s “Distributor,” Morgan StanleyDistribution, Inc., may pay the financial intermediary forthe sale of Portfolio shares and related services. Thesepayments, which may be significant in amount, may cre-ate a conflict of interest by influencing the broker-dealeror other financial intermediary and your salesperson torecommend the Portfolio over another investment. Askyour salesperson or visit your broker-dealer’s or otherfinancial intermediary’s web site for more information.

8




ObjectiveThe Small Company Growth Portfolio seeks long-term capi-tal appreciation by investing primarily in growth-orientedequity securities of small capitalization companies.

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio. Forshareholders of Class P and Class H shares, you may quali-fy for sales charge discounts if the cumulative net assetvalue (“NAV”) of Class P or Class H shares of thePortfolio purchased in a single transaction, together withthe NAV of all Class P or Class H shares of portfolios ofMorgan Stanley Institutional Fund, Inc. (the “Fund”) orportfolios of Morgan Stanley Institutional Fund Trust heldin related accounts, amounts to $25,000 or more withrespect to Class P and $50,000 or more with respect toClass H. More information about these and other dis-counts is available from your financial adviser and in the“Shareholder Information—How To Purchase Class P andClass H Shares” section on page 26 of this Prospectus.

Shareholder Fees (fees paid directly from your investment)

Class I Class P Class H Class LMaximum sales charge (load)imposed onpurchases (as apercentage of offering price) None 5.25% 4.75% NoneRedemption Fee (as a percentageof the amountredeemed onredemptions made within 30 days of purchase) 2.00% 2.00% 2.00% 2.00%

Annual Portfolio Operating Expenses (expenses that youpay each year as a percentage of the value of your investment)

Class I Class P Class H Class LAdvisory Fee 0.90% 0.90% 0.90% 0.90%Distribution and/orShareholder Service (12b-1) Fee None 0.25% 0.25% 0.75%Other Expenses 0.22% 0.22% 0.22% 0.22%Total Annual PortfolioOperating Expenses* 1.12% 1.37% 1.37% 1.87%Fee Waiverand/or Expense Reimbursement* 0.07% 0.07% 0.07% 0.07%Total Annual PortfolioOperating Expenses After Fee Waiverand/or ExpenseReimbursement* 1.05% 1.30% 1.30% 1.80%


The example assumes that you invest $10,000 in thePortfolio, your investment has a 5% return each yearand that the Portfolio’s operating expenses remain thesame. Although your actual costs may be higher orlower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 YearsClass I $107 $334 $579 $1,283Class P $650 $915 $1,200 $2,010Class H $601 $868 $1,154 $1,968Class L $183 $566 $975 $2,116

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, taxes, interest and other extraordinary expenses(including litigation), will not exceed 1.05% for Class I, 1.30%for Class P, 1.30% for Class H and 1.80% for Class L. Thefee waivers and/or expense reimbursements will continue forat least one year or until such time as the Fund’s Board ofDirectors acts to discontinue all or a portion of such waiversand/or reimbursements when it deems such action isappropriate.


Principal Investment StrategiesUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies from auniverse comprised of small capitalization companies,most with market capitalizations of generally less than$4 billion.

Under normal circumstances, at least 80% of thePortfolio’s assets will be invested in equity securities ofsmall capitalization companies. This policy may bechanged without shareholder approval; however, youwould be notified in writing of any changes. A companyis considered to be a small capitalization company if ithas a total market capitalization at the time of purchaseof $4 billion or less.

The Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality companies itbelieves have sustainable competitive advantages and theability to redeploy capital at high rates of return. The

Small Company Growth Portfolio


Portfolio Summary

9



Adviser typically favors companies with rising returns oninvested capital, above average business visibility, strongfree cash flow generation and an attractive risk/reward.The Adviser generally considers selling an investmentwhen it determines the company no longer satisfies itsinvestment criteria.

The Portfolio’s equity investments may include commonand preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase com-mon stocks, depositary receipts, exchange-traded funds(“ETFs”), limited partnership interests and other special-ty securities having equity features. The Portfolio mayinvest in privately placed and restricted securities.

The Adviser may invest up to 25% of the Portfolio’s netassets in foreign securities, including emerging marketsecurities, and securities classified as AmericanDepositary Receipts (“ADRs”), Global DepositaryReceipts (“GDRs”), American Depositary Shares(“ADSs”) or Global Depositary Shares (“GDSs”), foreignU.S. dollar-denominated securities that are traded on aU.S. exchange or local shares of non-U.S. issuers.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connectionwith its investments in foreign securities.


• Equity Securities. In general, prices of equity securitiesare more volatile than those of fixed income securities.The prices of equity securities fluctuate, and some-times widely fluctuate, in response to activities specificto the issuer of the security as well as factors unrelatedto the fundamental condition of the issuer, includinggeneral market, economic and political conditions. Tothe extent that the Portfolio invests in convertible secu-rities, and the convertible security’s investment value isgreater than its conversion value, its price will be likelyto increase when interest rates fall and decrease wheninterest rates rise. If the conversion value exceeds theinvestment value, the price of the convertible securitywill tend to fluctuate directly with the price of theunderlying equity security.

• Foreign and Emerging Market Securities.Investments in foreign markets entail special riskssuch as currency, political, economic and marketrisks. There also may be greater market volatility, lessreliable financial information, higher transaction andcustody costs, decreased market liquidity and lessgovernment and exchange regulation associated withinvestments in foreign markets. In addition,

investments in certain foreign markets, which havehistorically been considered stable, may become morevolatile and subject to increased risk due to ongoingdevelopments and changing conditions in such mar-kets. Moreover, the growing interconnectivity of globaleconomies and financial markets has increased theprobability that adverse developments and conditionsin one country or region will affect the stability ofeconomies and financial markets in other countries orregions. The risks of investing in emerging marketcountries are greater than risks associated with invest-ments in foreign developed countries. In addition, thePortfolio’s investments may be denominated in foreigncurrencies and therefore, to the extent unhedged, thevalue of the investment will fluctuate with the U.S.dollar exchange rates. To the extent hedged by use offoreign currency forward exchange contracts, the pre-cise matching of foreign currency forward exchangecontract amounts and the value of the securitiesinvolved will not generally be possible because thefuture value of such securities in foreign currencies willchange as a consequence of market movements in thevalue of those securities between the date on which thecontract is entered into and the date it matures. Thereis additional risk that such transactions reduce or pre-clude the opportunity for gain if the value of the cur-rency should move in the direction opposite to theposition taken and that foreign currency forwardexchange contracts create exposure to currencies inwhich the Portfolio’s securities are not denominated.The use of foreign currency forward exchange con-tracts involves the risk of loss from the insolvency orbankruptcy of the counterparty to the contract or thefailure of the counterparty to make payments or other-wise comply with the terms of the contract.

• Small Cap Companies. Investments in small cap com-panies may involve greater risks than those associatedwith larger, more established companies. The securi-ties issued by small cap companies may be less liquid,and such companies may have more limited markets,financial resources and product lines, and may lack thedepth of management of larger companies.

• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increasingthe level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer these securi-ties due to restrictions on transfers or on the ability tofind buyers interested in purchasing the securities. Theilliquidity of the market, as well as the lack of publiclyavailable information regarding these securities, mayalso adversely affect the ability to arrive at a fair valuefor certain securities at certain times and could make itdifficult for the Portfolio to sell certain securities.

Small Company Growth Portfolio (Cont’d)

10




Performance InformationThe bar chart and table below provide some indication ofthe risks of investing in the Portfolio by showing changesin the Portfolio’s Class I shares’ performance from year-to-year and by showing how the Portfolio’s average annu-al returns for the past one, five and 10 year periods com-pare with those of a broad measure of market perform-ance, as well as an index that represents a group ofsimilar mutual funds, over time. The performance of theother Classes, which is shown in the table below, willdiffer because the Classes have different ongoing fees.The Portfolio’s returns in the table include the maxi-mum applicable sales charge for Class P and Class Hand assume you sold your shares at the end of each peri-od (unless otherwise noted). The Portfolio’s past per-formance, before and after taxes, is not necessarily anindication of how the Portfolio will perform in thefuture. Updated performance information is availableonline at www.morganstanley.com/im.




Past Past Past One Five Ten Since Year Years Years InceptionClass I (commenced operations on 11/1/89) Return before Taxes 17.10% 3.09% 10.10% 10.67%Return after Taxes on Distributions 16.28% 2.85% 9.53% 8.36%Return after Taxes on Distributions and Sale of Portfolio Shares 12.06% 2.62% 8.89% 8.19%Russell 2000® Growth Index (reflects no deduction for fees, expenses or taxes)1 14.59% 3.49% 9.80% 6.74%Lipper Small-Cap Growth Funds Index (reflects no deduction for taxes)2 14.95% 2.09% 8.56% 8.58%

Past Past Past One Five Ten Since Year Years Years InceptionClass P† (commenced operations on 1/2/96)Return before Taxes 10.61% 1.71% 9.23% 9.08%Russell 2000® Growth Index (reflects no deduction for fees, expenses or taxes)1 14.59% 3.49% 9.80% 4.95%Lipper Small-Cap Growth Funds Index (reflects no deduction for taxes)2 14.95% 2.09% 8.56% 6.27%Class H (commenced operations on 11/11/11)Return before Taxes 11.23% N/A N/A 6.48%Class L (commenced operations on 11/11/11)Return before Taxes 16.21% N/A N/A 10.56%Russell 2000® GrowthIndex (reflects nodeduction for fees,expenses or taxes)1 14.59% N/A N/A 11.48%Lipper Small-Cap GrowthFunds Index (reflects nodeduction for taxes)2 14.95% N/A N/A 11.35%

† The historical performance of Class P shares has beenrestated to reflect the current maximum initial sales charge of5.25%.

1 The Russell 2000® Growth Index measures the performanceof the small-cap growth segment of the U.S. equity universe.It includes those Russell 2000® Index companies with higherprice-to-book ratios and higher forecasted growth values. TheRussell 2000® Index is a subset of the Russell 3000® Indexrepresenting approximately 10% of the total marketcapitalization of that index. It includes approximately 2,000 ofthe smallest securities based on a combination of theirmarket capitalization and current index membership. It is notpossible to invest directly in an index.

2 The Lipper Small-Cap Growth Funds Index is an equallyweighted performance index of the largest qualifying funds(based on net assets) in the Lipper Small-Cap Growth Fundsclassification. There are currently 30 funds represented inthis Index.


27.2027.20

47.9247.92

-60

60

-60%

-40%

60%

40%

0%

20%

-20%

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’11 ’12’10

11.9011.90 17.1017.10

-9.12-9.12

44.1344.13

13.5513.553.043.04

-41.84-41.84

19.1719.17



Portfolio Summary

11


JOB: 13-2439-4 CYCLE#;BL#: 30; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, Black2, ~HTML color, ~HTML color 2, ~note-color 2 GRAPHICS: 2439-4 sm co gro bar.eps V1.5


Portfolio Managers. The Portfolio is managed by mem-bers of the Growth team. Information about the mem-bers jointly and primarily responsible for the day-to-daymanagement of the Portfolio is shown below:

Date Began Title with ManagingName Adviser PortfolioDennis P. Lynch Managing Director January 1999David S. Cohen Managing Director January 2002Sam G. Chainani Managing Director June 2004Alexander T. Norton Executive Director July 2005Jason C. Yeung Managing Director September 2007Armistead B. Nash Executive Director September 2008

Purchase and Sale of Portfolio SharesThe Fund suspended offering Class P, Class H and Class Lshares of the Portfolio to new investors. The Fund will con-tinue to offer Class P, Class H and Class L shares of thePortfolio to existing shareholders. The Fund may recom-mence offering Class P, Class H and Class L shares of thePortfolio to new investors in the future. Any such offeringsof the Portfolio’s Class P, Class H and Class L shares may belimited in amount and may commence and terminatewithout any prior notice.

The minimum initial investment generally is$5,000,000 for Class I shares, $25,000 for Class Hshares and $1,000 for each of Class P and Class L sharesof the Portfolio. The minimum initial investment may bewaived for certain investments. For more information,please refer to the “Shareholder Information—MinimumInvestment Amounts” section beginning on page 25 ofthis Prospectus.

Class I and Class L shares of the Portfolio may be pur-chased or sold on any day the New York Stock Exchange

(“NYSE”) is open for business directly from the Fund bymail (c/o Morgan Stanley Services Company Inc.,P.O. Box 219804, Kansas City, MO 64121-9804) or bytelephone (1-800-548-7786) or by contacting yourauthorized financial intermediary. For more information,please refer to the “Shareholder Information—How ToPurchase Class I and Class L Shares” and “—How ToRedeem Shares—Class I and Class L Shares” sectionsbeginning on pages 26 and 29, respectively, of thisProspectus.

Class P and Class H shares of the Portfolio may be pur-chased or redeemed by contacting your authorizedfinancial intermediary. For more information, pleaserefer to the “Shareholder Information—How ToPurchase Class P and Class H Shares” and “—How ToRedeem Shares—Class P and Class H Shares” sectionsbeginning on pages 26 and 29, respectively, of thisProspectus.

Tax InformationThe Portfolio intends to make distributions that may betaxed as ordinary income or capital gains, unless you areinvesting through a tax-deferred arrangement, such as a401(k) plan or an individual retirement account.

Payments to Broker-Dealers and OtherFinancial IntermediariesIf you purchase the Portfolio through a broker-dealer orother financial intermediary (such as a bank), the Adviserand/or the Portfolio’s “Distributor,” Morgan StanleyDistribution, Inc., may pay the financial intermediary forthe sale of Portfolio shares and related services. Thesepayments, which may be significant in amount, may cre-ate a conflict of interest by influencing the broker-dealeror other financial intermediary and your salesperson torecommend the Portfolio over another investment. Askyour salesperson or visit your broker-dealer’s or otherfinancial intermediary’s web site for more information.


12



ObjectiveThe Global Discovery Portfolio seeks long-term capital appreciation.

The Portfolio’s investment objective may be changed bythe Fund’s Board of Directors without shareholderapproval, but no change is anticipated. If the Portfolio’sinvestment objective changes, the Portfolio will notifyshareholders and shareholders should consider whetherthe Portfolio remains an appropriate investment in lightof the change.

ApproachThe Adviser seeks to achieve the Portfolio’s investmentobjective by investing primarily in established andemerging franchise companies located throughout theworld, with capitalizations within the range of compa-nies included in the MSCI All Country World Index.

ProcessThe Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in franchises with sustainable com-petitive advantages. The Adviser typically favors compa-nies with one or more of the following: strong cash gen-eration, attractive returns on capital, hard-to-replicateassets and a favorable risk/reward.

Fundamental research drives the investment process. TheAdviser studies on an ongoing basis company develop-ments, including business strategy and financial results.The Adviser generally considers selling a portfolio hold-ing when it determines that the holding no longer satis-fies its investment criteria.

The Adviser believes that the number of issuers meetingits investment criteria may be limited and, accordingly,the Portfolio is non-diversified and may focus its hold-ings in a relatively small number of companies and mayinvest up to 25% of its assets in a single issuer.

The Portfolio’s equity investments may include commonand preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase com-mon stocks, depositary receipts, ETFs, limited partner-ship interests and other specialty securities having equityfeatures. The Portfolio may invest in privately placedand restricted securities.

The Portfolio may invest up to 100% of its net assets inforeign securities, which may include emerging marketsecurities. Under normal market conditions, thePortfolio typically invests at least 40% of its assets in thesecurities of issuers located outside of the United States.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connec-tion with its investments in foreign securities.

Derivative instruments used by the Portfolio will becounted toward the Portfolio’s exposure in the types ofsecurities listed above to the extent they have economiccharacteristics similar to such securities.

RisksThe Portfolio’s principal investment strategies are subjectto the following principal risks:

Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in a portfolio of equity securities of issuerslocated throughout the world, including emerging mar-ket or developing countries. In general, prices of equitysecurities are more volatile than those of fixed incomesecurities. The prices of equity securities will rise and fallin response to a number of different factors. In particu-lar, prices of equity securities fluctuate, and sometimeswidely fluctuate, in response to activities specific to theissuer of the security as well as factors unrelated to thefundamental condition of the issuer, including generalmarket, economic and political conditions.

To the extent that the Portfolio invests in convertiblesecurities, and the convertible security’s investment valueis greater than its conversion value, its price will be likelyto increase when interest rates fall and decrease wheninterest rates rise. If the conversion value exceeds theinvestment value, the price of the convertible securitywill tend to fluctuate directly with the price of theunderlying equity security.

In addition, at times, small and medium capitalizationequity securities may underperform relative to the overallmarket. Investments in small and medium capitalizationcompanies may involve greater risks than investments inlarger, more established companies. The securities issuedby small and medium capitalization companies may beless liquid and their prices subject to more abrupt orerratic price movements. In addition, small and mediumcapitalization companies may have more limited markets,financial resources and product lines, and may lack thedepth of management of larger companies. The Adviser’sperception that a stock is under- or over-valued may notbe accurate or may not be realized.

Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. The value of the Portfolio’s shares may varywidely in response to political and economic factorsaffecting companies in foreign countries. These sameevents will not necessarily have an effect on the U.S.economy or similar issuers located in the United States.In addition, investments in certain foreign markets,which have historically been considered stable, maybecome more volatile and subject to increased risk due



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to ongoing developments and changing conditions insuch markets. Moreover, the growing interconnectivityof global economies and financial markets has increasedthe probability that adverse developments and condi-tions in one country or region will affect the stabilityof economies and financial markets in other countries orregions.

The Portfolio’s investments in foreign issuers generally willbe denominated in foreign currencies and therefore, tothe extent unhedged, the value of the investment willfluctuate with the U.S. dollar exchange rates. To theextent hedged through foreign currency forward exchangecontracts, the precise matching of the foreign currencyforward exchange contract amounts and the value of thesecurities involved will not generally be possible becausethe future value of such securities in foreign currencieswill change as a consequence of market movements inthe value of those securities between the date on whichthe contract is entered into and the date it matures.Furthermore, such transactions reduce or preclude theopportunity for gain if the value of the currency shouldmove in the direction opposite to the position taken.There is additional risk to the extent that foreign currencyforward exchange contracts create exposure to currenciesin which the Portfolio’s securities are not denominated.Unanticipated changes in currency prices may result inpoorer overall performance for the Portfolio than if ithad not entered into such contracts. The use of foreigncurrency forward exchange contracts involves the risk of

loss from the insolvency or bankruptcy of the counter-party to the contract or the failure of the counterparty tomake payments or otherwise comply with the terms ofthe contract.

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increasingthe level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer these securi-ties due to restrictions on transfers or on the ability tofind buyers interested in purchasing the securities. Theilliquidity of the market, as well as the lack of publiclyavailable information regarding these securities, mayalso adversely affect the ability to arrive at a fair valuefor certain securities at certain times and could make itdifficult for the Portfolio to sell certain securities.

The risks of investing in the Portfolio may be intensifiedbecause the Portfolio is non-diversified, which means thatit may invest in securities of a limited number of issuers.As a result, the performance of a particular investment ora small group of investments may affect the Portfolio’sperformance more than if the Portfolio were diversified.

Please see “Additional Information about the Portfolios’Investment Strategies and Related Risks” for furtherinformation about these and other risks of investing inthe Portfolio.


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ObjectiveThe Growth Portfolio seeks long-term capital appreciationby investing primarily in growth-oriented equity securities oflarge capitalization companies.

ApproachUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies, withcapitalizations within the range of companies includedin the Russell 1000® Growth Index. As of December 31,2012, these market capitalizations ranged between$400 million to $500 billion. The Portfolio deems anissuer to be a U.S. issuer if (i) its principal securitiestrading market (i.e., a U.S. stock exchange or over-the-counter (“OTC”) markets) is in the United States;(ii) alone or on a consolidated basis it derives 50% ormore of its annual revenue from either goods produced,sales made or services performed in the United States; or(iii) it is organized under the laws of, or has a principaloffice in the United States. The Portfolio invests primari-ly in companies that the Adviser believes exhibit, amongother things, strong free cash flow and compelling busi-ness strategies. The Adviser emphasizes individual securityselection.

ProcessThe Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality companies itbelieves have sustainable competitive advantages and theability to redeploy capital at high rates of return. TheAdviser typically favors companies with rising returns oninvested capital, above average business visibility, strongfree cash flow generation and an attractive risk/reward.

Fundamental research drives the investment process. TheAdviser studies on an ongoing basis company develop-ments, including business strategy and financial results.The Adviser generally considers selling an investmentwhen it determines the company no longer satisfies itsinvestment criteria.

The Adviser may invest up to 25% of the Portfolio’s netassets in foreign securities, including emerging marketsecurities, and securities classified as ADRs, GDRs, ADSsor GDSs, foreign U.S. dollar-denominated securities thatare traded on a U.S. exchange or local shares of non-U.S.issuers.


The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connection with its investments in foreign securities.Derivative instruments used by the Portfolio will becounted toward the Portfolio’s exposure in the types ofsecurities listed above to the extent they have economiccharacteristics similar to such securities.


Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in a portfolio of equity securities. In general,prices of equity securities are more volatile than those offixed income securities. The prices of equity securities willrise and fall in response to a number of different factors.In particular, prices of equity securities fluctuate, andsometimes widely fluctuate, in response to activities spe-cific to the issuer of the security as well as factors unre-lated to the fundamental condition of the issuer, includ-ing general market, economic and political conditions.In addition, at times, large capitalization growth-orientedequity securities may underperform relative to the overallmarket.


Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. The value of the Portfolio’s shares may varywidely in response to political and economic factorsaffecting companies in foreign countries. These sameevents will not necessarily have an effect on the U.S.economy or similar issuers located in the United States.In addition, investments in certain foreign markets,which have historically been considered stable, maybecome more volatile and subject to increased risk dueto ongoing developments and changing conditions insuch markets. Moreover, the growing interconnectivityof global economies and financial markets has increasedthe probability that adverse developments and condi-tions in one country or region will affect the stabilityof economies and financial markets in other countries orregions.

The Portfolio’s investments in foreign issuers may bedenominated in foreign currencies and therefore, to theextent unhedged, the value of the investment will


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Growth Portfolio



fluctuate with the U.S. dollar exchange rates. To theextent hedged through foreign currency forwardexchange contracts, the precise matching of the foreigncurrency forward exchange contract amounts and thevalue of the securities involved will not generally be pos-sible because the future value of such securities in foreigncurrencies will change as a consequence of market move-ments in the value of those securities between the date onwhich the contract is entered into and the date itmatures. Furthermore, such transactions reduce or pre-clude the opportunity for gain if the value of the currencyshould move in the direction opposite to the positiontaken. There is additional risk to the extent that foreigncurrency forward exchange contracts create exposure tocurrencies in which the Portfolio’s securities are notdenominated. Unanticipated changes in currency pricesmay result in poorer overall performance for thePortfolio than if it had not entered into such contracts.The use of foreign currency forward exchange contractsinvolves the risk of loss from the insolvency orbankruptcy of the counterparty to the contract or the

failure of the counterparty to make payments or other-wise comply with the terms of the contract.

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restrictions.These securities will have the effect of increasing thelevel of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due torestrictions on transfers or on the ability to find buyersinterested in purchasing the securities. The illiquidity ofthe market, as well as the lack of publicly available infor-mation regarding these securities, may also adverselyaffect the ability to arrive at a fair value for certain secu-rities at certain times and could make it difficult for thePortfolio to sell certain securities.



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ObjectiveThe Small Company Growth Portfolio seeks long-term cap-ital appreciation by investing primarily in growth-orientedequity securities of small capitalization companies.

ApproachUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies from auniverse comprised of small capitalization companies,most with market capitalizations of generally less than$4 billion.

ProcessUnder normal circumstances, at least 80% of thePortfolio’s assets will be invested in equity securities ofsmall capitalization companies. This policy may bechanged without shareholder approval; however, youwould be notified in writing of any changes. A companyis considered to be a small capitalization company if ithas a total market capitalization at the time of purchaseof $4 billion or less. The market capitalization limit issubject to adjustment annually based upon the Adviser’sassessment as to the capitalization range of companieswhich possess the fundamental characteristics ofsmall cap companies.

The Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality companies itbelieves have sustainable competitive advantages andthe ability to redeploy capital at high rates of return.The Adviser typically favors companies with risingreturns on invested capital, above average business visi-bility, strong free cash flow generation and an attractiverisk/reward.

Fundamental research drives the investment process. TheAdviser studies on an ongoing basis company develop-ments, including business strategy and financial results.The Adviser generally considers selling an investmentwhen it determines the company no longer satisfies itsinvestment criteria.


The Adviser may invest up to 25% of the Portfolio’s netassets in foreign securities, including emerging marketsecurities, and securities classified as ADRs, GDRs,ADSs or GDSs, foreign U.S. dollar-denominated securi-ties that are traded on a U.S. exchange or local shares ofnon-U.S. issuers.

The Portfolio may utilize foreign currency forwardexchange contracts, which are derivatives, in connec-tion with its investments in foreign securities.Derivative instruments used by the Portfolio will becounted toward the Portfolio’s 80% policy discussedabove to the extent they have economic characteristicssimilar to the securities included within that policy.


Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in a portfolio of equity securities of growth-oriented small companies. In general, prices of equitysecurities are more volatile than those of fixed incomesecurities. The prices of equity securities will rise andfall in response to a number of different factors. In par-ticular, prices of equity securities fluctuate, and some-times widely fluctuate, in response to activities specificto the issuer of the security as well as factors unrelatedto the fundamental condition of the issuer, includinggeneral market, economic and political conditions. Inaddition, at times, small capitalization growth-orientedequity securities may underperform relative to the over-all market.


The risk of investing in equity securities is intensified inthe case of the small companies in which the Portfolioinvests. Market prices for such companies’ equity securi-ties tend to be more volatile than those of larger, moreestablished companies. Such companies may themselvesbe more vulnerable to economic or company specificproblems. Because of high valuations placed on compa-nies with growth prospects within certain sectors, suchas technology, biotechnology and internet, the Portfoliomay own securities of companies that have significantmarket capitalizations despite a general lack of operatinghistory and/or positive earnings.

Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. The value of the Portfolio’s shares may varywidely in response to political and economic factorsaffecting companies in foreign countries. These sameevents will not necessarily have an effect on the U.S.economy or similar issuers located in the United States.

Small Company Growth Portfolio


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In addition, investments in certain foreign markets,which have historically been considered stable, maybecome more volatile and subject to increased risk dueto ongoing developments and changing conditions insuch markets. Moreover, the growing interconnectivityof global economies and financial markets has increasedthe probability that adverse developments and condi-tions in one country or region will affect the stabilityof economies and financial markets in other countries orregions.

The Portfolio’s investments in foreign issuers may bedenominated in foreign currencies and therefore, to theextent unhedged, the value of the investment will fluctu-ate with the U.S. dollar exchange rates. To the extenthedged through foreign currency forward exchange con-tracts, the precise matching of the foreign currency for-ward exchange contract amounts and the value of thesecurities involved will not generally be possible becausethe future value of such securities in foreign currencieswill change as a consequence of market movements inthe value of those securities between the date on whichthe contract is entered into and the date it matures.Furthermore, such transactions reduce or preclude theopportunity for gain if the value of the currency shouldmove in the direction opposite to the position taken.There is additional risk to the extent that foreigncurrency forward exchange contracts create exposure to

currencies in which the Portfolio’s securities are notdenominated. Unanticipated changes in currency pricesmay result in poorer overall performance for thePortfolio than if it had not entered into such contracts.The use of foreign currency forward exchange contractsinvolves the risk of loss from the insolvency or bank-ruptcy of the counterparty to the contract or the failureof the counterparty to make payments or otherwisecomply with the terms of the contract.

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restrictions.These securities will have the effect of increasing thelevel of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due torestrictions on transfers or on the ability to find buyersinterested in purchasing the securities. The illiquidity ofthe market, as well as the lack of publicly available infor-mation regarding these securities, may also adverselyaffect the ability to arrive at a fair value for certain secu-rities at certain times and could make it difficult for thePortfolio to sell certain securities.



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Equity SecuritiesEquity securities may include common and preferredstocks, convertible securities and equity-linked securities,rights and warrants to purchase common stocks, deposi-tary receipts, limited partnership interests and other spe-cialty securities having equity features. The Portfoliosmay invest in equity securities that are publicly-tradedon securities exchanges or OTC or in equity securitiesthat are not publicly traded. Securities that are not pub-licly traded may be more difficult to sell and their valuemay fluctuate more dramatically than other securities.

Depositary receipts involve many of the same risks asthose associated with direct investment in foreign securi-ties. In addition, the underlying issuers of certain deposi-tary receipts, particularly unsponsored or unregistereddepositary receipts, are under no obligation to distributeshareholder communications to the holders of suchreceipts, or to pass through to them any voting rightswith respect to the deposited securities.

A convertible security is a bond, debenture, note, pre-ferred stock, right, warrant or other security that may beconverted into or exchanged for a prescribed amount ofcommon stock or other security of the same or a differ-ent issuer or into cash within a particular period of timeat a specified price or formula. A convertible securitygenerally entitles the holder to receive interest paid oraccrued on debt securities or the dividend paid on pre-ferred stock until the convertible security matures or isredeemed, converted or exchanged. Before conversion,convertible securities generally have characteristics simi-lar to both debt and equity securities. The value of con-vertible securities tends to decline as interest rates riseand, because of the conversion feature, tends to vary withfluctuations in the market value of the underlying securi-ties. Convertible securities ordinarily provide a stream ofincome with generally higher yields than those of com-mon stock of the same or similar issuers. Convertiblesecurities generally rank senior to common stock in acorporation’s capital structure but are usually subordi-nated to comparable nonconvertible securities.Convertible securities generally do not participate direct-ly in any dividend increases or decreases of the underly-ing securities although the market prices of convertiblesecurities may be affected by any dividend changes orother changes in the underlying securities.

Price VolatilityThe value of your investment in a Portfolio is based onthe market prices of the securities the Portfolio holds.These prices change daily due to economic and otherevents that affect markets generally, as well as those thataffect particular regions, countries, industries, companiesor governments. These price movements, sometimescalled volatility, may be greater or less depending on thetypes of securities the Portfolio owns and the markets inwhich the securities trade. Over time, equity securitieshave generally shown gains superior to fixed incomesecurities, although they have tended to be more volatilein the short term. Fixed income securities, regardless of

credit quality, also experience price volatility, especiallyin response to interest rate changes. As a result of pricevolatility, there is a risk that you may lose money byinvesting in a Portfolio.

Foreign InvestingTo the extent that a Portfolio invests in foreign issuers,there is the risk that news and events unique to a countryor region will affect those markets and their issuers. Thesesame events will not necessarily have an effect on the U.S.economy or similar issuers located in the United States. Inaddition, some of the Portfolios’ securities, includingunderlying securities represented by depositary receipts,generally will be denominated in foreign currencies. As aresult, changes in the value of a country’s currency com-pared to the U.S. dollar may affect the value of aPortfolio’s investments. These changes may happen sepa-rately from, and in response to, events that do not other-wise affect the value of the security in the issuer’s homecountry. These risks may be intensified for a Portfolio’sinvestments in securities of issuers located in emergingmarket or developing countries.

Foreign SecuritiesForeign issuers generally are subject to different account-ing, auditing and financial reporting standards than U.S.issuers. There may be less information available to thepublic about foreign issuers. Securities of foreign issuerscan be less liquid and experience greater price move-ments. In addition, the prices of such securities may besusceptible to influence by large traders, due to the limitedsize of many foreign securities markets. Moreover, invest-ments in certain foreign markets, which have historicallybeen considered stable, may become more volatile andsubject to increased risk due to ongoing developmentsand changing conditions in such markets. Also, thegrowing interconnectivity of global economies andfinancial markets has increased the probability thatadverse developments and conditions in one country orregion will affect the stability of economies and financialmarkets in other countries or regions. In some foreigncountries, there is also the risk of government expropria-tion, excessive taxation, political or social instability, theimposition of currency controls or diplomatic develop-ments that could affect a Portfolio’s investment. Therealso can be difficulty obtaining and enforcing judgmentsagainst issuers in foreign countries. Foreign stockexchanges, broker-dealers and listed issuers may be sub-ject to less government regulation and oversight. Thecost of investing in foreign securities, including broker-age commissions and custodial expenses, can be higherthan in the United States.

In connection with their investments in foreign securi-ties, the Portfolios also may enter into contracts withbanks, brokers or dealers to purchase or sell securities orforeign currencies at a future date. A foreign currencyforward exchange contract is a negotiated agreementbetween the contracting parties to exchange a specifiedamount of currency at a specified future time at a speci-fied rate. The rate can be higher or lower than the spot

This section discussesadditional informationrelating to thePortfolios’ investmentstrategies, other typesof investments that thePortfolios may makeand related risk factors.The Portfolios’investment practicesand limitations aredescribed in moredetail in the Statementof AdditionalInformation (“SAI”),which is incorporatedby reference and legallyis a part of thisProspectus. For detailson how to obtain acopy of the SAI andother reports andinformation, see theback cover of thisProspectus.


Additional Information about the Portfolios’ Investment Strategies and Related Risks

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rate between the currencies that are the subject of thecontract. Foreign currency forward exchange contractsmay be used to protect against uncertainty in the level offuture foreign currency exchange rates or to gain ormodify exposure to a particular currency. In addition, aPortfolio may use cross currency hedging or proxy hedg-ing with respect to currencies in which the Portfolio hasor expects to have portfolio or currency exposure. Crosscurrency hedges involve the sale of one currency againstthe positive exposure to a different currency and may beused for hedging purposes or to establish an active expo-sure to the exchange rate between any two currencies.

Emerging Market RisksCertain Portfolios may invest in emerging market ordeveloping countries, which are countries that majorinternational financial institutions, such as the WorldBank, generally consider to be less economically maturethan developed nations, such as the United States ormost nations in Western Europe. Emerging market ordeveloping countries can include every nation in theworld except the United States, Canada, Japan,Australia, New Zealand and most countries located inWestern Europe. Emerging market or developing coun-tries may be more likely to experience political turmoilor rapid changes in economic conditions than moredeveloped countries, and the financial condition ofissuers in emerging market or developing countries maybe more precarious than in other countries. In addition,emerging market securities generally are less liquid andsubject to wider price and currency fluctuations thansecurities issued in more developed countries. Thesecharacteristics result in greater risk of price volatility inemerging market or developing countries, which may beheightened by currency fluctuations relative to theU.S. dollar.

Foreign CurrencyThe investments of the Portfolios generally will bedenominated in foreign currencies. The value of foreigncurrencies may fluctuate relative to the value of the U.S.dollar. Since the Portfolios may invest in such non-U.S.dollar-denominated securities, and therefore may con-vert the value of such securities into U.S. dollars,changes in currency exchange rates can increase ordecrease the U.S. dollar value of the Portfolios’ assets.The Adviser may use derivatives to reduce this risk. TheAdviser may in its discretion choose not to hedge againstcurrency risk. In addition, certain market conditions maymake it impossible or uneconomical to hedge against cur-rency risk.

DerivativesThe Portfolios may, but are not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management or toearn income. Derivatives are financial instruments whosevalue is based on the value of an underlying asset, inter-est rate, index or financial instrument. A derivativeinstrument often has risks similar to its underlying asset

and may have additional risks, including imperfect cor-relation between the value of the derivative and theunderlying asset, risks of default by the counterparty tocertain transactions, magnification of losses incurreddue to changes in the market value of the securities,instruments, indices or interest rates to which theyrelate, and risks that the transactions may not be liquid.The use of derivatives involves risks that are differentfrom, and possibly greater than, the risks associatedwith other portfolio investments. Derivatives mayinvolve the use of highly specialized instruments thatrequire investment techniques and risk analyses differ-ent from those associated with other portfolio investments.

Certain derivative transactions may give rise to a formof leverage. Leverage magnifies the potential for gainand the risk of loss. Leverage associated with derivativetransactions may cause a Portfolio to liquidate portfoliopositions when it may not be advantageous to do so tosatisfy its obligations or to meet earmarking or segrega-tion requirements, pursuant to applicable SEC rulesand regulations, or may cause a Portfolio to be morevolatile than if the Portfolio had not been leveraged.Although the Adviser seeks to use derivatives to furthera Portfolio’s investment objectives, there is no assurancethat the use of derivatives will achieve this result.

The derivative instruments and techniques that certainPortfolios may use include:

Futures. A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of anunderlying instrument at a specific price at a specificfuture time. The value of a futures contract tends toincrease and decrease in tandem with the value of theunderlying instrument. Depending on the terms of theparticular contract, futures contracts are settled througheither physical delivery of the underlying instrument onthe settlement date or by payment of a cash settlementamount on the settlement date. A decision as to whether,when and how to use futures contracts involves the exer-cise of skill and judgment and even a well-conceivedfutures transaction may be unsuccessful because of mar-ket behavior or unexpected events. In addition to thederivatives risks discussed above, the prices of futurescontracts can be highly volatile, using futures contractscan lower total return, and the potential loss fromfutures contracts can exceed a Portfolio’s initial invest-ment in such contracts. No assurance can be given that aliquid market will exist for any particular futures con-tract at any particular time.

Options. If a Portfolio buys an option, it buys a legal con-tract giving it the right to buy or sell a specific amount ofthe underlying instrument or futures contract on theunderlying instrument at an agreed-upon price typicallyin exchange for a premium paid by the Portfolio. If aPortfolio sells an option, it sells to another person the



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right to buy from or sell to the Portfolio a specificamount of the underlying instrument or futures contracton the underlying instrument at an agreed-upon pricetypically in exchange for a premium received by thePortfolio. When options are purchased OTC, a Portfoliobears the risk that the counterparty that wrote the optionwill be unable or unwilling to perform its obligationsunder the option contract. Options may also be illiquidand a Portfolio may have difficulty closing out its posi-tion. A decision as to whether, when and how to useoptions involves the exercise of skill and judgment andeven a well-conceived option transaction may be unsuc-cessful because of market behavior or unexpected events.The prices of options can be highly volatile and the useof options can lower total returns.

Swaps. An OTC swap contract is an agreement betweentwo parties pursuant to which the parties exchange pay-ments at specified dates on the basis of a specifiednotional amount, with the payments calculated by refer-ence to specified securities, indices, reference rates, cur-rencies or other instruments. Most swap agreements pro-vide that when the period payment dates for both par-ties are the same, the payments are made on a net basis(i.e., the two payment streams are netted out, with onlythe net amount paid by one party to the other). APortfolio’s obligations or rights under a swap contractentered into on a net basis will generally be equal onlyto the net amount to be paid or received under the agree-ment, based on the relative values of the positions heldby each party. Most swap agreements are not entered intoor traded on exchanges and often there is no centralclearing or guaranty function for swaps. These OTCswaps are often subject to credit risk or the risk ofdefault or non-performance by the counterparty. Swapscould result in losses if interest rate or foreign currencyexchange rates or credit quality changes are not correctlyanticipated by a Portfolio or if the reference index, securi-ty or investments do not perform as expected. TheDodd-Frank Wall Street Reform and ConsumerProtection Act and related regulatory developments willrequire the clearing and exchange-trading of many OTCswap agreements. Mandatory exchange-trading and clear-ing will occur on a phased-in basis.

Contracts for Difference. A contract for difference(“CFD”) is a privately negotiated contract between twoparties, buyer and seller, stipulating that the seller willpay to or receive from the buyer the difference betweenthe nominal value of the underlying instrument at theopening of the contract and that instrument’s value atthe end of the contract. The underlying instrumentmay be a single security, stock basket or index. A CFDcan be set up to take either a short or long positionon the underlying instrument. The buyer and sellerare typically both required to post margin, which is adjusted daily. The buyer will also pay to the seller afinancing rate on the notional amount of the capital

employed by the seller less the margin deposit. In addi-tion to the general risks of derivatives, CFDs may besubject to liquidity risk and counterparty risk.

Structured Investments. The Portfolios also may invest aportion of their assets in structured investments. Astructured investment is a derivative security designedto offer a return linked to a particular underlying secu-rity, currency, commodity, or market. Structuredinvestments may come in various forms includingnotes, warrants and options to purchase securities. ThePortfolios will typically use structured investments togain exposure to a permitted underlying security, cur-rency, commodity, or market when direct access to amarket is limited or inefficient from a tax or coststandpoint. Investments in structured investmentsinvolve risks including issuer risk, counterparty riskand market risk. Holders of structured investmentsbear risks of the underlying investment and are subjectto issuer or counterparty risk because a Portfolio isrelying on the creditworthiness of such issuer or coun-terparty and has no rights with respect to the underly-ing investment. Certain structured investments may bethinly traded or have a limited trading market and mayhave the effect of increasing a Portfolio’s illiquidity tothe extent that the Portfolio, at a particular point intime, may be unable to find qualified buyers for thesesecurities.

Real Estate Investment Trusts and Foreign Real EstateCompaniesInvesting in real estate investment trusts (“REITs”) andforeign real estate companies exposes investors to therisks of owning real estate directly, as well as to risksthat relate specifically to the way in which REITs andforeign real estate companies are organized and operated.REITs and foreign real estate companies generally investdirectly in real estate, in mortgages or in some combina-tion of the two. Operating REITs and foreign real estatecompanies requires specialized management skills and aPortfolio indirectly bears management expenses alongwith the direct expenses of the Portfolio. IndividualREITs and foreign real estate companies may own a lim-ited number of properties and may concentrate in a par-ticular region or property type. REITs also must satisfyspecific requirements of the Internal Revenue Code of1986, as amended (the “Code”), in order to qualify fortax-free pass-through income. The failure of a companyto qualify as a REIT could have adverse consequencesfor a Portfolio, including significantly reducing thereturn to a Portfolio on its investment in such company.Foreign real estate companies may be subject to laws,rules and regulations governing those entities and theirfailure to comply with those laws, rules and regulationscould negatively impact the performance of those entities.In addition, REITs and foreign real estate companies,like mutual funds, have expenses, including manage-ment and administration fees, that are paid by their


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shareholders. As a result, shareholders will absorb theirproportionate share of duplicate levels of fees when aPortfolio invests in REITs and foreign real estate companies.

Exchange-Traded FundsThe Portfolios may invest in ETFs. ETFs seek to trackthe performance of various portions or segments of theequity and fixed income markets. Shares of ETFs havemany of the same risks as direct investments in commonstocks or bonds. In addition, the market value of ETFshares may differ from their NAV because the supplyand demand in the market for ETF shares at any pointin time is not always identical to the supply and demandin the market for the underlying securities. Also, ETFsthat track particular indices typically will be unable tomatch the performance of the index exactly due to theETF’s operating expenses and transaction costs. ETFstypically incur fees that are separate from those feesincurred directly by the Portfolio. Therefore, as a share-holder in an ETF, the Portfolio would bear its ratableshare of that entity’s expenses. At the same time, thePortfolio would continue to pay its own investmentmanagement fees and other expenses. As a result, thePortfolio and its shareholders, in effect, will be absorbingduplicate levels of fees with respect to investments inETFs.

Initial Public OfferingsCertain Portfolios may purchase shares issued as part of,or a short period after, a company’s initial public offering(“IPOs”), and may at times dispose of those shares shortly after their acquisition. A Portfolio’s purchase ofshares issued in IPOs exposes it to the risks associatedwith companies that have little operating history as pub-lic companies, as well as to the risks inherent in thosesectors of the market where these new issuers operate.

The market for IPO issuers has been volatile, and shareprices of newly-public companies have fluctuated signifi-cantly over short periods of time. IPOs may producehigh, double-digit returns. Such returns are highlyunusual and may not be sustainable.

Investment DiscretionIn pursuing the Portfolios’ investment objectives, theAdviser has considerable leeway in deciding whichinvestments it buys, holds or sells on a day-to-day basis,and which trading strategies it uses. For example, theAdviser, in its discretion, may determine to use somepermitted trading strategies while not using others. Thesuccess or failure of such decisions will affect thePortfolios’ performance.

Temporary Defensive InvestmentsWhen the Adviser believes that changes in market, eco-nomic, political or other conditions warrant, eachPortfolio may invest without limit in cash, cash equiva-lents or other fixed income securities for temporarydefensive purposes that may be inconsistent with aPortfolio’s principal investment strategies. If the Adviserincorrectly predicts the effects of these changes, suchdefensive investments may adversely affect a Portfolio’sperformance and the Portfolio may not achieve itsinvestment objective.

Portfolio TurnoverConsistent with its investment policies, a Portfolio willpurchase and sell securities without regard to the effecton portfolio turnover. Higher portfolio turnover(e.g., over 100% per year) will cause a Portfolio to incuradditional transaction costs and may result in taxablegains being passed through to shareholders. ThePortfolios may engage in frequent trading of securities toachieve their investment objectives.



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Portfolio ManagementGrowth Portfolio andSmall Company Growth PortfolioEach Portfolio is managed by members of the Growthteam. The team consists of portfolio managers and analysts. Current members of the team jointly and primarily responsible for the day-to-day managementof each Portfolio are Dennis P. Lynch, David S. Cohen,Sam G. Chainani, Alexander T. Norton, Jason C.Yeung and Armistead B. Nash.

Mr. Lynch has been associated with the Adviser in aninvestment management capacity since 1998. Mr. Cohen

has been associated with the Adviser in an investmentmanagement capacity since 1993. Mr. Chainani has beenassociated with the Adviser in an investment managementcapacity since 1996. Mr. Norton has been associatedwith the Adviser in an investment management capacitysince 2000. Messrs. Yeung and Nash have been associatedwith the Adviser in an investment management capacitysince 2002.

Mr. Lynch is the lead portfolio manager of the Portfolio.Messrs. Cohen, Chainani, Norton, Yeung and Nash areco-portfolio managers. Members of the team collaborateto manage the assets of the Portfolio.

Adviser’s Rates of Compensation(as a percentage of average net assets)

0.00%Global Discovery Portfolio

0.50%Growth Portfolio

0.83%Small Company Growth Portfolio

Advisory Fees

For the fiscal year ended December 31, 2012, theAdviser received from each Portfolio the advisory fee(net of fee waivers and/or affiliated rebates, if applicable)set forth in the table below.

Morgan Stanley Investment Management Inc., withprincipal offices at 522 Fifth Avenue, New York,NY 10036, conducts a worldwide portfolio managementbusiness and provides a broad range of portfolio man-agement services to customers in the United States andabroad. Morgan Stanley (NYSE: “MS”) is the direct par-ent of the Adviser and the indirect parent of theDistributor. Morgan Stanley is a preeminent globalfinancial services firm engaged in securities trading andbrokerage activities, as well as providing investment

banking, research and analysis, financing and financialadvisory services. As of March 31, 2013, the Adviser,together with its affiliated asset management companies,had approximately $341.5 billion in assets under manage-ment or supervision.

A discussion regarding the Board of Directors’ approvalof the Investment Advisory Agreement is available ineach Portfolio’s Semiannual Report to Shareholders forthe period ended June 30, 2012.

Adviser

The Adviser has agreed to reduce its advisory feeand/or reimburse the Portfolios, if necessary, if suchfees would cause the total annual operating expenses ofeach Portfolio to exceed the percentage of average dailynet assets set forth in the table below. In determiningthe actual amount of fee waiver and/or expense reim-bursement for a Portfolio, if any, the Adviser excludesfrom annual operating expenses certain investment

related expenses, taxes, interest and other extraordinaryexpenses (including litigation). The fee waivers and/orexpense reimbursements for a Portfolio will continuefor at least one year or until such time as the Fund’sBoard of Directors acts to discontinue all or a portionof such waivers and/or reimbursements when it deemssuch action is appropriate.

Expense Cap Expense Cap Expense Cap Expense Cap Class I Class P Class H Class LGlobal Discovery Portfolio 1.35% 1.60% 1.60% 2.10%Growth Portfolio 0.80% 1.05% 1.05% 1.55%Small Company Growth Portfolio 1.05% 1.30% 1.30% 1.80%


Fund Management



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Global Discovery PortfolioThe Portfolio is managed by members of the Growthteam. The team consists of portfolio managers andanalysts. Burak Alici is the lead portfolio manager andis primarily responsible for the day-to-day managementof the Portfolio. Mr. Alici has been associated withthe Adviser in an investment management capacitysince 2007.

Additional InformationThe Portfolios’ SAI provides additional informationabout the portfolio managers’ compensation structure,other accounts managed by the portfolio managers andthe portfolio managers’ ownership of securities in thePortfolios.

The composition of each team may change from time totime.

Portfolio Management (Cont’d)



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Share Class ArrangementsThis Prospectus offers Class I, Class P, Class H andClass L shares of each Portfolio. Neither Class I norClass L shares are subject to a sales charge, and Class Ishares are not subject to a distribution and/or sharehold-er service (12b-1) fee. Class I shares generally requireinvestments in minimum amounts that are substantiallyhigher than Class P, Class H and Class L shares.

The Fund suspended offering Class P, Class H andClass L shares of the Small Company Growth Portfolioto new investors.The Fund will continue to offer Class P,Class H and Class L shares of the Small CompanyGrowth Portfolio to existing shareholders. The Fundmay recommence offering Class P, Class H and Class Lshares of the Small Company Growth Portfolio to newinvestors in the future. Any such offerings of the SmallCompany Growth Portfolio’s Class P, Class H andClass L shares may be limited in amount and may com-mence and terminate without any prior notice.

Minimum Investment AmountsThe minimum initial investment generally is$5,000,000 for Class I shares, $25,000 for Class Hshares and $1,000 for each of Class P and Class L sharesof a Portfolio. The minimum initial investment may bewaived for the following categories: (1) sales throughbanks, broker-dealers and other financial institutions(including registered investment advisers and financialplanners) purchasing shares on behalf of their clients in(i) discretionary and non-discretionary advisory programs,(ii) fund supermarkets, (iii) asset allocation programs,(iv) other programs in which the client pays an asset-basedfee for advice or for executing transactions in Portfolioshares or for otherwise participating in the program or(v) certain other investment programs that do not chargean asset-based fee; (2) qualified state tuition plansdescribed in Section 529 of the Code and donor-advisedcharitable gift funds (subject to all applicable terms andconditions); (3) defined contribution, defined benefit andother employer-sponsored employee benefit plans,whether or not qualified under the Code; (4) certainretirement and deferred compensation programs estab-lished by Morgan Stanley Investment Management or itsaffiliates for their employees or the Fund’s Directors;(5) current or retired directors, officers and employees ofMorgan Stanley and any of its subsidiaries, such persons’spouses, and children under the age of 21, and trustaccounts for which any of such persons is a beneficiary;(6) current or retired Directors or Trustees of the MorganStanley Funds, such persons’ spouses, and children underthe age of 21, and trust accounts for which any of suchpersons is a beneficiary; (7) certain other registered open-end investment companies whose shares are distributed bythe Distributor; (8) with respect to holders of Class I andClass P shares, respectively, clients who owned suchPortfolio shares as of December 31, 2007, as applicable;(9) investments made in connection with certain mergersand/or reorganizations as approved by the Adviser; or(10) the reinvestment of dividends in additional Portfolioshares. If the value of your account falls below the minimum initial investment amount for Class I, Class P,

Class H or Class L shares as a result of share redemp-tions or you no longer meet one of the waiver criteria setforth above, your account may be subject to involuntaryconversion or involuntary redemption, as applicable.You will be notified prior to any such conversions orredemptions.

Distribution of Portfolio SharesMorgan Stanley Distribution, Inc. is the exclusiveDistributor of Class I, Class P, Class H and Class L sharesof each Portfolio. The Distributor receives no compensa-tion from the Fund for distributing Class I shares of thePortfolios. The Fund has adopted a Shareholder ServicesPlan with respect to the Class P shares of each Portfolio, aShareholder Services Plan with respect to the Class Hshares of each Portfolio and a Distribution andShareholder Services Plan with respect to the Class Lshares of each Portfolio (the “Plans”) pursuant toRule 12b-1 under the Investment Company Act of 1940,as amended (the “1940 Act”). Under the Plans, eachPortfolio pays the Distributor a shareholder services fee ofup to 0.25% of the average daily net assets of each of theClass P, Class H and Class L shares on an annualizedbasis and a distribution fee of up to 0.50% of the averagenet assets of Class L shares on an annualized basis. TheDistributor may compensate other parties for providingdistribution-related and/or shareholder support services toinvestors who purchase Class P, Class H and Class Lshares. Such fees relate solely to the Class P, Class H andClass L shares and will reduce the net investment incomeand total return of the Class P, Class H and Class L shares,respectively.

The Adviser and/or Distributor may pay compensationto certain authorized third-parties, such as brokers, deal-ers or other financial intermediaries that have enteredinto a selling agreement with the Distributor (each a“Financial Intermediary”) in connection with the sale,distribution, marketing and retention of a Portfolio’sshares and/or shareholder servicing. Such compensationmay be significant in amount and the prospect of receiv-ing any such additional compensation may provide affil-iated or unaffiliated Financial Intermediaries with anincentive to favor sales of shares of the Portfolios overother investment options. Any such payments will notchange the NAV or the price of a Portfolio’s shares. Formore information, please see the Portfolios’ SAI.

About Net Asset ValueThe NAV per share of a class of shares of a Portfolio isdetermined by dividing the total of the value of thePortfolio’s investments and other assets attributable tothe class, less any liabilities attributable to the class, bythe total number of outstanding shares of that class ofthe Portfolio. In making this calculation, each Portfoliogenerally values securities at market price. If marketprices are unavailable or may be unreliable because ofevents occurring after the close of trading, including cir-cumstances under which the Adviser determines that asecurity’s market price is not accurate, fair value pricesmay be determined in good faith using methodsapproved by the Board of Directors.

Shareholder Information





Shareholder Information (Cont’d)

In addition, with respect to securities that primarily arelisted on foreign exchanges, when an event occurs afterthe close of such exchanges that is likely to have changedthe value of the securities (e.g., a percentage change invalue of one or more U.S. securities indices in excess ofspecified thresholds), such securities will be valued attheir fair value, as determined under procedures estab-lished by the Fund’s Board of Directors. Securities alsomay be fair valued in the event of a significant develop-ment affecting a country or region or an issuer-specificdevelopment which is likely to have changed the valueof the security. In these cases, a Portfolio’s NAV willreflect certain portfolio securities’ fair value rather thantheir market price. To the extent a Portfolio invests inopen-end management companies that are registeredunder the 1940 Act, the Portfolio’s NAV is calculatedbased upon the NAV of such funds. The prospectusesfor such funds explain the circumstances under whichthey will use fair value pricing and its effects.

Fair value pricing involves subjective judgments and it ispossible that the fair value determined for a security ismaterially different than the value that could be realizedupon the sale of that security. With respect to securitiesthat are primarily listed on foreign exchanges, the valuesof a Portfolio’s investment securities may change on dayswhen you will not be able to purchase or sell your shares.

Pricing of Portfolio SharesYou may buy or sell (redeem) Class I, Class P, Class Hand Class L shares of the Portfolios at the NAV nextdetermined for the class after receipt of your order, plusany applicable sales charge. The Fund determines theNAV per share for the Portfolios as of the close of theNYSE (normally 4:00 p.m. Eastern Time) on each daythat the NYSE is open for business (the “Pricing Time”).

Portfolio HoldingsA description of the Fund’s policies and procedures withrespect to the disclosure of each Portfolio’s securities isavailable in the Portfolios’ SAI.

How To Purchase Class I and Class L SharesYou may purchase Class I and Class L shares of aPortfolio on each day that the Portfolios are open forbusiness by contacting your Financial Intermediary ordirectly from the Fund.

Purchasing Shares Through a Financial IntermediaryYou may open a new account and purchase Class I andClass L shares of a Portfolio through a FinancialIntermediary. The Financial Intermediary will assist you,step-by-step, with the procedures to invest in Class I andClass L shares of a Portfolio. Investors purchasing orselling Class I and Class L shares through a FinancialIntermediary, including Morgan Stanley WealthManagement, may be charged a transaction-based orother fees by the Financial Intermediary for its services.If you are purchasing Class I or Class L shares through aFinancial Intermediary, please consult your FinancialIntermediary for more information regarding any suchfees and for purchase instructions.

Purchasing Shares Directly From the FundInitial Purchase by MailYou may open a new account, subject to acceptance bythe Fund, and purchase Class I and Class L shares bycompleting and signing a New Account Application pro-vided by Morgan Stanley Services Company Inc.(“Morgan Stanley Services”), the Fund’s transfer agent,which you can obtain by calling Morgan Stanley Servicesat 1-800-548-7786 and mailing it to Morgan StanleyInstitutional Fund, Inc., c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City, MO64121-9804 together with a check payable to MorganStanley Institutional Fund, Inc.

Please note that payments to investors who redeemClass I and Class L shares purchased by check will not bemade until payment of the purchase has been collected,which may take up to 15 calendar days after purchase.You can avoid this delay by purchasing Class I andClass L shares by wire.

Initial Purchase by WireYou may purchase Class I and Class L shares of eachPortfolio by wiring Federal Funds (monies credited bya Federal Reserve Bank) to State Street Bank and TrustCompany (the “Custodian”). You must forward a com-pleted New Account Application to Morgan Stanley Servicesin advance of the wire by following the instructions under“Initial Purchase by Mail.” You should instruct your bankto send a Federal Funds wire in a specified amount tothe Custodian using the following wire instructions:

State Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111-2101ABA #011000028DDA #00575373Attn: Morgan Stanley Institutional Fund, Inc.Subscription AccountRef: (Portfolio Name, Account Number,Account Name)

Additional InvestmentsYou may purchase additional Class I and Class L sharesfor your account at any time by contacting yourFinancial Intermediary or by contacting the Fund direct-ly. For additional purchases directly from the Fund, youshould write a “letter of instruction” that includes youraccount name, account number, the Portfolio name andthe class selected, signed by the account owner(s), toassure proper crediting to your account. The letter mustbe mailed along with a check in accordance with theinstructions under “Initial Purchase by Mail.” You mayalso purchase additional Class I and Class L shares bywire by following the instructions under “Initial Purchaseby Wire.”

How To Purchase Class P and Class H SharesClass P and Class H shares of a Portfolio may be pur-chased by contacting your Financial Intermediary,including Morgan Stanley Wealth Management, who

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will assist you, step-by-step, with the procedures toinvest in Class P and Class H shares. Your FinancialIntermediary, including Morgan Stanley WealthManagement, may charge transaction-based or other feesin connection with the purchase or sale of Class P andClass H shares. Please consult your Financial Intermediaryfor more information regarding any such fees.

Class P and Class H shares are subject to a sales chargeequal to a maximum of 5.25% and 4.75%, respectively,each calculated as a percentage of the offering price on asingle transaction as shown in the tables below. Asshown below, the sales charge is reduced for purchases of$25,000 and over with respect to Class P and $50,000and over with respect to Class H.

Class P Front End Sales Charge

Percentage of Approximate PercentageAmount of Single Transaction Public Offering Price of Net Amount InvestedLess than $25,000 5.25% 5.54%$25,000 but less than $50,000 4.75% 4.99%$50,000 but less than $100,000 4.00% 4.17%$100,000 but less than $250,000 3.00% 3.09%$250,000 but less than $500,000 2.50% 2.56%$500,000 but less than $1 million 2.00% 2.04%$1 million and over 0.00% 0.00%

Class H Front End Sales Charge

Percentage of Approximate PercentageAmount of Single Transaction Public Offering Price of Net Amount Invested$25,000 but less than $50,000 4.75% 4.99%$50,000 but less than $100,000 4.00% 4.17%$100,000 but less than $250,000 3.00% 3.09%$250,000 but less than $500,000 2.50% 2.56%$500,000 but less than $1 million 2.00% 2.04%$1 million and over 0.00% 0.00%

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You may benefit from a reduced sales charge schedule(i.e., breakpoint discount) for purchases of Class P orClass H shares of a Portfolio, by combining, in a singletransaction, your purchase with purchases of Class P orClass H shares of a Portfolio by the following relatedaccounts (“Related Accounts”):

• A single account (including an individual, a jointaccount, a trust or fiduciary account).

• A family member account (limited to spouse, andchildren under the age of 21).

• An UGMA/UTMA account.• Pension, profit sharing or other employee benefit

plans of companies and their affiliates.• Employer sponsored and individual retirement

accounts (including IRAs, Keogh, 401(k), 403(b),408(k) and 457(b) Plans).

• Tax-exempt organizations.• Groups organized for a purpose other than to buy

mutual fund shares.

In addition to investments of $1 million or more, pur-chases of Class P and Class H shares are not subject to afront-end sales charge if your account qualifies under oneof the following categories:

• Sales through banks, broker-dealers and other financialinstitutions (including registered investment advisersand financial planners) purchasing shares on behalf of

their clients in (i) discretionary and non-discretionaryadvisory programs, (ii) fund supermarkets, (iii) assetallocation programs, (iv) other programs in which theclient pays an asset-based fee for advice or for execut-ing transactions in Portfolio shares or for otherwiseparticipating in the program or (v) certain other invest-ment programs that do not charge an asset-based fee.

• Qualified state tuition plans described in Section 529of the Code and donor-advised charitable gift funds(subject to all applicable terms and conditions).

• Defined contribution, defined benefit and otheremployer-sponsored employee benefit plans, whetheror not qualified under the Code.

• Certain retirement and deferred compensation pro-grams established by Morgan Stanley InvestmentManagement or its affiliates for their employees or theFund’s Directors.

• Current or retired Directors or Trustees of the MorganStanley Funds, such persons’ spouses, and childrenunder the age of 21, and trust accounts for which anyof such persons is a beneficiary.

• Current or retired directors, officers and employees ofMorgan Stanley and any of its subsidiaries, such per-sons’ spouses, and children under the age of 21, andtrust accounts for which any of such persons is a beneficiary.

• Certain other registered open-end investment compa-nies whose shares are distributed by the Distributor.






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• Investments made in connection with certain mergersand/or reorganizations as approved by the Adviser.

• The reinvestment of dividends from Class P and/orClass H shares in additional Class P and/or Class Hshares, respectively.

Combined Purchase PrivilegeYou will have the benefit of reduced sales charges bycombining purchases of Class P or Class H shares of aPortfolio for any Related Account in a single transactionwith purchases of Class P or Class H shares of anotherportfolio of the Fund or of a portfolio of MorganStanley Institutional Fund Trust for the Related Accountor any other Related Account.

Right of AccumulationYou may benefit from a reduced sales charge if thecumulative NAV of Class P or Class H shares of aPortfolio purchased in a single transaction, together withthe NAV of all Class P or Class H shares of portfolios ofthe Fund or portfolios of Morgan Stanley InstitutionalFund Trust held in Related Accounts, amounts to$25,000 or more with respect to Class P and $50,000 ormore with respect to Class H.

NotificationYou must notify your Financial Intermediary at the timea purchase order is placed, that the purchase qualifies fora reduced sales charge under any of the privileges dis-cussed above. The reduced sales charge will not be grant-ed if: (i) notification is not furnished at the time of theorder; or (ii) a review of the records of Morgan StanleySmith Barney LLC (“Morgan Stanley Smith Barney”) oryour Financial Intermediary or the Fund’s transfer agent,Morgan Stanley Services, does not confirm your repre-sented holdings.

In order to obtain a reduced sales charge under any ofthe privileges discussed above, it may be necessary at thetime of purchase for you to inform your FinancialIntermediary of the existence of other accounts in whichthere are holdings eligible to be aggregated to meet thesales load breakpoint and/or right of accumulationthreshold. In order to verify your eligibility, you may berequired to provide account statements and/or confirma-tions regarding Class P and Class H shares of a portfolioof the Fund or of a portfolio of Morgan StanleyInstitutional Fund Trust held in all Related Accountsdescribed above at your Financial Intermediary, as wellas shares held by related parties, such as members of thesame family or household, in order to determinewhether you have met the sales load breakpoint and/orright of accumulation threshold.

Letter of IntentThe above schedule of reduced sales charges for largerpurchases also will be available to you if you enter into awritten “Letter of Intent.” A Letter of Intent provides for

the purchase of Class P or Class H shares of a portfolioof the Fund or of a portfolio of Morgan StanleyInstitutional Fund Trust within a 13-month period. Theinitial purchase under a Letter of Intent must be at least5% of the stated investment goal. The Letter of Intentdoes not preclude a Portfolio from discontinuing sales ofits shares. To determine the applicable sales chargereduction, you may also include (1) the cost of otherClass P or Class H shares which were previously pur-chased at a price including a front-end sales charge dur-ing the 90-day period prior to the Distributor receivingthe Letter of Intent and (2) the historical cost of Class Pand Class H shares of other portfolios of the Fund orportfolios of Morgan Stanley Institutional Fund Trustyou currently own that you acquired in exchange forshares of other portfolios of the Fund or portfolios ofMorgan Stanley Institutional Fund Trust purchased dur-ing that period at a price including a front-end salescharge. You may combine purchases and exchanges byfamily members (limited to spouse, and children underthe age of 21) during the period referenced above. Youshould retain any records necessary to substantiate his-torical costs because the Fund, Morgan Stanley Servicesand Financial Intermediary may not maintain this infor-mation. You can obtain a Letter of Intent by contactingyour Financial Intermediary. If you do not achieve thestated investment goal within the 13-month period, youare required to pay the difference between the salescharges otherwise applicable and sales charges actuallypaid, which may be deducted from your investment.Shares acquired through reinvestment of distributionsare not aggregated to achieve the stated investment goal.

Additional InvestmentsYou may purchase additional Class P and Class H sharesfor your account at any time by contacting yourFinancial Intermediary.

GeneralClass I, Class P, Class H and Class L shares may, in theFund’s discretion, be purchased with investment securities(in lieu of or, in conjunction with, cash) acceptable to theFund. The securities would be accepted by the Fund attheir market value in return for Portfolio shares of equalvalue, taking into account any applicable sales charge.

To help the U.S. Government fight the funding of ter-rorism and money laundering activities, federal lawrequires all financial institutions to obtain, verify andrecord information that identifies each person whoopens an account. What this means to you: when youopen an account, we will ask your name, address, date ofbirth and other information that will allow us to identifyyou. If we are unable to verify your identity, we reservethe right to restrict additional transactions and/or liqui-date your account at the next calculated NAV after youraccount is closed (less any applicable sales/accountcharges and/or tax penalties) or take any other action




29

required by law. In accordance with federal law require-ments, the Fund has implemented an anti-money laundering compliance program, which includes the designation of an anti-money laundering complianceofficer.

When you buy Portfolio shares, the shares will be pur-chased at the next share price calculated (plus any appli-cable sales charge) after we receive your purchase order.Your payment is due on the third business day after youplace your purchase order. We reserve the right to rejectany order for the purchase of Portfolio shares for anyreason.

The Fund may suspend the offering of shares, or any classof shares, of the Portfolios when we think it is in the bestinterests of the Portfolios.

Certain patterns of exchange and/or purchase or saletransactions involving the Portfolios may result in theFund rejecting, limiting or prohibiting, at its sole discre-tion, and without prior notice, additional purchasesand/or exchanges and may result in a shareholder’saccount being closed. Determination in this regard maybe made based on the frequency or dollar amount of theprevious exchange or purchase or sale transaction. See“Frequent Purchases and Redemptions of Shares.”

How To Redeem SharesClass I and Class L SharesYou may process a redemption request by contactingyour Financial Intermediary. Otherwise, you mayredeem Class I and Class L shares of a Portfolio by mailor, if authorized, by telephone, at no charge other thanas described below. The value of shares redeemed may bemore or less than the purchase price, depending on theNAV at the time of redemption. Class I and Class Lshares of a Portfolio will be redeemed at the NAV nextdetermined after we receive your redemption request ingood order.

Redemptions by LetterRequests should be addressed to Morgan StanleyInstitutional Fund, Inc., c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City,MO 64121-9804.

To be in good order, redemption requests must includethe following documentation:

(a) A letter of instruction, if required, or a stockassignment specifying the account name, the accountnumber, the name of the Portfolio and the number ofshares or dollar amount to be redeemed, signed by allregistered owners of the shares in the exact names inwhich the shares are registered, and whether you wish

to receive the redemption proceeds by check or by wireto the bank account we have on file for you;

(b) The share certificates, if issued;

(c) Any required signature guarantees if you arerequesting payment to anyone other than the registeredowner(s) or that payment be sent to any address otherthan the address of the registered owner(s) or pre-designated bank account; and

(d) Other supporting legal documents, if required, inthe case of estates, trusts, guardianships, custodianship,corporations, pension and profit sharing plans and otherorganizations.

Redemptions by TelephoneYou automatically have telephone redemption andexchange privileges unless you indicate otherwise bychecking the applicable box on the New AccountApplication or calling Morgan Stanley Services to optout of such privileges. You may request a redemption ofClass I and Class L shares by calling the Fund at1-800-548-7786 and requesting that the redemptionproceeds be mailed or wired to you. You cannot redeemClass I and Class L shares by telephone if you hold sharecertificates for those shares. For your protection whencalling the Fund, we will employ reasonable proceduresto confirm that instructions communicated over thetelephone are genuine. These procedures may includerequiring various forms of personal identification (suchas name, mailing address, social security number orother tax identification number), tape-recording tele-phone communications and providing written confirma-tion of instructions communicated by telephone. If rea-sonable procedures are employed, none of MorganStanley, Morgan Stanley Services or the Fund will beliable for following telephone instructions which it rea-sonably believes to be genuine. Telephone redemptionsand exchanges may not be available if you cannot reachMorgan Stanley Services by telephone, whether becauseall telephone lines are busy or for any other reason; insuch case, a shareholder would have to use the Fund’sother redemption and exchange procedures described inthis section. Telephone instructions will be accepted ifreceived by Morgan Stanley Services between 9:00 a.m.and 4:00 p.m. Eastern time on any day the NYSE isopen for business. During periods of drastic economic ormarket changes, it is possible that the telephone privi-leges may be difficult to implement, although this hasnot been the case with the Fund in the past. To opt outof telephone privileges, please contact Morgan StanleyServices at 1-800-548-7786.

Class P and Class H SharesYou may redeem Class P and Class H shares of aPortfolio by contacting your Financial Intermediary. Thevalue of Class P and Class H shares redeemed may bemore or less than the purchase price, depending on the






30

NAV at the time of redemption. Class P and Class Hshares of the Portfolios will be redeemed at the NAVnext determined after we receive your redemptionrequest in good order.

Redemption ProceedsThe Fund will ordinarily distribute redemption proceedsin cash within one business day of your redemptionrequest, but it may take up to seven days. However, ifyou purchased Class I, Class P, Class H or Class L sharesby check, the Fund will not distribute redemption pro-ceeds until it has collected your purchase payment,which may take up to 15 calendar days.

If we determine that it is in the best interest of the Fundor Portfolio not to pay redemption proceeds in cash, wemay distribute to you securities held by the Portfolio. Ifrequested, we will pay a portion of your redemption(s) incash (during any 90 day period) up to the lesser of$250,000 or 1% of the net assets of the Portfolio at thebeginning of such period. Such in-kind securities may beilliquid and difficult or impossible for a shareholder tosell at a time and at a price that a shareholder would like.Redemptions paid in such securities generally will giverise to income, gain or loss for income tax purposes inthe same manner as redemptions paid in cash. In addi-tion, you may incur brokerage costs and a further gain orloss for income tax purposes when you ultimately sell thesecurities.

Redemption FeesClass I, Class P, Class H and Class L shares of the SmallCompany Growth Portfolio redeemed within 30 days ofpurchase may be subject to a 2% redemption fee,payable to the Portfolio. The redemption fee is designedto protect the Portfolio and its remaining shareholdersfrom the effects of short-term trading. The redemptionfee is not imposed on redemptions made: (i) throughsystematic withdrawal/exchange plans, (ii) through pre-approved asset allocation programs, (iii) of sharesreceived by reinvesting income dividends or capitalgain distributions, (iv) through certain collective trustfunds or other pooled vehicles and (v) on behalf ofadvisory accounts where client allocations are solely atthe discretion of the the Morgan Stanley InvestmentManagement investment team. The redemption fee isbased on, and deducted from, the redemption proceeds.Each time you redeem or exchange Class I, Class P,Class H and Class L shares, the shares held the longestwill be redeemed or exchanged first.

The redemption fee may not be imposed on transactionsthat occur through certain omnibus accounts atFinancial Intermediaries. Certain FinancialIntermediaries may not have the ability to assess aredemption fee. Certain Financial Intermediaries mayapply different methodologies than those describedabove in assessing redemption fees, may impose theirown redemption fee that may differ from the Small

Company Growth Portfolio’s redemption fee or mayimpose certain trading restrictions to deter market-timing and frequent trading. If you invest in a Portfoliothrough a Financial Intermediary, please read thatFinancial Intermediary’s materials carefully to learnabout any other restrictions or fees that may apply.

Exchange PrivilegeYou may exchange Class I, Class P, Class H and Class Lshares of a Portfolio for the same class of shares of otheravailable portfolios of the Fund and available portfoliosof Morgan Stanley Institutional Fund Trust, without theimposition of an exchange fee. A front-end sales charge(load) is not imposed on exchanges of Class P orClass H shares. Exchanges are effected based on therespective NAVs of the applicable portfolios (subject toany applicable redemption fee). To obtain a prospectusfor another portfolio, call the Fund at 1-800-548-7786or contact your Financial Intermediary. If you purchasedPortfolio shares through a Financial Intermediary, cer-tain portfolios may be unavailable for exchange. Contactyour Financial Intermediary to determine which portfo-lios are available for exchange.

With respect to exchanges of Class I and Class L shares,you can process your exchange by contacting yourFinancial Intermediary. Otherwise, you should sendexchange requests by mail to Morgan StanleyInstitutional Fund, Inc., c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City, MO64121-9804. Exchange requests can also be made bycalling 1-800-548-7786. With respect to exchanges ofClass P and Class H shares, you can process yourexchange by contacting your Financial Intermediary.

When you exchange for shares of another portfolio, yourtransaction will be treated the same as an initial pur-chase. You will be subject to the same minimum initialinvestment and account size as an initial purchase. Yourexchange price will be the price calculated at the nextPricing Time after the Fund receives your exchangeorder. The Fund, in its sole discretion, may waive theminimum initial investment amount in certain cases.An exchange of Class I, Class P, Class H or Class Lshares of the Small Company Growth Portfolio held forless than 30 days from the date of purchase will be sub-ject to the 2% redemption fee described above. TheFund may terminate or revise the exchange privilegeupon required notice or in certain cases without notice.The Fund reserves the right to reject an exchange orderfor any reason.

Frequent Purchases and Redemptions of SharesFrequent purchases and redemptions of shares byPortfolio shareholders are referred to as “market-timing”or “short-term trading” and may present risks for othershareholders of a Portfolio, which may include, amongother things, diluting the value of a Portfolio’s shares heldby long-term shareholders, interfering with the efficient




31

management of the Portfolio, increasing brokerage andadministrative costs, incurring unwanted taxable gainsand forcing the Portfolio to hold excess levels of cash.

In addition, a Portfolio is subject to the risk that market-timers and/or short-term traders may take advantage oftime zone differences between the foreign markets onwhich a Portfolio’s securities trade and the time thePortfolio’s NAV is calculated (“time-zone arbitrage”). Forexample, a market-timer may purchase shares of aPortfolio based on events occurring after foreign marketclosing prices are established, but before the Portfolio’sNAV calculation, that are likely to result in higher pricesin foreign markets the following day. The market-timerwould redeem the Portfolio’s shares the next day whenthe Portfolio’s share price would reflect the increasedprices in foreign markets for a quick profit at theexpense of long-term Portfolio shareholders.

Investments in other types of securities also may be sus-ceptible to short-term trading strategies. These invest-ments include securities that are, among other things,thinly traded, traded infrequently or relatively illiquid,which have the risk that the current market price for thesecurities may not accurately reflect current market val-ues. A shareholder may seek to engage in short-termtrading to take advantage of these pricing differences(referred to as “price arbitrage”). Investment in certaintypes of fixed income securities may be adversely affectedby price arbitrage trading securities.

The Fund discourages and does not accommodate fre-quent purchases and redemptions of Portfolio shares byPortfolio shareholders and the Fund’s Board of Directorshas adopted policies and procedures with respect to suchfrequent purchases and redemptions.

The Fund’s policies with respect to purchases andredemptions of Portfolio shares are described in the“Shareholder Information—How To Purchase Class Iand Class L Shares,” “Shareholder Information—How toPurchase Class P and Class H Shares,” “ShareholderInformation—General” and “ShareholderInformation—How to Redeem Shares” sections of thisProspectus. Except as described in each of these sections,and with respect to trades that occur through omnibusaccounts at Financial Intermediaries, as described below,the Fund’s policies regarding frequent trading ofPortfolio shares are applied uniformly to all shareholders.With respect to trades that occur through omnibusaccounts at Financial Intermediaries, such as investmentadvisers, broker-dealers, transfer agents and third-partyadministrators, the Fund (i) has requested assurance thatsuch Financial Intermediaries currently selling Portfolioshares have in place internal policies and procedures rea-sonably designed to address market-timing concerns andhas instructed such Financial Intermediaries to notifythe Fund immediately if they are unable to comply with

such policies and procedures and (ii) requires all prospec-tive Financial Intermediaries to agree to cooperate inenforcing the Fund’s policies (or, upon prior writtenapproval only, a Financial Intermediary’s own policies)with respect to frequent purchases, redemptions andexchanges of Portfolio shares.

With respect to trades that occur through omnibusaccounts at Financial Intermediaries, to some extent,the Fund relies on the Financial Intermediary to moni-tor frequent short-term trading within a Portfolio bythe Financial Intermediary’s customers and to collectthe Portfolio’s redemption fee, as applicable, from itscustomers. However, the Fund has entered into agree-ments with Financial Intermediaries whereby FinancialIntermediaries are required to provide certain customeridentification and transaction information upon theFund’s request. The Fund may use this information tohelp identify and prevent market-timing activity in theFund. There can be no assurance that the Fund will beable to identify or prevent all market-timing activities.

Dividends and DistributionsEach Portfolio’s policy is to distribute to shareholderssubstantially all of its net investment income, if any, inthe form of an annual dividend and to distribute netrealized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and dis-tributions in additional shares. However, you may electto receive distributions in cash by giving written noticeto the Fund or your Financial Intermediary or bychecking the appropriate box in the DistributionOption section on the New Account Application.

TaxesThe dividends and distributions you receive from aPortfolio may be subject to federal, state and local taxa-tion, depending on your tax situation. The tax treat-ment of dividends and distributions is the samewhether or not you reinvest them. Dividends paid by aPortfolio that are attributable to “qualified dividends”received by the Portfolio may be taxed at reduced ratesto individual shareholders (either 15% or 20%, depend-ing on whether the individual’s income exceeds certainthreshold amounts), if certain requirements are met bythe Portfolio and the shareholders. “Qualified divi-dends” may include dividends distributed by certainforeign corporations (generally, corporations incorporat-ed in a possession of the United States, some corpora-tions eligible for treaty benefits under a treaty with theUnited States and corporations whose stock withrespect to which such dividend is paid is readily trad-able on an established securities market in the UnitedStates). Dividends paid by a Portfolio not attributableto “qualified dividends” received by a Portfolio, includ-ing distributions of short-term capital gains, will betaxed at normal tax rates applicable to ordinary income.






The maximum individual rate applicable to long-termcapital gains is generally either 15% or 20%, dependingon whether the individual’s income exceeds certainthreshold amounts. The Fund will tell you annuallyhow to treat dividends and distributions.

If you redeem shares of a Portfolio, you may be subjectto tax on any gains you earn based on your holding period for the shares and your marginal tax rate. Anexchange of shares of a Portfolio for shares of anotherportfolio is treated for tax purposes as a sale of the origi-nal shares in the Portfolio, followed by the purchase ofshares in the other portfolio. Conversions of sharesbetween classes will not result in taxation.

For taxable years beginning after December 31, 2012, anadditional 3.8% Medicare tax will be imposed on certainnet investment income (including ordinary dividendsand capital gain distributions received from a Portfolioand net gains from redemptions or other taxable disposi-tions of Portfolio shares) of U.S. individuals, estates andtrusts to the extent that such person’s “modified adjustedgross income” (in the case of an individual) or “adjustedgross income” (in the case of an estate or trust) exceedscertain threshold amounts.

Due to recent legislation, the Portfolios (or their admin-istrative agent) are required to report to the InternalRevenue Service and furnish to Portfolio shareholdersthe cost basis information for sale transactions of sharespurchased on or after January 1, 2012. Shareholdersmay elect to have one of several cost basis methodsapplied to their account when calculating the cost basisof shares sold, including average cost, FIFO (“first-in,first-out”) or some other specific identification method.Unless you instruct otherwise, each Portfolio will useaverage cost as its default cost basis method, and willtreat sales as first coming from shares purchased prior toJanuary 1, 2012. If average cost is used for the first saleof Portfolio shares covered by these new rules, the share-holder may only use an alternative cost basis method forshares purchased prospectively. Portfolio shareholdersshould consult with their tax advisors to determine thebest cost basis method for their tax situation.

Because each investor’s tax circumstances are unique andthe tax laws may change, you should consult your taxadvisor about your investment.


The Fund currently consists of the following portfolios:

U.S. EquityAdvantage PortfolioGrowth PortfolioInsight PortfolioOpportunity PortfolioSmall Company Growth Portfolio*U.S. Real Estate Portfolio

Global and International EquityActive International Allocation PortfolioAsian Equity PortfolioEmerging Markets PortfolioFrontier Emerging Markets PortfolioGlobal Advantage PortfolioGlobal Discovery PortfolioGlobal Franchise PortfolioGlobal Insight PortfolioGlobal Opportunity Portfolio

Global Real Estate PortfolioInternational Advantage PortfolioInternational Equity PortfolioInternational Opportunity PortfolioInternational Real Estate PortfolioInternational Small Cap PortfolioSelect Global Infrastructure Portfolio

Fixed Income Emerging Markets Domestic Debt Portfolio

Emerging Markets External Debt Portfolio

Asset Allocation Multi-Asset Portfolio Total Emerging Markets Portfolio

* Class P, H and L shares of the Portfolio are currently closed to newinvestors

32



The financial highlights tables that follow are intendedto help you understand the financial performance ofthe Class I, Class P, Class H and Class L shares of eachPortfolio, as applicable, for the past five years or sinceinception if less than five years. Certain information re-flects financial results for a single Portfolio share. Thetotal returns in the tables represent the rate that an in-vestor would have earned (or lost) on an investment ineach Portfolio (assuming reinvestment of all dividendsand distributions).

The ratio of expenses to average net assets listed in thetables below for each class of shares of the Portfolios arebased on the average net assets of such Portfolio for eachof the periods listed in the tables. To the extent that a

Portfolio’s average net assets decrease over the Portfolio’snext fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixedcosts will be spread over a smaller amount of assets.

The information below has been audited by Ernst &Young LLP, the Fund’s independent registered publicaccounting firm. Ernst & Young LLP’s reports, alongwith each Portfolio’s financial statements, are incorpo-rated by reference into the SAI. The Annual Reports to Shareholders and each Portfolio’s financial statements,as well as the SAI, are available at no cost from theFund at the toll-free number noted on the back coverto this Prospectus.

Financial Highlights

33




Class I

Period from

Year EndedDecember 28,

December 31,2010^ to

December 31,Selected Per Share Data and Ratios 2012 2011 2010Net Asset Value, Beginning of Period $ 9.06 $ 9.97 $ 10.00

Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.25 0.13 (0.00)‡Net Realized and Unrealized Gain (Loss) 2.62 (0.92) (0.03)

Total from Investment Operations 2.87 (0.79) (0.03)

Distributions from and/or in Excess of:Net Investment Income (0.30) (0.12) —Net Realized Gain (0.52) (0.00)‡ —

Total Distributions (0.82) (0.12) —

Net Asset Value, End of Period $11.11 $ 9.06 $ 9.97

Total Return++ 31.64% (7.72)% (0.30)%#

Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $3,432 $2,446 $ 697Ratio of Expenses to Average Net Assets (1) 1.35%+ 1.35%+ 1.35%*Ratio of Net Investment Income (Loss) to Average Net Assets (1) 2.41%+ 1.39%+ (1.14)%*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%§ N/APortfolio Turnover Rate 96% 83% 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††

Ratios Before Expense Limitation:Expenses to Average Net Assets 4.33% 5.52% 238.14%*Net Investment Loss to Average Net Assets (0.57)% (2.78)% (237.93)%*

^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.+ The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley

affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to AverageNet Assets.”

§ Amount is less than 0.005%.# Not Annualized.* Annualized.

Merrill Corp - MS Institutional Fund Growth Portfolio Prospectus [Funds] 33-23166 04-30-2013 ED [AUX] | thunt | 22-Apr-13 09:28 | 13-2439-4.ea | Sequence: 1CHKSUM Content: 27669 Layout: 11588 Graphics: No Graphics CLEAN


34

Global Discovery Portfolio Class P

Period from









Total Return++ 31.40% (7.98)% (0.30)%#

Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $ 137 $ 91 $ 100Ratio of Expenses to Average Net Assets (1) 1.60%+ 1.60%+ 1.60%*Ratio of Net Investment Income (Loss) to Average Net Assets (1) 2.16%+ 1.14%+ (1.39)%*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%§ N/APortfolio Turnover Rate 96% 83% 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††







35



Global Discovery Portfolio Class H

Period from









Total Return++ 31.36% (7.96)% (0.30)%#

Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $1,597 $1,157 $ 349Ratio of Expenses to Average Net Assets (1) 1.60%+ 1.60%+ 1.60%*Ratio of Net Investment Income (Loss) to Average Net Assets (1) 2.16%+ 1.14%+ (1.39)%*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%§ N/APortfolio Turnover Rate 96% 83% 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††

Ratios Before Expense Limitation:Expense to Average Net Assets 4.58% 5.77% 238.39%*Net Investment Loss to Average Net Assets (0.82)% (3.03)% (238.18)%*

^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.+ The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley





36

Global Discovery Portfolio Class L

Period from









Total Return++ 30.62% (8.41)% (0.30)%#

Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $ 111 $ 91 $ 100Ratio of Expenses Average Net Assets (1) 2.10%+ 2.10%+ 2.10%*Ratio of Net Investment Income (Loss) to Average Net Assets (1) 1.66%+ 0.64%+ (1.89)%*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%§ N/APortfolio Turnover Rate 96% 83% 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††







37



Growth Portfolio Class I

Year Ended December 31,

Selected Per Share Data and Ratios 2012 2011 2010 2009 2008Net Asset Value, Beginning of Period $ 23.46 $ 24.24 $ 19.69 $ 12.12 $ 24.69

Income (Loss) from Investment Operations:Net Investment Income† 0.16 0.01 0.06 0.05 0.05Net Realized and Unrealized Gain (Loss) 3.52 (0.73) 4.49 7.58 (12.50)

Total from Investment Operations 3.68 (0.72) 4.55 7.63 (12.45)

Distributions from and/or in Excess of:Net Investment Income (0.05) (0.06) (0.00)‡ (0.06) (0.10)Net Realized Gain (0.04) — — — (0.02)

Total Distributions (0.09) (0.06) (0.00)‡ (0.06) (0.12)

Redemption Fees — — — 0.00‡ 0.00‡

Net Asset Value, End of Period $ 27.05 $ 23.46 $ 24.24 $ 19.69 $ 12.12

Total Return++ 15.66% (3.01)% 23.11% 62.97%** (50.47)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $661,073 $622,193 $704,410 $674,070 $543,841Ratio of Expenses to Average Net Assets 0.72%+ 0.71%+†† 0.73%+†† 0.65%+ 0.62%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A N/A 0.73%+†† 0.65%+ 0.62%+Ratio of Net Investment Income to Average Net Assets 0.59%+ 0.05%+†† 0.27%+†† 0.35%+ 0.24%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the

Portfolio’s past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in thefuture. Had these settlements not occurred, the total return for Class I shares would have been approximately 62.72%.

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

†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.



38

Growth Portfolio Class P



Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.09 (0.05) 0.00‡ 0.02 0.00‡Net Realized and Unrealized Gain (Loss) 3.45 (0.73) 4.42 7.46 (12.27)


Distributions from and/or in Excess of:Net Investment Income — (0.01) (0.00)‡ (0.02) (0.04)Net Realized Gain (0.04) — — — (0.02)




Total Return++ 15.36% (3.27)% 22.79% 62.66%** (50.57)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $138,416 $135,777 $136,585 $99,475 $59,883Ratio of Expenses to Average Net Assets 0.97%+ 0.96%+†† 0.98%+†† 0.90%+ 0.87%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A N/A 0.98%+†† 0.90%+ 0.87%+Ratio of Net Investment Income (Loss) to Average Net Assets 0.34%+ (0.20)%+†† 0.02%+†† 0.10%+ (0.01)%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the

Portfolio’s past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in thefuture. Had these settlements not occurred, the total return for Class P shares would have been approximately 62.41%.

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




39



Growth Portfolio Class H

Period from April 27, 2012^ to December 31, Selected Per Share Data and Ratios 2012Net Asset Value, Beginning of Period $27.60

Income (Loss) from Investment Operations:Net Investment Income† 0.08Net Realized and Unrealized Loss (1.10)

Total from Investment Operations (1.02)

Distributions from and/or in Excess of:Net Investment Income (0.02)Net Realized Gain (0.04)

Total Distributions (0.06)

Net Asset Value, End of Period $26.52

Total Return++ (3.72)%#

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 44Ratio of Expenses to Average Net Assets 0.96%+*Ratio of Net Investment Income to Average Net Assets 0.44%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%*§Portfolio Turnover Rate 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”§ Amount is less than 0.005%.# Not Annualized.* Annualized.



40

Growth Portfolio Class L

Period from April 27, 2012^ to December 31, Selected Per Share Data and Ratios 2012Net Asset Value, Beginning of Period $27.60



Distributions from and/or in Excess of:Net Investment Income (0.00)‡Net Realized Gain (0.04)




Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 10Ratio of Expenses Average Net Assets 1.51%+*Ratio of Net Investment Income to Average Net Assets 0.20%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%*§Portfolio Turnover Rate 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”# Not Annualized.* Annualized.§ Amount is less than 0.005%.



41



Small Company Growth Portfolio Class I



Income (Loss) from Investment Operations:Net Investment Income (Loss)† (0.03) (0.04) 0.01 (0.03) (0.01)Net Realized and Unrealized Gain (Loss) 2.19 (1.25) 3.02 3.68 (5.47)


Distributions from and/or in Excess of:Net Investment Income — — — (0.01) —Net Realized Gain (0.64) (0.24) — (0.14) —

Total Distributions (0.64) (0.24) — (0.15) —

Redemption Fees 0.00‡ 0.00‡ 0.00‡ 0.00‡ 0.00‡


Total Return++ 17.10% (9.12)% 27.20% 47.92% (41.84)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $1,143,640 $1,074,392 $1,227,782 $977,515 $638,559Ratio of Expenses to Average Net Assets (1) 1.05%+†† 1.05%+ 1.05%+†† 1.05%+ 1.02%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A 1.05%+ 1.05%+†† 1.05%+ 1.02%+Ratio of Net Investment Income (Loss) to Average Net Assets (1) (0.20)%+†† (0.29)%+ 0.10%+†† (0.28)%+ (0.08)%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 22% 26% 26% 27% 34%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.12%†† 1.10% 1.12%+†† 1.07%+ 1.05%+Net Investment Income (Loss) to Average Net Assets (0.27)%†† (0.34)% 0.03%+†† (0.30)%+ (0.11)%+

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.



42

Small Company Growth Portfolio Class P



Income (Loss) from Investment Operations:Net Investment Loss† (0.06) (0.07) (0.02) (0.05) (0.03)Net Realized and Unrealized Gain (Loss) 2.03 (1.16) 2.83 3.46 (5.17)


Distributions from and/or in Excess of:Net Realized Gain (0.64) (0.24) — (0.14) —

Redemption Fees 0.00‡ 0.00‡ 0.00‡ 0.00‡ 0.00‡


Total Return++ 16.70% (9.28)% 26.86% 47.41% (41.97)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $156,824 $282,988 $530,123 $536,329 $345,302Ratio of Expenses to Average Net Assets (1) 1.30%+†† 1.30%+ 1.30%+†† 1.30%+ 1.27%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A 1.30%+ 1.30%+†† 1.30%+ 1.27%+Ratio of Net Investment Loss to Average Net Assets (1) (0.45)%+†† (0.54)%+ (0.15)%+†† (0.53)%+ (0.34)%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 22% 26% 26% 27% 34%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.37%†† 1.35% 1.37%+†† 1.32%+ 1.30%+Net Investment Loss to Average Net Assets (0.52)%†† (0.59)% (0.22)%+†† (0.55)%+ (0.37)%+

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.



43



Small Company Growth Portfolio Class H

Period from November 11, Year Ended 2011^ to December 31, December 31,Selected Per Share Data and Ratios 2012 2011Net Asset Value, Beginning of Period $ 11.80 $ 12.47

Income (Loss) from Investment Operations:Net Investment Loss† (0.06) (0.00)‡Net Realized and Unrealized Gain (Loss) 2.04 (0.43)

Total from Investment Operations 1.98 (0.43)

Distributions from and/or in Excess of:Net Realized Gain (0.64) (0.24)

Redemption Fees 0.00‡ 0.00‡

Net Asset Value, End of Period $ 13.14 $ 11.80

Total Return++ 16.79% (3.46)%#

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $32,287 $32,006Ratio of Expenses to Average Net Assets (1) 1.30%+†† 1.30%+*Ratio of Net Investment Loss to Average Net Assets (1) (0.45)%+†† (0.26)%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§*Portfolio Turnover Rate 22% 26%*(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expense to Average Net Assets 1.37%†† 1.35%*Net Investment Loss to Average Net Assets (0.52)%†† (0.31)%*

^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.+ The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates




44

Small Company Growth Portfolio Class L

Period from November 11, Year Ended 2011^ to December 31, December 31,Selected Per Share Data and Ratios 2012 2011Net Asset Value, Beginning of Period $11.79 $12.47

Income (Loss) from Investment Operations:Net Investment Loss† (0.12) (0.01)Net Realized and Unrealized Gain (Loss) 2.03 (0.43)


Distributions from and/or in Excess of:Net Realized Gain (0.64) (0.24)

Redemption Fees 0.00‡ 0.00‡

Net Asset Value, End of Period $13.06 $11.79

Total Return++ 16.21% (3.54)%#

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $1,696 $1,657Ratio of Expenses Average Net Assets (1) 1.80%+†† 1.80%+*Ratio of Net Investment Loss to Average Net Assets (1) (0.95)%+†† (0.77)%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§*Portfolio Turnover Rate 22% 26%*(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.87%†† 1.85%*Net Investment Loss to Average Net Assets (1.02)%†† (0.82)%*

^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.+ The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates




In addition to this Prospectus, the Portfolios have a

Statement of Additional Information, dated April 30,

2013, which contains additional, more detailed

information about the Fund and the Portfolios. The

Statement of Additional Information is incorporated

by reference into this Prospectus and, therefore, legally

forms a part of this Prospectus.

The Portfolios publish Annual and Semiannual Reports

to Shareholders (“Shareholder Reports”) that contain

additional information about the respective Portfolio’s

investments. In each Portfolio’s Annual Report to

Shareholders, you will find a discussion of the market

conditions and the investment strategies that

significantly affected such Portfolio’s performance

during the last fiscal year. For additional Fund

information, including information regarding the

investments comprising each of the Portfolios, please

call the toll-free number below.

You may obtain the Statement of Additional

Information and Shareholder Reports without charge

by contacting the Fund at the toll-free number below or

on our internet site at: www.morganstanley.com/im. If

you purchased shares through a Financial Intermediary,

you may also obtain these documents, without charge,

by contacting your Financial Intermediary.

Information about the Fund (including the Statement of

Additional Information and Shareholder Reports) can be

reviewed and copied at the SEC’s Public Reference

Room in Washington, D.C. Information on the

operation of the Public Reference Room may be obtained

by calling the SEC at (202) 551-8090. Shareholder

Reports and other information about the Fund are

available on the EDGAR Database on the SEC’s Internet

site at http://www.sec.gov, and copies of this information

may be obtained, after paying a duplicating fee, by

electronic request at the following E-mail address:

[email protected], or by writing the SEC’s Public

Reference Section, Washington, D.C. 20549-1520.

Morgan Stanley Institutional Fund, Inc.

c/o Morgan Stanley Services Company Inc.

P.O. Box 219804

Kansas City, MO 64121-9804

For Shareholder Inquiries,

call 1-800-548-7786.

Prices and Investments Results are available at

www.morganstanley.com/im.

The Fund’s Investment Company Act registration number

is 811-05624.

Where to FindAdditional Information

MSIEQUPRO-0413


Additional Information

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AnnualReportDecember 31, 2012

Morgan Stanley

Institutional Fund, Inc.

Growth Portfolio

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JOB: 13-3765-3 CYCLE#;BL#: 1; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: e-del_sar_full.eps, ms_new_ko_logo.eps, ms_text_SAR_cvr_lg_flat_30k.eps V1.5

Shareholders’ Letter........................................................................................................................................2

Expense Example ...........................................................................................................................................3

Investment Overview .......................................................................................................................................4

Portfolio of Investments...................................................................................................................................6

Statement of Assets and Liabilities ...................................................................................................................8

Statement of Operations .................................................................................................................................9

Statements of Changes in Net Assets.............................................................................................................10

Financial Highlights .......................................................................................................................................11

Notes to Financial Statements........................................................................................................................15

Report of Independent Registered Public Accounting Firm ................................................................................22

Federal Tax Notice ........................................................................................................................................23

U.S. Privacy Policy ........................................................................................................................................24

Director and Officer Information .....................................................................................................................27

Table of Contents

1


Annual Report — December 31, 2012

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

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue toperform as discussed herein or that securities in such sectors will be held by the Portfolio in the future. There is no assurance that a Portfoliowill achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by thePortfolio will decline and, therefore, the value of the Portfolio’s shares may be less than what you paid for them. Accordingly, you can losemoney investing in Portfolios. Please see the prospectus for more complete information on investment risks.

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Dear Shareholders,

We are pleased to provide this Annual report, in which you will learn how your investment in Growth Portfolio performed duringthe latest twelve-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 financialmarkets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help themreach their investment goals.

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

Sincerely,

Arthur LevPresident and Principal Executive Officer

January 2013

Shareholders’ Letter (unaudited)



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As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs and (2) ongoing costs, including advisoryfees, administration fees, distribution and shareholder services fees and other Portfolio expenses. This example is intended to helpyou understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs ofinvesting in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2012and 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 valueby $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the tableunder the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during thisperiod.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of ExpenseOffset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio ofexpenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actualexpense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. Thehypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid forthe period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so,compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the otherfunds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect anytransactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparingongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if thesetransactional costs were included, your costs would have been higher.

Actual Net Beginning Actual Ending Expenses Expense Account Account Hypothetical Paid Hypothetical Ratio Value Value Ending Account During Expenses Paid During 7/1/12 12/31/12 Value Period* During Period* Period**

Growth Portfolio Class I $1,000.00 $1,039.20 $1,021.52 $3.69 $3.66 0.72%Growth Portfolio Class P 1,000.00 1,037.80 1,020.26 4.97 4.93 0.97Growth Portfolio Class H 1,000.00 1,037.70 1,020.31 4.92 4.88 0.96Growth Portfolio Class L 1,000.00 1,034.70 1,017.55 7.72 7.66 1.51

* Expenses are calculated using each Portfolio Class’ annualized net expense ratio (as disclosed), multiplied by the average account value over the period,and multiplied by 184/366 (to reflect the most recent one-half year period).

**Annualized.

Expense Example (unaudited)Growth Portfolio





4

Investment Overview (unaudited)Growth Portfolio

The Growth Portfolio (the “Portfolio”) seeks long-termcapital appreciation by investing primarily in growth-oriented equity securities of large capitalization companies.

Performance

For the year ended December 31, 2012, the Portfolio had atotal return based on net asset value and reinvestment ofdistributions per share of 15.66%, net of fees, for Class Ishares. The Portfolio’s Class I shares outperformed against itsbenchmark, the Russell 1000® Growth Index (the “Index”),which returned 15.26%.

Factors Affecting Performance

• Despite economic uncertainties in the U.S., Europeand China, accommodative monetary policy fromcentral banks around the world helped buoy theprices of stocks and other risky assets during the12 months ended December 31, 2012. The marketwas volatile during the year. The U.S. economyappeared to hit a soft patch in the spring, problemsin Greece and Spain reignited concerns about theEuropean debt crisis, and the lack of resolutionabout the “fiscal cliff ” (the automatic tax increasesand spending cuts triggered on January 1, 2013 thatpotentially raised recession risks) weighed on themarket. However, a pledge by the European CentralBank president to do “whatever it takes” to preservethe euro and additional stimulus from the U.S.Federal Reserve (including a third round ofquantitative easing, or QE3) eased fears. Corporateearnings growth remained strong, furthercontributing to market gains during the year, butwas expected to weaken in 2013.

• Stock selection in the consumer discretionary sectorwas the largest contributor to relative performance.Within the sector, a position in an online retailerled gains.

• The financial services sector also drove positiverelative performance, due to both stock selectionand an overweight in the sector. A holding in aglobal asset manager focused on property, powerand infrastructure assets was the top contributor inthe sector.

• An underweight to the consumer staples sectorbenefited relative performance.

• Stock selection in the technology sector dampenedrelative returns, with a holding in a socialnetworking web site detracting the most.

• Stock selection in energy also hurt relativeperformance but the negative influence wasmoderately offset by the benefit of an underweightin the sector.

• Stock selection in materials and processing wasdetrimental as well, driven by weakness from aposition in a rare earths miner.

Management Strategies

• We look for high-quality growth companies that webelieve have these attributes: sustainable competitiveadvantages, above-average business visibility, risingreturn on invested capital, strong free cash flowgeneration and a favorable risk/reward profile. Wefind these companies through intense fundamentalresearch. Our emphasis is on secular growth, and asa result, short-term market events are not asmeaningful in the stock selection process.

* Minimum Investment for Class I shares

In accordance with SEC regulations, Portfolio’s performance shown assumes that allrecurring fees (including management fees) were deducted and all dividends anddistributions were reinvested. The performance of Class H, L and P shares will varyfrom Class I shares based upon their different inception dates and will be negativelyimpacted by additional fees assessed to those classes.

4,000

6,000

12,000

10,000

8,000

14,000

Lipper Large-Cap Growth Funds IndexRussell 1000® Growth IndexGrowth Portfolio - Class I

Comparison of the Change in Value of a $5,000,000* InvestmentOver 10 Years

DO

LLA

RS

(00

0)

FISCAL YEAR ENDED DECEMBER 31

03 04 05 06 07 08 09 10 11 12

$11,180,580

$10,325,290

$9,292,119

KEY

02



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Investment Overview (unaudited) (cont’d)Growth Portfolio

Performance Compared to the Russell 1000®

Growth Index(1) and the Lipper Large-Cap GrowthFunds Index(2)

Period Ended December 31, 2012 Total Returns(3)

Average Annual One Five Ten Since Year Years Years Inception(7)

Portfolio — Class I Shares w/o sales charges(4) 15.66% 2.19% 8.38% 9.04%

Russell 1000® Growth Index 15.26 3.12 7.52 7.56Lipper Large-Cap Growth Funds Index 15.92 1.01 6.39 6.91

Portfolio — Class P Shares w/o sales charges(5) 15.36 1.96 8.11 7.31

Russell 1000® Growth Index 15.26 3.12 7.52 6.04Lipper Large-Cap Growth Funds Index 15.92 1.01 6.39 4.90

Portfolio — Class H Shares w/o sales charges(6) — — — -3.72

Portfolio — Class H Shares with maximum 4.75% sales charges(6) — — — -8.30

Russell 1000® Growth Index — — — 0.16Lipper Large-Cap Growth Funds Index — — — -0.99

Portfolio — Class L Shares w/o sales charges(6) — — — -4.10

Russell 1000® Growth Index — — — 0.16Lipper Large-Cap Growth Funds Index — — — -0.99

Performance data quoted represents past performance, which is noguarantee of future results, and current performance may be lower orhigher than the figures shown. Performance assumes that all dividends anddistributions, if any, were reinvested. For the most recent month-endperformance figures, please visit www.morganstanley.com/im. Investmentreturn and principal value will fluctuate so that Portfolio shares, whenredeemed, may be worth more or less than their original cost. Total returnsdo not reflect the deduction of taxes that a shareholder would pay onPortfolio distributions or the redemption of Portfolio shares. Performanceof share classes will vary due to difference in expenses.

(1) The Russell 1000® Growth Index measures the performance of the large-capgrowth segment of the U.S. equity universe. It includes those Russell 1000®

Index companies with higher price-to-book ratios and higher forecasted growthvalues. The Russell 1000® Index is an index of approximately 1,000 of thelargest U.S. companies based on a combination of market capitalization andcurrent index membership. The Index is unmanaged and its returns do notinclude any sales charges or fees. Such costs would lower performance. It is notpossible to invest directly in an index.

(2) The Lipper Large-Cap Growth Funds Index is an equally weighted performanceindex of the largest qualifying funds (based on net assets) in the Lipper Large-Cap Growth Funds classification. The Index, which is adjusted for capital gainsdistributions and income dividends, is unmanaged and should not be consideredan investment. There are currently 30 funds represented in this Index. As of thedate of this report, the Portfolio is in the Lipper Large-Cap Growth Fundsclassification.

(3) Total returns for the Portfolio reflect fees waived and expenses reimbursed, ifapplicable, by the Adviser. Without such waivers and reimbursements, totalreturns would have been lower. The fee waivers and/or expense reimbursementswill continue for at least one year or until such time as the Fund’s Board ofDirectors acts to discontinue all or a portion of such waivers and/or expensereimbursements when it deems that such action is appropriate.

(4) Commenced operations on April 2, 1991.(5) Commenced offering on January 2, 1996.(6) Commenced offering on April 27, 2012.(7) For comparative purposes, average annual since inception returns listed for the

Indexes refer to the inception date or initial offering of the respective share classof the Portfolio, not the inception of the Index. Returns for periods less than oneyear are not annualized.

Portfolio Composition

Percentage ofClassification Total InvestmentsOther* 48.7%Computer Services, Software & Systems 21.0Diversified Retail 12.8Computer Technology 8.8Consumer Lending 8.7Total Investments 100.0%

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





6

Foods (1.5%)Nestle SA ADR (Switzerland) 185,377 $ 12,081

Insurance: Property-Casualty (2.1%)Progressive Corp. (The) 778,139 16,419

Medical Equipment (2.9%)Intuitive Surgical, Inc. (a) 46,749 22,924

Pharmaceuticals (3.0%)Mead Johnson Nutrition Co. 186,149 12,265Valeant Pharmaceuticals International, Inc.

(Canada) (a) 201,286 12,031

24,296

Real Estate Investment Trusts (REIT) (3.7%)Brookfield Asset Management, Inc.,

Class A (Canada) 817,624 29,966

Recreational Vehicles & Boats (3.8%)Edenred (France) 965,967 30,039

Restaurants (2.6%)Starbucks Corp. 393,353 21,092

Semiconductors & Components (1.3%)First Solar, Inc. (a) 335,216 10,352

Textiles Apparel & Shoes (1.5%)Coach, Inc. 216,478 12,017

Total Common Stocks (Cost $612,827) 791,120

Convertible Preferred Stocks (0.1%)Alternative Energy (0.1%)Better Place, Inc. (a)(b)(c)

(acquisition cost — $4,355; acquired 1/25/10) (Cost $4,355) 1,741,925 522

Short-Term Investment (1.2%)Investment Company (1.2%)Morgan Stanley Institutional Liquidity

Funds — Money Market Portfolio —Institutional Class (See Note G) (Cost $9,357) 9,356,700 9,357

Total Investments (100.2%) (Cost $626,539) (d) 800,999

Liabilities in Excess of Other Assets (-0.2%) (1,456)

Net Assets (100.0%) $799,543

(a) Non-income producing security.(b) At December 31, 2012, the Portfolio held a fair valued security valued

at approximately $522,000, representing 0.1% of net assets. Thissecurity has been fair valued as determined in good faith underprocedures established by and under the general supervision of theFund’s Directors.

(c) Security cannot be offered for public resale without first being registeredunder the Securities Act of 1933 and related rules (“restricted security”).Acquisition date represents the day on which an enforceable right toacquire such security is obtained and is presented along with relatedcost in the security description. The Portfolio has registration rights forcertain restricted securities. Any costs related to such registration areborne by the issuer. The aggregate value of restricted securities(excluding 144A holdings) at December 31, 2012 amounts toapproximately $522,000 and represents 0.1% of net assets.

Portfolio of InvestmentsGrowth Portfolio

Value Shares (000)

Value Shares (000)

Common Stocks (98.9%)Alternative Energy (2.2%)Range Resources Corp. 167,596 $ 10,530Ultra Petroleum Corp. (a) 390,459 7,079

17,609

Asset Management & Custodian (1.7%)BlackRock, Inc. 65,306 13,500

Beverage: Brewers & Distillers (2.4%)DE Master Blenders 1753 N.V. (Netherlands) (a) 1,627,153 18,927

Biotechnology (2.9%)Illumina, Inc. (a) 419,104 23,298

Chemicals: Diversified (3.1%)Monsanto Co. 263,163 24,908

Commercial Services (1.6%)Intertek Group PLC (United Kingdom) 258,598 13,050

Communications Technology (3.9%)Motorola Solutions, Inc. 564,349 31,423

Computer Services, Software & Systems (21.1%)Baidu, Inc. ADR (China) (a) 209,169 20,977Facebook, Inc., Class A (a) 1,704,202 45,383Google, Inc., Class A (a) 73,975 52,476LinkedIn Corp., Class A (a) 115,329 13,242Salesforce.com, Inc. (a) 128,112 21,536VMware, Inc., Class A (a) 101,309 9,537Workday, Inc. (a) 95,800 5,221

168,372

Computer Technology (8.8%)Apple, Inc. 117,332 62,542Yandex N.V., Class A (Russia) (a) 376,467 8,120

70,662

Consumer Lending (8.7%)CME Group, Inc. 212,892 10,796Mastercard, Inc., Class A 58,368 28,675Visa, Inc., Class A 198,585 30,101

69,572

Diversified Media (3.1%)McGraw-Hill Cos., Inc. (The) 233,905 12,788Naspers Ltd., Class N (South Africa) 187,252 12,031

24,819

Diversified Retail (12.8%)Amazon.com, Inc. (a) 264,669 66,469Groupon, Inc. (a) 1,886,475 9,206Priceline.com, Inc. (a) 43,125 26,789

102,464

Electronic Components (1.5%)Sensata Technologies Holding N.V. (a) 362,137 11,762

Financial Data & Systems (2.7%)MSCI, Inc. (a) 308,152 9,550Verisk Analytics, Inc., Class A (a) 235,658 12,018

21,568

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



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7

Portfolio of Investments (cont’d)Growth Portfolio


(d) The approximate fair value and percentage of net assets, $74,047,000and 9.3%, respectively, represent the securities that have been fairvalued under the fair valuation policy for international investments asdescribed in Note A-1 within the Notes to the Financial Statements.

ADR American Depositary Receipt.



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Growth Portfolio


December 31, 2012 (000)

Assets:Investments in Securities of Unaffiliated Issuers, at Value (Cost $617,182) $ 791,642Investment in Security of Affiliated Issuer, at Value (Cost $9,357) 9,357

Total Investments in Securities, at Value (Cost $626,539) 800,999Receivable for Portfolio Shares Sold 472Receivable for Investments Sold 276Dividends Receivable 203Tax Reclaim Receivable 127Receivable from Affiliate 2Other Assets 12

Total Assets 802,091

Liabilities:Payable for Advisory Fees 990Payable for Portfolio Shares Redeemed 707Payable for Sub Transfer Agency Fees 603Payable for Administration Fees 54Payable for Directors’ Fees and Expenses 32Payable for Distribution and Shareholder Services Fees — Class P 29Payable for Distribution and Shareholder Services Fees — Class H —@Payable for Distribution and Shareholder Services Fees — Class L —@Payable for Professional Fees 27Payable for Custodian Fees 18Payable for Transfer Agent Fees 2Other Liabilities 86

Total Liabilities 2,548

Net Assets $ 799,543

Net Assets Consist of:Paid-in-Capital $ 642,472Undistributed Net Investment Income 3,461Accumulated Net Realized Loss (20,849)Unrealized Appreciation (Depreciation) on:

Investments 174,460Foreign Currency Translations (1)


CLASS I:Net Assets $ 661,073Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 24,442,075Net Asset Value, Offering and Redemption Price Per Share $ 27.05

CLASS P:Net Assets $ 138,416Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 5,218,091Net Asset Value, Offering and Redemption Price Per Share $ 26.53

CLASS H:Net Assets $ 44Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 1,666Net Asset Value, Redemption Price Per Share $ 26.52

Maximum Sales Load 4.75%Maximum Sales Charge $ 1.32Maximum Offering Price Per Share $ 27.84

CLASS L:Net Assets $ 10Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 362Net Asset Value, Offering and Redemption Price Per Share $ 26.43

@ Amount is less than $500.

Statement of Assets and Liabilities



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Growth Portfolio


Year Ended December 31, 2012

(000)Investment Income:

Dividends from Securities of Unaffiliated Issuers (Net of $224 of Foreign Taxes Withheld) $ 10,880Dividends from Security of Affiliated Issuer 44

Total Investment Income 10,924

Expenses:Advisory Fees (Note B) 4,159Sub Transfer Agency Fees 804Administration Fees (Note C) 666Distribution and Shareholder Services Fees — Class P (Note D) 386Distribution and Shareholder Services Fees — Class H (Note D) —@Distribution and Shareholder Services Fees — Class L (Note D) —@Registration Fees 89Shareholder Reporting Fees 88Professional Fees 79Custodian Fees (Note F) 65Directors’ Fees and Expenses 22Transfer Agency Fees (Note E) 17Pricing Fees 5Other Expenses 29

Total Expenses 6,409

Rebate from Morgan Stanley Affiliate (Note G) (32)Expense Offset (Note F) (—@)

Net Expenses 6,377

Net Investment Income 4,547

Realized Gain:Investments Sold 71,844Investments in Affiliates 579Foreign Currency Transactions 1

Net Realized Gain 72,424

Change in Unrealized Appreciation (Depreciation):Investments 36,426Investments in Affiliates (34)Foreign Currency Translations (1)

Net Change in Unrealized Appreciation (Depreciation) 36,391

Net Realized Gain and Change in Unrealized Appreciation (Depreciation) 108,815

Net Increase in Net Assets Resulting from Operations $113,362


Statement of Operations





10

Growth Portfolio


Year Ended Year Ended December 31, December 31, 2012 2011

(000) (000)Increase (Decrease) in Net Assets:Operations:

Net Investment Income $ 4,547 $ 30Net Realized Gain 72,424 77,749Net Change in Unrealized Appreciation (Depreciation) 36,391 (100,432)Net Increase (Decrease) in Net Assets Resulting from Operations 113,362 (22,653)

Distributions from and/or in Excess of:Class I:Net Investment Income (1,111) (1,649)Net Realized Gain (917) —Class P:Net Investment Income — (79)Net Realized Gain (195) —Class H:Net Investment Income (—@)* —Net Realized Gain (—@)* —Class L:Net Investment Income (—@)* —Net Realized Gain (—@)* —Total Distributions (2,223) (1,728)

Capital Share Transactions:(1)

Class I:Subscribed 102,434 95,503Distributions Reinvested 2,027 1,646Redeemed (156,920) (159,435)Class P:Subscribed 33,160 33,841Distributions Reinvested 195 79Redeemed (50,515) (30,278)Class H:Subscribed 43* —Distributions Reinvested —@* —Class L:Subscribed 10* —Net Decrease in Net Assets Resulting from Capital Share Transactions (69,566) (58,644)Total Increase (Decrease) in Net Assets 41,573 (83,025)

Net Assets:Beginning of Period 757,970 840,995End of Period (Including Undistributed Net Investment Income of $3,461 and $24) $ 799,543 $ 757,970

(1) Capital Share Transactions:Class I:Shares Subscribed 3,824 3,775Shares Issued on Distributions Reinvested 75 60Shares Redeemed (5,978) (6,374)Net Decrease in Class I Shares Outstanding (2,079) (2,539)Class P:Shares Subscribed 1,264 1,380Shares Issued on Distributions Reinvested 7 3Shares Redeemed (1,949) (1,222)Net Increase (Decrease) in Class P Shares Outstanding (678) 161Class H:Shares Subscribed 2* —Shares Issued on Distributions Reinvested —@@* —Net Increase in Class H Shares Outstanding 2 —Class L:Shares Subscribed —@@* —

@ Amount is less than $500.@@ Amount is less than 500 shares.* For the period April 27, 2012 to December 31, 2012.

Statements of Changes in Net Assets





11

Financial HighlightsGrowth Portfolio


Class I



Income (Loss) from Investment Operations:Net Investment Income† 0.16 0.01 0.06 0.05 0.05Net Realized and Unrealized Gain (Loss) 3.52 (0.73) 4.49 7.58 (12.50)


Distributions from and/or in Excess of:Net Investment Income (0.05) (0.06) (0.00)‡ (0.06) (0.10)Net Realized Gain (0.04) — — — (0.02)




Total Return++ 15.66% (3.01)% 23.11% 62.97%** (50.47)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $661,073 $622,193 $704,410 $674,070 $543,841Ratio of Expenses to Average Net Assets 0.72%+ 0.71%+†† 0.73%+†† 0.65%+ 0.62%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A N/A 0.73%+†† 0.65%+ 0.62%+Ratio of Net Investment Income to Average Net Assets 0.59%+ 0.05%+†† 0.27%+†† 0.35%+ 0.24%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the






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12



Class P



Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.09 (0.05) 0.00‡ 0.02 0.00‡Net Realized and Unrealized Gain (Loss) 3.45 (0.73) 4.42 7.46 (12.27)


Distributions from and/or in Excess of:Net Investment Income — (0.01) (0.00)‡ (0.02) (0.04)Net Realized Gain (0.04) — — — (0.02)




Total Return++ 15.36% (3.27)% 22.79% 62.66%** (50.57)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $138,416 $135,777 $136,585 $99,475 $59,883Ratio of Expenses to Average Net Assets 0.97%+ 0.96%+†† 0.98%+†† 0.90%+ 0.87%+Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses N/A N/A 0.98%+†† 0.90%+ 0.87%+Ratio of Net Investment Income (Loss) to Average Net Assets 0.34%+ (0.20)%+†† 0.02%+†† 0.10%+ (0.01)%+Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the


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






13



Class H

Period from April 27, 2012^ to Selected Per Share Data and Ratios December 31, 2012Net Asset Value, Beginning of Period $27.60



Distributions from and/or in Excess of:Net Investment Income (0.02)Net Realized Gain (0.04)




Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 44Ratio of Expenses to Average Net Assets 0.96%+*Ratio of Net Investment Income to Average Net Assets 0.44%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%*§Portfolio Turnover Rate 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates






14



Class L

Period from April 27, 2012^ toSelected Per Share Data and Ratios December 31, 2012Net Asset Value, Beginning of Period $27.60



Distributions from and/or in Excess of:Net Investment Income (0.00)‡Net Realized Gain (0.04)




Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 10Ratio of Expenses Average Net Assets 1.51%+*Ratio of Net Investment Income to Average Net Assets 0.20%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%*§Portfolio Turnover Rate 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”# Not Annualized.* Annualized.§ Amount is less than 0.005%.





15

Morgan Stanley Institutional Fund, Inc. (the “Fund”) is regis-

tered under the Investment Company Act of 1940, as

amended (the “Act”), as an open-end management investment

company. The Fund is comprised of twenty-six separate, active,

diversified and non-diversified portfolios (individually referred

to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Growth

Portfolio. The Portfolio seeks long-term capital appreciation by

investing primarily in growth oriented equity securities of large

capitalization companies. Under normal market conditions,

the Portfolio seeks to achieve it’s investment objective by

investing primarily in established and emerging companies,

with capitalizations within the range of companies included in

the Russell 1000® Growth Index. The Portfolio offers four

classes of shares — Class I, Class P, Class H and Class L.

A. Significant Accounting Policies: The following signif-

icant accounting policies are in conformity with U.S. generally

accepted accounting principles (“GAAP”). Such policies are

consistently followed by the Fund in the preparation of its

financial statements. GAAP may require management to make

estimates and assumptions that affect the reported amounts

and disclosures in the financial statements. Actual results may

differ from those estimates.

1. Security Valuation: Securities listed on a foreign

exchange are valued at their closing price, except as noted

below. Unlisted securities and listed securities not traded

on the valuation date for which market quotations are

readily available are valued at the mean between the last

reported bid and ask prices. Equity securities listed on a

U.S. exchange are valued at the latest quoted sales price on

the valuation date. Equity securities listed or traded on

NASDAQ, for which market quotations are available, are

valued at the NASDAQ Official Closing Price. Short-term

debt securities purchased with remaining maturities of

60 days or less are valued at amortized cost, unless the

Fund’s Board of Directors (the “Directors”) determines

such valuation does not reflect the securities’ fair value, in

which case these securities will be valued at their fair value

as determined in good faith under procedures adopted by

the Directors.

Under procedures approved by the Directors, the Fund’s

adviser, Morgan Stanley Investment Management Inc.

(the “Adviser”), has formed a Valuation Committee. The

Valuation Committee provides administration and over-

sight of the Fund’s valuation policies and procedures,

which are reviewed at least annually by the Directors.

Among other things, these procedures allow the Fund to

utilize independent pricing services, quotations from

securities and financial instrument dealers, and other

market sources to determine fair value.

The Fund has procedures to determine the fair value of

securities and other financial instruments for which

market prices are not readily available. Under these pro-

cedures, 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 infor-

mation 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 valua-

tions of such investments, the fair values may differ sig-

nificantly 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, transac-

tional back-testing or disposition analysis, and reviews

of any related market activity.

Most foreign markets close before the New York Stock

Exchange (“NYSE”). Occasionally, developments that

could affect 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 on the NYSE. If these developments

are expected to materially affect the value of the securi-

ties, the valuations may be adjusted to reflect the esti-

mated fair value as of the close of the NYSE, as

determined in good faith under procedures established

by the Directors.

2. Fair Value Measurement: Financial Accounting

Standards Board (“FASB”) Accounting Standards Codifi-

cationTM (“ASC”) 820, “Fair Value Measurements and

Notes to Financial Statements



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16

Disclosures” (“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 inde-

pendent 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 (observ-

able 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, inter-

est 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 consid-

ered 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 avail-

able documents and, if necessary, available

information concerning other securities in

similar circumstances

The inputs or methodology used for valuing securities

are not necessarily an indication of the risk associated

with investing in those securities and the determination

of the significance of a particular input to the fair value

measurement in its entirety requires judgment and

considers factors specific to each security.

The following is a summary of the inputs used to value

the Portfolio’s investments as of December 31, 2012.

Level 2 Level 1 Other Level 3 Unadjusted significant Significant quoted observable unobservable prices inputs inputs TotalInvestment Type (000) (000) (000) (000)Assets:Common Stocks

Alternative Energy $ 17,609 $ — $ — $ 17,609Asset Management &

Custodian 13,500 — — 13,500Beverage: Brewers &

Distillers — 18,927 — 18,927Biotechnology 23,298 — — 23,298Chemicals: Diversified 24,908 — — 24,908Commercial Services — 13,050 — 13,050Communications

Technology 31,423 — — 31,423Computer Services,

Software & Systems 168,372 — — 168,372Computer Technology 70,662 — — 70,662Consumer Lending 69,572 — — 69,572Diversified Media 12,788 12,031 — 24,819Diversified Retail 102,464 — — 102,464Electronic Components 11,762 — — 11,762Financial Data & Systems 21,568 — — 21,568Foods 12,081 — — 12,081Insurance:

Property-Casualty 16,419 — — 16,419Medical Equipment 22,924 — — 22,924Pharmaceuticals 24,296 — — 24,296Real Estate Investment

Trusts (REIT) 29,966 — — 29,966Recreational Vehicles &

Boats — 30,039 — 30,039Restaurants 21,092 — — 21,092Semiconductors &

Components 10,352 — — 10,352Textiles Apparel & Shoes 12,017 — — 12,017

Total Common Stocks 717,073 74,047 — 791,120Convertible Preferred

Stocks — — 522 522Short-Term Investment —

Investment Company 9,357 — — 9,357Total Assets $726,430 $74,047 $522 $800,999

Transfers between investment levels may occur as the mar-kets fluctuate and/or the availability of data used in an investment’s valuation changes. The Portfolio recognizestransfers between the levels as of the end of the period. Asof December 31, 2012, securities with a total value of approximately $42,070,000 transferred from Level 1 toLevel 2. At December 31, 2012, the fair market value ofcertain securities were adjusted due to developmentswhich occurred between the time of the close of the for-eign markets on which they trade and the close of businesson the NYSE which resulted in their Level 2 classification.

Notes to Financial Statements (cont’d)





17

Following is a reconciliation of investments in which

significant unobservable inputs (Level 3) were used in

determining fair value.

ConvertibleCommon Preferred

Stock Stock(000) (000)

Beginning Balance $27,021 $7,908Purchases — —Sales (17,980) —Amortization of discount — —Transfers in — —Transfers out — —Change in unrealized appreciation/depreciation (9,041) (7,386)Realized gains (losses) — —

Ending Balance $ — $ 522

Net change in unrealized appreciation/depreciation from investments still held as of December 31, 2012 $ — $(7,386)

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 at the mean of the bid and ask

prices of such currencies against U.S. dollars last quoted

by a major bank as follows:

– investments, other assets and liabilities at the prevail-

ing 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 unreal-

ized 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

The following table presents additional information about valuation techniques and inputs used for investments that are meas-ured at fair value and categorized within Level 3 as of December 31, 2012.

Fair Value at Impact to December 31, 2012 Valuation Unobservable Weighted Valuation from an (000) Technique Input Range Average Increase in InputAlternative Energy

Convertible Preferred Stock $522 Asset Approach Net Tangible Assets $0.25 $0.25 $0.25 Increase Weighted average Discounted cash flow cost of capital 24.7% 26.0% 25.0% Decrease Perpetual growth rate 3.5% 4.5% 4.0% Increase Market Comparable Enterprise Value/ Companies Revenue 2.8x 4.6x 3.7x Increase

Discount for lack of marketability 15% 15% 15% Decrease






18

foreign denominated debt securities are treated as ordi-

nary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transac-

tions represent net foreign exchange gains (losses) from

foreign currency exchange contracts, disposition of for-

eign 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) on the Statement of Assets and Liabilities.

The change in unrealized currency gains (losses) on for-

eign 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 politi-

cal or economic instability.

The net assets of the Portfolio include foreign denomi-

nated securities and currency. Changes in currency

exchange rates will affect the U.S. Dollar value of and

investment income from such securities. Further, at

times the Portfolio’s investments are concentrated in a

limited number of countries and regions. This concen-

tration may further increase the risk of the Portfolio.

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 owner-

ship 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. Such securities, if any, are identified as fair val-

ued in the Portfolio of Investments.

4. Restricted Securities: The Portfolio invested in unreg-

istered or otherwise restricted securities. The term “re-

stricted securities” refers to securities that are unregistered

or are held by control persons of the issuer and securities

that are subject to contractual restrictions on their resale.

As a result, restricted securities may be more difficult to

value and the Portfolio may have difficulty disposing of

such assets either in a timely manner or for a reasonable

price. In order to dispose of an unregistered security, the

Portfolio, where it has contractual rights to do so, may

have to cause such security to be registered. A considerable

period may elapse between the time the decision is made

to sell the security and the time the security is registered so

that the Portfolio could sell it. Contractual restrictions on

the resale of securities vary in length and scope and are

generally the result of a negotiation between the issuer and

acquirer of the securities. The Portfolio would, in either

case, bear market risks during that period. Restricted Secu-

rities are identified in the Portfolio of Investments.

5. Indemnifications: The Fund enters into contracts that

contain a variety of indemnifications. The Fund’s maxi-

mum exposure under these arrangements is unknown.

However, the Fund has not had prior claims or losses

pursuant to these contracts and expects the risk of loss to

be remote.

6. Other: Security transactions are accounted for on the date

the securities are purchased or sold. Realized gains (losses)

on the sale of investment securities are determined on the

specific identified cost basis. Dividend income and distri-

butions 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 applica-

ble withholding taxes. Interest income is recognized on the

accrual basis except where collection is in doubt.

Discounts and premiums on securities purchased are

amortized according to the effective yield method over

their respective lives. Most expenses of the Fund can be

directly attributed to a particular Portfolio. Expenses

which cannot be directly attributed are apportioned

among the Portfolios based upon relative net assets or

other appropriate measures. Income, expenses (other than

class specific expenses) and realized and unrealized gains or






19

losses are allocated to each class of shares based upon their

relative net assets.

The Portfolio owns shares of real estate investment

trusts (“REITs”) which report information on the source

of their distributions annually in the following calendar

year. A portion of distributions received from REITs

during the year is estimated to be a return of capital and

is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary

of Morgan Stanley, provides the Portfolio with advisory serv-

ices under the terms of an Investment Advisory Agreement,

paid quarterly, at the annual rate based on the average daily net

assets as follows:

First $1 Next $1 Next $1 Over $3billion billion billion billion0.50% 0.45% 0.40% 0.35%

For the year ended December 31, 2012, the advisory fee rate(net of rebate) was equivalent to an annual effective rate of0.50% of the Portfolio’s daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reim-

burse the Portfolio so that total annual portfolio operating

expenses, excluding certain investment related expenses, will

not exceed 0.80% for Class I shares, 1.05% for Class P shares,

1.05% for Class H shares and 1.55% for Class L shares. The

fee waivers and/or expense reimbursements will continue for at

least one year or until such time that the Fund’s Board of

Directors acts to discontinue all or a portion of such waivers

and/or reimbursements when it deems such action is appropriate.

C. Administration Fees: The Adviser also serves as Admin-

istrator to the Fund and provides administrative services

pursuant to an Administration Agreement for an annual fee,

accrued daily and paid monthly, of 0.08% of the Portfolio’s

average daily net assets. Under a Sub-Administration Agree-

ment between the Administrator and State Street Bank and

Trust Company (“State Street”), State Street provides certain

administrative services to the Fund. For such services, the

Administrator pays State Street a portion of the fee the Admin-

istrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distribu-

tor”), a wholly-owned subsidiary of the Adviser, and an indirect

subsidiary of Morgan Stanley, serves as the Fund’s Distributor

of Portfolio shares pursuant to a Distribution agreement. The

Fund has adopted Shareholder Services Plans with respect to

Class P and Class H shares pursuant to Rule 12b-1 under the

Act. Under the Shareholder Services Plans, the Portfolio pays

the Distributor a shareholder services fee, accrued daily and

paid monthly, at an annual rate of 0.25% of the Portfolio’s aver-

age daily net assets attributable to Class P and Class H shares.

The Fund has adopted a Distribution and Shareholder Services

Plan with respect to Class L shares pursuant to Rule 12b-1

under the Act. Under the Distribution and Shareholder Serv-

ices Plan, the Portfolio pays the Distributor a distribution fee,

accrued daily and paid monthly, at an annual rate of 0.50%

and a shareholder service fee, accrued daily and paid monthly,

at an annual rate of 0.25% of the Portfolio’s average daily net

assets attributable to Class L shares.

The distribution and shareholder services fees are used to

support the expenses associated with servicing and maintaining

accounts. The Distributor may compensate other parties for

providing shareholder support services to investors who pur-

chase Class P, Class H and Class L shares.

E. Dividend Disbursing and Transfer Agent: The

Fund’s dividend disbursing and transfer agent is Morgan

Stanley Services Company Inc. (“Morgan Stanley Services”).

Pursuant to a transfer agency agreement, the Fund pays

Morgan Stanley Services a fee based on the number of classes,

accounts and transactions relating to the Portfolios of the

Fund.

F. Custodian Fees: State Street (the “Custodian”) serves as

Custodian for the Fund in accordance with a custodian agree-

ment. The Custodian holds cash, securities, and other assets of

the Fund as required by the Act. Custody fees are payable

monthly based on assets held in custody, investment purchases

and sales activity and account maintenance fees, plus reim-

bursement for certain out-of-pocket expenses.

The Fund has entered into an arrangement with its Custodian

whereby credits realized on uninvested cash balances may be

used to offset a portion of the Portfolio’s expenses. If applicable,

these custodian credits are shown as “Expense Offset” in the

Statement of Operations.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2012, purchases

and sales of investment securities for the Portfolio, other than

long-term U.S. Government securities and short-term invest-

ments, were approximately $397,147,000 and $480,122,000,

respectively. There were no purchases and sales of long-term U.S.

Government securities for the year ended December 31, 2012.






20

The Portfolio invests in the Institutional Class of the Morgan

Stanley Institutional Liquidity Funds — Money Market Port-

folio (the “Liquidity Funds”), an open-end management

investment company managed by the Adviser. Advisory fees

paid by the Portfolio are reduced by an amount equal to its

pro-rata share of the advisory and administration fees paid by

the Portfolio due to its investment in the Liquidity Funds. For

the year ended December 31, 2012, advisory fees paid were

reduced by approximately $32,000 relating to the Portfolio’s

investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the

Liquidity Funds during the year ended December 31, 2012 is

as follows:

Value Value December 31, Purchases Dividend December 31, 2011 at Cost Sales Income 2012 (000) (000) (000) (000) (000)

$12,909 $279,702 $283,254 $41 $9,357

For the year ended December 31, 2012, the Portfoliohad transactions with Citigroup, Inc., and its affiliated broker-dealers which may be deemed affiliates of the Adviser,Administrator and Distributor under Section 17 of the Act.

Value Value December 31, Purchases Realized Dividend December 31, 2011 at Cost Sales Gain Income 2012 (000) (000) (000) (000) (000) (000)

$2,101 $845 $3,490 $579 $3 $—

During the year ended December 31, 2012, the Portfolio in-curred approximately $3,000 in brokerage commissions withCitigroup, Inc., and its affiliated broker-dealers, which may bedeemed affiliates of the Adviser, Administrator and Distributorunder Section 17 of the Act, for portfolio transactions executedon behalf of the Portfolio.

H. Federal Income Taxes: It is the Portfolio’s intention to

continue to qualify as a regulated investment company and dis-

tribute all of its taxable and tax-exempt income. Accordingly,

no provision for Federal income taxes is required in the finan-

cial statements.

Dividend income and distributions to shareholders are

recorded on the ex-dividend date. Interest income is recognized

on an accrual basis. Dividends from net investment income, if

any, are declared and paid semiannually. Net realized capital

gains, if any, are distributed at least annually.

The Portfolio may be subject to taxes imposed by countries in

which it invests. Such taxes are generally based on income

and/or capital gains earned or repatriated. Taxes are accrued

based on net investment income, net realized gains and net

unrealized appreciation as such income and/or gains are

earned. Taxes may also be based on transactions in foreign cur-

rency and are accrued based on the value of investments de-

nominated 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 un-

certain tax positions that would require recognition in the fi-

nancial statements. If applicable, the Portfolio recognizes

interest accrued related to unrecognized tax benefits in “Inter-

est Expense” and penalties in “Other Expenses” in the State-

ment of Operations. The Portfolio files tax returns with the

U.S. Internal Revenue Service, New York and various states.

Generally, each of the tax years in the four-year period ended

December 31, 2012, 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 distri-

butions paid during fiscal 2012 and 2011 was as follows:

2012 2011 Distributions Distributions Paid From: Paid From: Ordinary Long-Term Ordinary Long-Term Income Capital Gain Income Capital Gain (000) (000) (000) (000) $1,111 $1,112 $1,728 $—

The amount and character of income and gains to be distrib-uted are determined in accordance with income tax regulationswhich may differ from GAAP. These book/tax differences areeither 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 de-

ductibility of certain expenses.

Permanent differences, primarily due to differing treatments of

gains (losses) related to foreign currency transactions and a div-

idend redesignation, resulted in the following reclassifications

among the components of net assets at December 31, 2012:

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






21

At December 31, 2012, the components of distributable earn-ings for the Portfolio on a tax basis were as follows:

Undistributed Undistributed Ordinary Long-Term Income Capital Gain (000) (000) $3,475 $—

At December 31, 2012, the aggregate cost for federal incometax purposes is approximately $628,197,000. The aggregategross unrealized appreciation is approximately $224,868,000and the aggregate gross unrealized depreciation is approxi-mately $52,066,000, resulting in net unrealized appreciation ofapproximately $172,802,000.

On December 22, 2010, the Regulated Investment Company

Modernization Act of 2010 (the “Modernization Act”) was

signed into law. The Modernization Act modernizes several tax

provisions related to Regulated Investment Companies

(“RICs”) and their shareholders. One key change made by the

Modernization Act is that capital losses will generally retain

their character as short-term or long-term and may be carried

forward indefinitely to offset future gains. These losses are uti-

lized before other capital loss carryforwards that expire. Gener-

ally, the Modernization Act is effective for taxable years

beginning after December 22, 2010.

During the year ended December 31, 2012, the Portfolio uti-

lized capital loss carryforwards for U.S. Federal income tax

purposes of approximately $90,712,000.

Capital losses and specified ordinary losses, including currency

losses, incurred after October 31 but within the taxable year

are deemed to arise on the first day of the Portfolio’s next tax-

able year. For the year ended December 31, 2012, the Portfolio

deferred to January 1, 2013 for U.S. Federal income tax pur-

poses the following losses:

Specified Ordinary Capital Losses Losses (000) (000) $— $19,193

I. Other (unaudited): At December 31, 2012, the Portfoliohad otherwise unaffiliated record owners of 10% or greater. In-vestment activities of these shareholders could have a materialimpact on the Portfolio. The aggregate percentage of suchowners was 55.3% for Class P shares.

J. Accounting Pronouncement: In December 2011,

FASB issued Accounting Standards Update (“ASU”) 2011-11,

“Balance Sheet: Disclosures about Offsetting Assets and Liabil-

ities.” The pronouncement improves disclosures for recognized

financial and derivative instruments that are either offset on

the balance sheet in accordance with the offsetting guidance in

ASC 210-20-45, “Balance Sheet: Offsetting — Other Presen-

tation Matters” or ASC 815-10-45, “Derivatives: Overall —

Other Presentation Matters” or are subject to enforceable mas-

ter netting agreements or similar agreements. The Fund will be

required to disclose information about rights to offset and re-

lated arrangements (such as collateral agreements) in order to

enable financial statement users to understand the effect of

those rights and arrangements on its financial position as well

as disclose the following (1) gross amounts; (2) amounts offset

in the statement of financial position; (3) any other amounts

that can be offset in the event of bankruptcy, insolvency or

default of any of the parties (including cash and noncash finan-

cial collateral); and (4) the Fund’s net exposure. The require-

ments are effective for annual reporting periods beginning on

or after January 1, 2013, and must be applied retrospectively.

At this time, the Fund’s management is evaluating the implica-

tions of ASU 2011-11 and its impact, if any, on the financial

statements.






22

To the Shareholders and Board of Directors ofMorgan Stanley Institutional Fund, Inc. —Growth Portfolio

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Growth Portfolio(one of the portfolios constituting Morgan Stanley Institutional Fund, Inc.) (the “Portfolio”) as of December 31, 2012, and therelated statement of operations for the year then ended, the statements of changes in net assets for each of the two years in theperiod then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financialhighlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financialstatements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsand financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internalcontrol over financial reporting. Our audits included consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit alsoincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financialhighlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overallfinancial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2012, bycorrespondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, thefinancial position of Growth Portfolio (one of the portfolios constituting Morgan Stanley Institutional Fund, Inc.) December 31,2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period thenended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally acceptedaccounting principles.

Boston, Massachusetts

February 25, 2013

Report of Independent Registered Public Accounting Firm



Merrill Corp - MS Institutional Fund Growth Port Annual Report [Funds] 12-31-2012 ED [AUX] | cmashak | 22-Feb-13 17:14 | 13-3765-3.fa | Sequence: 8CHKSUM Content: 46692 Layout: 36271 Graphics: 63324 CLEAN

JOB: 13-3765-3 CYCLE#;BL#: 7; 0 TRIM: 8.25" x 10.75" AS: Merrill New York: 212-620-5600 COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: Ernst_Young_sig.eps V1.5

23

For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolioduring its taxable year ended December 31, 2012. For corporate shareholders, 100% of the dividends qualified for the dividendsreceived deduction.

The Portfolio designated and paid approximately $1,112,000 as a long-term capital gain distribution.

For Federal income tax purposes, the following information is furnished with respect to the Portfolio’s earnings for its taxable yearended December 31, 2012. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for theJobs and Growth Tax Relief Reconciliation Act of 2003. The Portfolio designated up to a maximum of approximately $1,111,000as taxable at this lower rate.

In January, the Portfolio provides tax information to shareholders for the preceding calendar year.

Federal Tax Notice (unaudited)





24

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

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

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

WE RESPECT YOUR PRIVACY

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

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

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

1. WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

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

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

• We may obtain information about account balances, your use of account(s) and the types of products and services you preferto 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 tocomply with various regulatory requirements.

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

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

U.S. Privacy Policy (unaudited)





25

a. Information we disclose to affiliated companies.

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

b. Information we disclose to third parties.

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

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

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

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

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

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

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

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

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





26

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

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

• Calling us at (800) 548-7786Monday–Friday between 8a.m. and 5p.m. (EST)

• Writing to us at the following address:

Morgan Stanley Services Company Inc.c/o Privacy Coordinator201 Plaza Two, 3rd FloorJersey City, New Jersey 07311

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

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

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

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

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

SPECIAL NOTICE TO RESIDENTS OF VERMONTThe following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in theabove Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third

parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal

information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent

to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIAThe following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary inthe above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as

permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.






27

Director and Officer Information (unaudited)



Independent Director:

Number of Portfolios in Fund Complex Position(s) Overseen by Other Directorships Name, Age and Address of Held with Length of Time Independent Held by Independent Independent Director Registrant Served* Principal Occupation(s) During Past 5 Years Director** Director***

Director of BP p.l.c.;Director of Naval andNuclear TechnologiesLLP; Director of theArmed Services YMCA ofthe USA and the U.S.Naval SubmarineLeague; Director of theAmerican ShipbuildingSuppliers Association;Member of the NationalSecurity Advisory Councilof the Center for U.S.Global Engagement anda member of the CNAMilitary Advisory Board.

101President, Strategic Decisions, LLC (consulting) (sinceFebruary 2009); Director or Trustee of various MorganStanley Funds (since August 2006); Chairperson of theInsurance Sub-Committee of the Compliance and InsuranceCommittee (since February 2007); served as President andChief Executive Officer of the Nuclear Energy Institute (policyorganization) (February 2005-November 2008); retired asAdmiral, U.S. Navy after serving over 38 years on active dutyincluding 8 years as Director of the Naval Nuclear PropulsionProgram in the Department of the Navy and the U.S.Department of Energy (1996-2004); served as Chief of NavalPersonnel (July 1994-September 1996); and on the JointStaff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of theMost Excellent Order of the British Empire; Awarded theOfficier de l’Orde National du Mérite by the FrenchGovernment; elected to the National Academy of Engineering(2009).

Since August 2006

DirectorFrank L. Bowman (68)c/o Kramer Levin Naftalis &Frankel LLP Counsel to the IndependentDirectors1177 Avenue of the Americas New York, NY 10036

Trustee and member ofthe Hillsdale CollegeBoard of Trustees.

103Private investor and a member of the advisory board ofAmerican Road Group LLC (retail) (since June 2000);Chairperson of the Compliance and Insurance Committee(since October 2006); Director or Trustee of various MorganStanley Funds (since April 1994); formerly, Chairperson of theInsurance Committee (July 2006-September 2006); ViceChairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer ofLevitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer ofHills Department Stores (May 1991-July 1995); variouslyChairman, Chief Executive Officer, President and ChiefOperating Officer (1987-1991) of the Sears MerchandiseGroup of Sears, Roebuck & Co.

Since April1994

DirectorMichael Bozic (72)c/o Kramer Levin Naftalis &Frankel LLP Counsel to the IndependentDirectors 1177 Avenue of the Americas New York, NY 10036

Director of various non-profit organizations.

101President, Cedarwood Associates (mutual fund and investmentmanagement consulting) (since July 2006); Chairperson of theMoney Market and Alternatives Sub-Committee of theInvestment Committee (since October 2006) and Director orTrustee of various Morgan Stanley Funds (since August 2006);formerly, Senior Managing Director of Victory CapitalManagement (1993-2006).

Since August 2006

DirectorKathleen A. Dennis (59)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors 1177 Avenue of the Americas New York, NY 10036

Director of NVR, Inc.(home construction).

103Senior Partner, Johnson Smick International, Inc. (consultingfirm); Chairperson of the Investment Committee (sinceOctober 2006) and Director or Trustee of various MorganStanley Funds (since July 1991); Co-Chairman and a founderof the Group of Seven Council (G7C) (international economiccommission); formerly, Chairperson of the Audit Committee(July 1991-September 2006), Vice Chairman of the Board ofGovernors of the Federal Reserve System and AssistantSecretary of the U.S. Treasury.

Since July1991

DirectorDr. Manuel H. Johnson (64)c/o Johnson SmickGroup, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006



28

Director and Officer Information (unaudited) (cont’d)



Independent Director: (cont’d)

Number of Portfolios in Fund Complex Position(s) Overseen by Other Directorships Name, Age and Address of Held with Length of Time Independent Held by Independent Independent Director Registrant Served* Principal Occupation(s) During Past 5 Years Director** Director***

Michael F. Klein (54)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors 1177 Avenue of the Americas New York, NY 10036

Director Since August 2006

Managing Director, Aetos Capital, LLC (since March 2000)and Co-President, Aetos Alternatives Management, LLC (sinceJanuary 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (sinceOctober 2006) and Director or Trustee of various MorganStanley Funds (since August 2006); formerly, ManagingDirector, Morgan Stanley & Co. Inc. and Morgan Stanley DeanWitter Investment Management, President, various MorganStanley Funds (June 1998-March 2000) and Principal, MorganStanley & Co. Inc. and Morgan Stanley Dean WitterInvestment Management (August 1997-December 1999).

101 Director of certaininvestment fundsmanaged or sponsoredby Aetos Capital, LLC.Director of Sanitized AGand Sanitized MarketingAG (specialtychemicals).

Michael E. Nugent (76)522 Fifth AvenueNew York, NY 10036

Chairpersonof the Boardand Director

Chairperson ofthe Boards sinceJuly 2006 andDirector sinceJuly 1991

General Partner, Triumph Capital, L.P. (private investmentpartnership); Chairperson of the Boards of various MorganStanley Funds (since July 2006); Chairperson of the Closed-EndFund Committee (since June 2012) and Director or Trustee ofvarious Morgan Stanley Funds (since July 1991); formerly,Chairperson of the Insurance Committee (until July 2006).

103 None.

W. Allen Reed (65)c/o Kramer Levin Naftalis &Frankel LLPCounsel to the IndependentDirectors 1177 Avenue of the Americas New York, NY 10036

Director Since August 2006

Chairperson of the Equity Sub-Committee of the InvestmentCommittee (since October 2006) and Director or Trustee ofvarious Morgan Stanley Funds (since August 2006); formerly,President and CEO of General Motors Asset Management;Chairman and Chief Executive Officer of the GM Trust Bankand Corporate Vice President of General Motors Corporation(August 1994-December 2005).

101 Director of Temple-Inland Industries(packaging and forestproducts); Director ofLegg Mason, Inc. andDirector of the AuburnUniversity Foundation.

Fergus Reid (80)c/o Joe Pietryka, Inc. 85 Charles Colman Blvd. Pawling, NY 12564

Director Since June1992

Chairman, Joe Pietryka, Inc.; Chairperson of the GovernanceCommittee and Director or Trustee of various Morgan StanleyFunds (since June 1992).

104 None.

Director of Electro RentCorporation (equipmentleasing) and The FordFamily Foundation.

104President, Kearns & Associates LLC (investment consulting);Chairperson of the Audit Committee (since October 2006) andDirector or Trustee of various Morgan Stanley Funds (sinceAugust 1994); formerly, Deputy Chairperson of the AuditCommittee (July 2003-September 2006) and Chairperson ofthe Audit Committee of various Morgan Stanley Funds (sinceAugust 1994); CFO of the J. Paul Getty Trust.

Since August 1994

DirectorJoseph J. Kearns (70)c/o Kearns & Associates LLC PMB754 22631 Pacific Coast Highway Malibu, CA 90265



29




Interested Director:

Number of Portfolios in Fund Complex Overseen by Other Directorships Name, Age and Address of Position(s) Held Length of Time Interested Held by Interested Interested Director with Registrant Served* Principal Occupation(s) During Past 5 Years Director** Director***

* Each Director serves an indefinite term, until his or her successor is elected.** The Fund Complex includes (as of December 31, 2012) all open-end and closed-end funds (including all of their portfolios) advised by Morgan Stanley Investment Management

Inc. (the “Adviser”) and any funds that have an adviser that is an affiliated person of the Adviser (including, but not limited to, Morgan Stanley AIP GP LP).*** This includes any directorships at public companies and registered investment companies held by the Director at any time during the past five years.

James F. Higgins (65)c/o Morgan Stanley ServicesCompany Inc.Harborside Financial Center 201 Plaza Two Jersey City, NJ 07311

Director Since June2000

Director or Trustee of various Morgan Stanley Funds (sinceJune 2000); Senior Advisor of Morgan Stanley (since August2000).

102 Director of AXAFinancial, Inc. andThe Equitable LifeAssurance Societyof the United States(financial services).


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30




Executive Officers:

Position(s) Held with Length of Time Name, Age and Address of Executive Officer Registrant Served* Principal Occupation(s) During Past 5 Years

* Each officer serves an indefinite term, until his or her successor is elected.

Arthur Lev (51) 522 Fifth Avenue New York, NY 10036

President andPrincipalExecutiveOfficer—Equityand FixedIncome Funds

Since June2011

President and Principal Executive Officer (since June 2011) of the Equity and Fixed IncomeFunds in the Fund Complex; Head of the Long Only Business of Morgan Stanley InvestmentManagement (since February 2011); Managing Director of the Adviser and various entitiesaffiliated with the Adviser (since December 2006). Formerly, Chief Strategy Officer ofMorgan Stanley Investment Management’s Traditional Asset Management business(November 2010-February 2011); General Counsel of Morgan Stanley InvestmentManagement (December 2006-October 2010); Partner and General Counsel of FrontPointPartners LLC (July 2002-December 2006); Managing Director and General Counsel ofMorgan Stanley Investment Management (May 2000-June 2002).

Mary Ann Picciotto (39)522 Fifth Avenue New York, NY 10036

ChiefComplianceOfficer

Since May 2010

Managing Director of the Adviser and various entities affiliated with the Adviser; ChiefCompliance Officer of various Morgan Stanley Funds (since May 2010); Chief ComplianceOfficer of the Adviser (since April 2007).

Stefanie V. Chang Yu (46)522 Fifth Avenue New York, NY 10036

Vice President SinceDecember1997

Managing Director of the Adviser and various entities affiliated with the Adviser; VicePresident of various Morgan Stanley Funds (since December 1997).

Francis J. Smith (47)c/o Morgan Stanley Services Company Inc. Harborside Financial Center 201 Plaza Two Jersey City, NJ 07311

Treasurer andPrincipalFinancial Officer

Treasurersince July2003 andPrincipalFinancialOfficer sinceSeptember2002

Executive Director of the Adviser and various entities affiliated with the Adviser; Treasurerand Principal Financial Officer of various Morgan Stanley Funds (since July 2003).

Mary E. Mullin (45)522 Fifth Avenue New York, NY 10036

Secretary Since June 1999

Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary ofvarious Morgan Stanley Funds (since June 1999).



31

Adviser and AdministratorMorgan Stanley Investment Management Inc.522 Fifth AvenueNew York, New York 10036

DistributorMorgan Stanley Distribution, Inc.522 Fifth AvenueNew York, New York 10036

Dividend Disbursing and Transfer AgentMorgan Stanley Services Company Inc.P.O. Box 219804Kansas City, Missouri 64121

CustodianState Street Bank and Trust CompanyOne Lincoln StreetBoston, Massachusetts 02111

Legal CounselDechert LLP1095 Avenue of the AmericasNew York, New York 10036

Independent Registered Public Accounting FirmErnst & Young LLP200 Clarendon StreetBoston, Massachusetts 02116

Reporting to ShareholdersEach 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’ssecond and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filedon Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders andmakes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley fund also files a complete schedule of portfolioholdings 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 fiscalquarters 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 theForm 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 inWashington, 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 canalso request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address ([email protected]) or by writingthe Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting RecordYou may obtain a copy of the Fund’s Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securitiesduring 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 atwww.morganstanley.com/im. This information is also available on the SEC’s website at www.sec.gov.

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





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

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

© 2013 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWANNIU13-00335P-Y12/12

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Growth PortfolioSemi-Annual ReportJune 30, 2013

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Shareholders’ Letter........................................................................................................................................2

Expense Example ...........................................................................................................................................3

Investment Advisory Agreement Approval..........................................................................................................4

Portfolio of Investments...................................................................................................................................6

Statement of Assets and Liabilities ...................................................................................................................8

Statement of Operations .................................................................................................................................9

Statements of Changes in Net Assets.............................................................................................................10

Financial Highlights .......................................................................................................................................11

Notes to Financial Statements........................................................................................................................15

U.S. Privacy Policy ........................................................................................................................................21

Director and Officer Information .....................................................................................................................24

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

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue toperform as discussed herein or that securities in such sectors will be held by the Portfolio in the future. There is no assurance that a Portfoliowill achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by thePortfolio will decline and, therefore, the value of the Portfolio’s shares may be less than what you paid for them. Accordingly, you can losemoney investing in Portfolios. Please see the prospectus for more complete information on investment risks.

Table of Contents

1


Semi-Annual Report — June 30, 2013

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Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Growth Portfolio performedduring 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 financialmarkets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help themreach their investment goals.

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

Sincerely,


July 2013

Shareholders’ Letter (unaudited)



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As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs and (2) ongoing costs, including advisoryfees, administration fees, distribution and shareholder services fees and other Portfolio expenses. This example is intended to helpyou understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs ofinvesting 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, 2013 andheld 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 valueby $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the tableunder the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during thisperiod.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actualexpense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. Thehypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid forthe period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so,compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the otherfunds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect anytransactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparingongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if thesetransactional costs were included, your costs would have been higher.

Actual Net Beginning Actual Ending Expenses Expense Account Account Hypothetical Paid Hypothetical Ratio Value Value Ending Account During Expenses Paid During 1/1/13 6/30/13 Value Period* During Period* Period**

Growth Portfolio Class I $1,000.00 $1,123.50 $1,021.32 $3.69 $3.51 0.70%Growth Portfolio Class P 1,000.00 1,122.10 1,020.08 5.00 4.76 0.95Growth Portfolio Class H 1,000.00 1,122.20 1,020.08 5.00 4.76 0.95Growth Portfolio Class L 1,000.00 1,119.60 1,017.60 7.62 7.25 1.45

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

**Annualized.

Expense Example (unaudited)Growth Portfolio





4

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 definedherein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securitiestrading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by thePortfolio’s Adviser under the administration agreement, including accounting, clerical, bookkeeping, compliance, businessmanagement and planning, and the provision of supplies, office space and utilities at the Adviser’s expense. (The advisory andadministration agreements together are referred to as the “Management Agreement.”) The Board also compared the nature of theservices provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper, Inc.(“Lipper”).

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other keypersonnel of the Adviser who provide the administrative and advisory services to the Portfolio. The Board determined that theAdviser’s portfolio managers and key personnel are well qualified by education and/or training and experience to perform theservices in an efficient and professional manner. The Board concluded that the nature and extent of the advisory andadministrative services provided were necessary and appropriate for the conduct of the business and investment activities of thePortfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and toappropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual resultsachieved in managing the Portfolio. When considering a fund’s performance, the Board and the Adviser place emphasis on trendsand longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2012, or since inception,as applicable). When a fund underperforms its benchmark and/or its peer group average, they discuss the causes of suchunderperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Boardnoted that the Portfolio’s performance was better than its peer group average for the one-, three- and five-year periods. The Boarddiscussed with the Adviser the level of the advisory and administration fees (together, the “management fee”) for this Portfoliorelative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper.In addition to the management fee, the Board also reviewed the Portfolio’s total expense ratio. The Board noted that both thePortfolio’s management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concludedthat the Portfolio’s performance, management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

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

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the lastyear from their relationship with the Portfolio and during the last two years from their relationship with the Morgan Stanley FundComplex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser andaffiliates. The Board has determined that its review of the analysis of the Adviser’s expenses and profitability supports its decision toapprove the Management Agreement.

Other Benefits of the Relationship

The Board considered other benefits to the Adviser and its affiliates derived from their relationship with the Portfolio and otherfunds advised by the Adviser. These benefits may include, among other things, “float” benefits derived from handling of checks forpurchases and sales, research received by the Adviser generated from commission dollars spent on funds’ portfolio trading and fees

Investment Advisory Agreement Approval (unaudited)





5

for distribution and/or shareholder servicing. The Board reviewed with the Adviser each of these arrangements and thereasonableness of the Adviser’s costs relative to the services performed. The Board has determined that its review of the otherbenefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

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

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under theManagement Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser,including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser formanaging the Portfolio’s operations and the Board’s confidence in the competence and integrity of the senior managers and keypersonnel of the Adviser. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations underthe Management Agreement and that it is beneficial for the Portfolio to continue its relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund’s ChiefCompliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere tohigh ethical standards in the conduct of the Portfolio’s business.

General Conclusion

After considering and weighing all of the above factors, the Board concluded that it would be in the best interest of the Portfolioand its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board didnot give particular weight to any single factor referenced above. The Board considered these factors over the course of numerousmeetings, some of which were in executive session with only the independent Board members and their counsel present. It ispossible that individual Board members may have weighed these factors differently in reaching their individual decisions toapprove the Management Agreement.

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





6

Health Care Services (0.5%)athenahealth, Inc. (a) 51,356 $ 4,351

Insurance: Multi-Line (1.2%)American International Group, Inc. (a) 224,258 10,024

Insurance: Property-Casualty (3.9%)Arch Capital Group Ltd. (a) 241,516 12,416Progressive Corp. (The) 851,500 21,645

34,061

Medical Equipment (3.0%)Intuitive Surgical, Inc. (a) 51,190 25,932

Pharmaceuticals (5.5%)Mead Johnson Nutrition Co. 273,608 21,678Valeant Pharmaceuticals International, Inc.

(Canada) (a) 311,904 26,849

48,527

Radio & TV Broadcasters (0.5%)Sirius XM Radio, Inc. 1,270,488 4,256

Recreational Vehicles & Boats (3.2%)Edenred (France) 922,681 28,224

Restaurants (2.8%)Starbucks Corp. 375,727 24,606

Semiconductors & Components (2.0%)ARM Holdings PLC ADR (United Kingdom) 89,895 3,253First Solar, Inc. (a) 320,195 14,322

17,575

Textiles Apparel & Shoes (4.7%)Christian Dior SA (France) 119,589 19,302Coach, Inc. 378,605 21,615

40,917

Total Common Stocks (Cost $632,624) 863,882

Short-Term Investment (1.4%)Investment Company (1.4%)Morgan Stanley Institutional Liquidity

Funds — Money Market Portfolio —Institutional Class (See Note G) (Cost $12,681) 12,681,037 12,681

Total Investments (100.0%) (Cost $645,305) 876,563

Liabilities in Excess of Other Assets (0.0%) (b) (436)

Net Assets (100.0%) $876,127

(a) Non-income producing security.(b) Amount is less than 0.05%.ADR American Depositary Receipt.

Portfolio of InvestmentsGrowth Portfolio

Value Shares (000)

Value Shares (000)

Common Stocks (98.6%)Alternative Energy (1.4%)Range Resources Corp. 160,086 $ 12,378

Asset Management & Custodian (2.5%)BlackRock, Inc. 86,606 22,245

Automobiles (2.4%)Tesla Motors, Inc. (a) 198,947 21,373

Biotechnology (3.4%)Illumina, Inc. (a) 400,324 29,960

Cable Television Services (0.5%)Charter Communications, Inc., Class A (a) 37,522 4,647

Chemicals: Diversified (2.8%)Monsanto Co. 251,371 24,835

Commercial Services (1.2%)Intertek Group PLC (United Kingdom) 242,407 10,777

Communications Technology (3.6%)Motorola Solutions, Inc. 539,060 31,120

Computer Services, Software & Systems (19.5%)Baidu, Inc. ADR (China) (a) 100,149 9,467Facebook, Inc., Class A (a) 2,019,702 50,210Google, Inc., Class A (a) 79,059 69,601LinkedIn Corp., Class A (a) 78,814 14,053Salesforce.com, Inc. (a) 489,484 18,688Workday, Inc., Class A (a) 136,511 8,749

170,768

Computer Technology (3.9%)Apple, Inc. 61,123 24,209Yandex N.V., Class A (Russia) (a) 359,597 9,936

34,145

Consumer Lending (9.4%)CME Group, Inc. 203,352 15,451Mastercard, Inc., Class A 55,752 32,029Visa, Inc., Class A 189,686 34,665

82,145

Diversified Media (2.9%)McGraw Hill Financial, Inc. 223,424 11,884Naspers Ltd., Class N (South Africa) 178,861 13,209

25,093

Diversified Retail (14.6%)Amazon.com, Inc. (a) 252,809 70,203Groupon, Inc. (a) 2,331,324 19,816NetFlix, Inc. (a) 19,542 4,125Priceline.com, Inc. (a) 41,193 34,072

128,216

Drug & Grocery Store Chains (0.5%)Whole Foods Market, Inc. 86,952 4,476

Financial Data & Systems (2.7%)MSCI, Inc. (a) 294,344 9,793Verisk Analytics, Inc., Class A (a) 225,098 13,438

23,231



Semi-Annual Report — June 30, 2013 (unaudited)

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Portfolio of Investments (cont’d)Growth Portfolio


Portfolio Composition Percentage ofClassification Total InvestmentsOther* 51.0%Computer Services, Software & Systems 19.5Diversified Retail 14.6Consumer Lending 9.4Pharmaceuticals 5.5Total Investments 100.0%

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



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Growth Portfolio


June 30, 2013 (000)

Assets:Investments in Securities of Unaffiliated Issuers, at Value (Cost $632,624) $ 863,882Investment in Security of Affiliated Issuer, at Value (Cost $12,681) 12,681Total Investments in Securities, at Value (Cost $645,305) 876,563Receivable for Portfolio Shares Sold 914Dividends Receivable 361Tax Reclaim Receivable 255Receivable from Affiliate 1Other Assets 36

Total Assets 878,130

Liabilities:Payable for Advisory Fees 1,071Payable for Sub Transfer Agency Fees 434Payable for Portfolio Shares Redeemed 278Payable for Administration Fees 57Payable for Directors’ Fees and Expenses 32Payable for Distribution and Shareholder Services Fees — Class P 30Payable for Distribution and Shareholder Services Fees — Class H —@Payable for Distribution and Shareholder Services Fees — Class L —@Payable for Custodian Fees 18Payable for Professional Fees 17Payable for Transfer Agent Fees 1Other Liabilities 65

Total Liabilities 2,003Net Assets $ 876,127

Net Assets Consist Of:Paid-in-Capital $ 621,385Undistributed Net Investment Income 5,124Accumulated Net Realized Gain 18,365Unrealized Appreciation (Depreciation) on:

Investments 231,258Foreign Currency Translations (5)


CLASS I:Net Assets $ 729,637Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 24,011,137Net Asset Value, Offering and Redemption Price Per Share $ 30.39

CLASS P:Net Assets $ 146,417Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 4,918,835Net Asset Value, Redemption Price Per Share $ 29.77Maximum Sales Load§§ 5.25%Maximum Sales Charge $ 1.65Maximum Offering Price Per Share $ 31.42

CLASS H:Net Assets $ 56Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 1,894Net Asset Value, Redemption Price Per Share $ 29.76Maximum Sales Load 4.75%Maximum Sales Charge $ 1.48Maximum Offering Price Per Share $ 31.24

CLASS L:Net Assets $ 17Shares Outstanding $0.001 par value shares of beneficial interest (500,000,000 shares authorized) (not in 000’s) 576Net Asset Value, Offering and Redemption Price Per Share $ 29.59@ Amount is less than $500.§§ Effective February 25, 2013, the Directors approved the imposition of a maximum initial sales charge of 5.25% on purchases of Class P shares of the Portfolio.

Statement of Assets and Liabilities



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Growth Portfolio


Six Months Ended June 30, 2013

(000)Investment Income:

Dividends from Securities of Unaffiliated Issuers (Net of $262 of Foreign Taxes Withheld) $ 4,795Dividends from Security of Affiliated Issuer 18

Total Investment Income 4,813

Expenses:Advisory Fees (Note B) 2,108Sub Transfer Agency Fees 382Administration Fees (Note C) 337Distribution and Shareholder Services Fees — Class P (Note D) 179Distribution and Shareholder Services Fees — Class H (Note D) —@Distribution and Shareholder Services Fees — Class L (Note D) —@Professional Fees 38Shareholder Reporting Fees 35Custodian Fees (Note F) 32Registration Fees 24Directors’ Fees and Expenses 9Transfer Agency Fees (Note E) 9Pricing Fees 2Other Expenses 17

Total Expenses 3,172

Rebate from Morgan Stanley Affiliate (Note G) (22)

Net Expenses 3,150

Net Investment Income 1,663

Realized Gain:Investments Sold 39,210Foreign Currency Transactions 4

Net Realized Gain 39,214

Change in Unrealized Appreciation (Depreciation):Investments 56,798Foreign Currency Translations (4)

Net Change in Unrealized Appreciation (Depreciation) 56,794

Net Realized Gain and Change in Unrealized Appreciation (Depreciation) 96,008

Net Increase in Net Assets Resulting from Operations $97,671


Statement of Operations





10

Growth Portfolio


Six Months Ended Year Ended June 30, 2013 December 31, (unaudited) 2012

(000) (000)Increase (Decrease) in Net Assets:Operations:

Net Investment Income $ 1,663 $ 4,547Net Realized Gain 39,214 72,424Net Change in Unrealized Appreciation (Depreciation) 56,794 36,391

Net Increase in Net Assets Resulting from Operations 97,671 113,362

Distributions from and/or in Excess of:Class I:Net Investment Income — (1,111)Net Realized Gain — (917)Class P:Net Realized Gain — (195)Class H:Net Investment Income — (—@)*Net Realized Gain — (—@)*Class L:Net Investment Income — (—@)*Net Realized Gain — (—@)*

Total Distributions — (2,223)

Capital Share Transactions:(1)

Class I:Subscribed 41,992 102,434Distributions Reinvested — 2,027Redeemed (54,640) (156,920)Class P:Subscribed 6,660 33,160Distributions Reinvested — 195Redeemed (15,112) (50,515)Class H:Subscribed 7 43*Distributions Reinvested — —@*Class L:Subscribed 6 10*

Net Decrease in Net Assets Resulting from Capital Share Transactions (21,087) (69,566)Total Increase in Net Assets 76,584 41,573

Net Assets:Beginning of Period 799,543 757,970

End of Period (Including Undistributed Net Investment Income of $5,124 and $3,461) $876,127 $ 799,543

(1) Capital Share Transactions:Class I:Shares Subscribed 1,470 3,824Shares Issued on Distributions Reinvested — 75Shares Redeemed (1,901) (5,978)Net Decrease in Class I Shares Outstanding (431) (2,079)Class P:Shares Subscribed 236 1,264Shares Issued on Distributions Reinvested — 7Shares Redeemed (535) (1,949)Net Decrease in Class P Shares Outstanding (299) (678)Class H:Shares Subscribed 1 2*Shares Issued on Distributions Reinvested — —@@*Net Increase in Class H Shares Outstanding 1 2Class L:Shares Subscribed —@@ —@@*Net Increase in Class L Shares Outstanding —@@ —@@*

@ Amount is less than $500.@@ Amount is less than 500 shares.* For the period April 27, 2012 to December 31, 2012.

Statements of Changes in Net Assets





11



Class I

Six Months Ended June 30, 2013 Year Ended December 31,

Selected Per Share Data and Ratios (unaudited) 2012 2011 2010 2009 2008Net Asset Value, Beginning of Period $ 27.05 $ 23.46 $ 24.24 $ 19.69 $ 12.12 $ 24.69

Income (Loss) from Investment Operations:Net Investment Income† 0.06 0.16 0.01 0.06 0.05 0.05Net Realized and Unrealized Gain (Loss) 3.28 3.52 (0.73) 4.49 7.58 (12.50)

Total from Investment Operations 3.34 3.68 (0.72) 4.55 7.63 (12.45)

Distributions from and/or in Excess of:Net Investment Income — (0.05) (0.06) (0.00)‡ (0.06) (0.10)Net Realized Gain — (0.04) — — — (0.02)

Total Distributions — (0.09) (0.06) (0.00)‡ (0.06) (0.12)

Redemption Fees — — — — 0.00‡ 0.00‡

Net Asset Value, End of Period $ 30.39 $ 27.05 $ 23.46 $ 24.24 $ 19.69 $ 12.12

Total Return++ 12.35%# 15.66% (3.01)% 23.11% 62.97%** (50.47)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $729,637 $661,073 $622,193 $704,410 $674,070 $543,841Ratio of Expenses to Average Net Assets (1) 0.70%+††* 0.72%+ 0.71%+†† 0.73%+†† 0.65%+ 0.62%+Ratio of Expenses to Average Net Assets

Excluding Non Operating Expenses N/A N/A N/A 0.73%+†† 0.65%+ 0.62%+Ratio of Net Investment Income to Average

Net Assets (1) 0.44%+††* 0.59%+ 0.05%+†† 0.27%+†† 0.35%+ 0.24%+Ratio of Rebate from Morgan Stanley Affiliates to

Average Net Assets 0.01%††* 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 20%# 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily one of the



†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.# Not Annualized.* Annualized.



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Class P

Six Months Ended June 30, 2013 Year Ended December 31,

Selected Per Share Data and Ratios (unaudited) 2012 2011 2010 2009 2008Net Asset Value, Beginning of Period $ 26.53 $ 23.03 $ 23.82 $ 19.40 $ 11.94 $ 24.27

Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.03 0.09 (0.05) 0.00‡ 0.02 0.00‡Net Realized and Unrealized Gain (Loss) 3.21 3.45 (0.73) 4.42 7.46 (12.27)

Total from Investment Operations 3.24 3.54 (0.78) 4.42 7.48 (12.27)

Distributions from and/or in Excess of:Net Investment Income — — (0.01) (0.00)‡ (0.02) (0.04)Net Realized Gain — (0.04) — — — (0.02)

Total Distributions — (0.04) (0.01) (0.00)‡ (0.02) (0.06)

Redemption Fees — — — — 0.00‡ 0.00‡

Net Asset Value, End of Period $ 29.77 $ 26.53 $ 23.03 $ 23.82 $ 19.40 $ 11.94

Total Return++ 12.21%# 15.36% (3.27)% 22.79% 62.66%** (50.57)%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $146,417 $138,416 $135,777 $136,585 $99,475 $59,883Ratio of Expenses to Average Net Assets (1) 0.95%+††* 0.97%+ 0.96%+†† 0.98%+†† 0.90%+ 0.87%+Ratio of Expenses to Average Net Assets

Excluding Non Operating Expenses N/A N/A N/A 0.98%+†† 0.90%+ 0.87%+Ratio of Net Investment Income (Loss) to

Average Net Assets (1) 0.19%+††* 0.34%+ (0.20)%+†† 0.02%+†† 0.10%+ (0.01)%+Ratio of Rebate from Morgan Stanley Affiliates to

Average Net Assets 0.01%††* 0.00%§ 0.00%††§ 0.00%††§ 0.00%§ 0.00%§Portfolio Turnover Rate 20%# 49% 26% 35% 19% 42%† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily one of the


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






13



Class H

Six Months Ended Period fromJune 30, 2013 April 27, 2012^ to

Selected Per Share Data and Ratios (unaudited) December 31, 2012Net Asset Value, Beginning of Period $26.52 $27.60

Income (Loss) from Investment Operations:Net Investment Income† 0.03 0.08Net Realized and Unrealized Gain (Loss) 3.21 (1.10)


Distributions from and/or in Excess of:Net Investment Income — (0.02)Net Realized Gain — (0.04)

Total Distributions — (0.06)


Total Return++ 12.22%# (3.72)%#

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 56 $ 44Ratio of Expenses to Average Net Assets (1) 0.95%+††* 0.96%+*Ratio of Net Investment Income to Average Net Assets (1) 0.19%+††* 0.44%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.01%††* 0.00%*§Portfolio Turnover Rate 20%# 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during

the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.# Not Annualized.* Annualized.





14



Class L

Six Months Ended Period fromJune 30, 2013 April 27, 2012^ to

Selected Per Share Data and Ratios (unaudited) December 31, 2012Net Asset Value, Beginning of Period $26.43 $27.60

Income (Loss) from Investment Operations:Net Investment Income (Loss)† (0.05) 0.03Net Realized and Unrealized Gain (Loss) 3.21 (1.16)


Distributions from and/or in Excess of:Net Investment Income — (0.00)‡Net Realized Gain — (0.04)

Total Distributions — (0.04)


Total Return++ 11.96%# (4.10)%#

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $ 17 $ 10Ratio of Expenses to Average Net Assets (1) 1.45%+††* 1.51%+*Ratio of Net Investment Income (Loss) to Average Net Assets (1) (0.32)%+††* 0.20%+*Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.01%††* 0.00%*§Portfolio Turnover Rate 20%# 49%#^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley

affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average NetAssets.”






15

Morgan Stanley Institutional Fund, Inc. (the “Fund”) is regis-

tered under the Investment Company Act of 1940, as

amended (the “Act”), as an open-end management investment

company. The Fund is comprised of twenty-six separate, active,

diversified and non-diversified portfolios (individually referred

to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Growth

Portfolio. The Portfolio seeks long-term capital appreciation by

investing primarily in growth oriented equity securities of large

capitalization companies. Under normal market conditions,

the Portfolio seeks to achieve its investment objective by invest-

ing primarily in established and emerging companies, with

capitalizations within the range of companies included in the

Russell 1000® Growth Index. The Portfolio offers four classes

of shares — Class I, Class P, Class H and Class L.

A. Significant Accounting Policies: The following signif-

icant accounting policies are in conformity with U.S. generally

accepted accounting principles (“GAAP”). Such policies are

consistently followed by the Fund in the preparation of its

financial statements. GAAP may require management to make

estimates and assumptions that affect the reported amounts

and disclosures in the financial statements. Actual results may

differ from those estimates.

1. Security Valuation: (1) An equity portfolio security

listed or traded on an exchange is valued at its latest

reported sales price (or at the exchange official closing

price if such exchange reports an official closing price), if

there were no sales on a given day, the security is valued at

the mean between the last reported bid and asked prices;

(2) all other equity portfolio securities for which over-the-

counter market quotations are readily available are valued

at the mean between the last reported bid and asked

prices. In cases where a security is traded on more than

one exchange, the security is valued on the exchange desig-

nated as the primary market; (3) when market quotations

are not readily available, including circumstances under

which Morgan Stanley Investment Management Inc. (the

“Adviser”) determines that the closing price, last sale price

or the mean between the last reported bid and asked prices

are not reflective of a security’s market value, portfolio

securities are valued at their fair value as determined in

good faith under procedures established by and under the

general supervision of the Fund’s Board of Directors (the

“Directors”). Occasionally, developments affecting the

closing prices of securities and other assets may occur

between the times at which valuations of such securities

are determined (that is, close of the foreign market on

which the securities trade) and the close of business of the

New York Stock Exchange (“NYSE”). If developments

occur during such periods that are expected to materially

affect the value of such securities, such valuations may be

adjusted to reflect the estimated fair value of such securi-

ties as of the close of the NYSE, as determined in good

faith by the Directors or by the Adviser using a pricing

service and/or procedures approved by the Directors;

(4) quotations of foreign portfolio securities, other assets

and liabilities and forward contracts stated in foreign

currency are translated into U.S. dollar equivalents at the

prevailing market rates prior to the close of the NYSE;

(5) investments in mutual funds, including the Morgan

Stanley Institutional Liquidity Funds, are valued at the net

asset value as of the close of each business day; and

(6) short-term debt securities with remaining maturities of

60 days or less at the time of purchase may be valued at

amortized cost, unless the Adviser determines such

valuation does not reflect the securities’ market value, in

which case these securities will be valued at their fair

market value determined by the Adviser.

Under procedures approved by the Directors, the Fund’s

Adviser has formed a Valuation Committee. The Valua-

tion Committee provides administration and oversight

of the Fund’s valuation policies and procedures, which

are reviewed at least annually by the Directors. These

procedures allow the Fund to utilize independent pric-

ing services, quotations from securities and financial in-

strument dealers, and other market sources to determine

fair value.

The Fund has procedures to determine the fair value of

securities and other financial instruments for which

market prices are not readily available. Under these pro-

cedures, 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

Notes to Financial Statements (unaudited)



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16

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 disposi-

tion analysis, and reviews of any related market activity.

2. Fair Value Measurement: Financial Accounting

Standards Board (“FASB”) Accounting Standards

CodificationTM (“ASC”) 820, “Fair Value Measurements

and Disclosures” (“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 determin-

ing 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 (includ-

ing 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 consid-

ered 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 avail-

able 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 con-

siders factors specific to each security.

The following is a summary of the inputs used to value

the Portfolio’s investments as of June 30, 2013.

Level 2 Level 1 Other Level 3 Unadjusted significant Significant quoted observable unobservable prices inputs inputs TotalInvestment Type (000) (000) (000) (000)Assets:Common Stocks

Alternative Energy $ 12,378 $— $— $ 12,378Asset Management &

Custodian 22,245 — — 22,245Automobiles 21,373 — — 21,373Biotechnology 29,960 — — 29,960Cable Television Services 4,647 — — 4,647Chemicals: Diversified 24,835 — — 24,835Commercial Services 10,777 — — 10,777Communications

Technology 31,120 — — 31,120Computer Services,

Software & Systems 170,768 — — 170,768Computer Technology 34,145 — — 34,145Consumer Lending 82,145 — — 82,145Diversified Media 25,093 — — 25,093Diversified Retail 128,216 — — 128,216Drug & Grocery Store

Chains 4,476 — — 4,476Financial Data & Systems 23,231 — — 23,231Health Care Services 4,351 — — 4,351Insurance: Multi-Line 10,024 — — 10,024Insurance:

Property-Casualty 34,061 — — 34,061Medical Equipment 25,932 — — 25,932Pharmaceuticals 48,527 — — 48,527Radio & TV Broadcasters 4,256 — — 4,256Recreational Vehicles &

Boats 28,224 — — 28,224Restaurants 24,606 — — 24,606Semiconductors &

Components 17,575 — — 17,575Textiles Apparel & Shoes 40,917 — — 40,917

Total Common Stocks 863,882 — — 863,882Short-Term Investment —

Investment Company 12,681 — — 12,681Total Assets $876,563 $— $— $876,563

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





17

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in aninvestment’s valuation changes. The Portfolio recognizestransfers between the levels as of the end of the period. Asof June 30, 2013, securities with a total value of approxi-mately $52,209,000 transferred from Level 2 to Level 1.At December 31, 2012, the fair value of certain securitieswere adjusted due to developments which occurred be-tween the time of the close of the foreign markets onwhich they trade and the close of business on the NYSEwhich resulted in their Level 2 classification.

Following is a reconciliation of investments in which

significant unobservable inputs (Level 3) were used in

determining fair value.

Convertible Preferred Stock (000)Beginning Balance $ 522

Purchases —Sales —Amortization of discount —Transfers in —Transfers out —Change in unrealized appreciation/depreciation 3,833Realized gains (losses) (4,355)

Ending Balance $ —

Net change in unrealized appreciation/depreciation from investments still held as of June 30, 2013 $ —

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

maintained in U.S. dollars. Foreign currency amounts are

translated into U.S. dollars at the mean of the bid and

asked prices of such currencies against U.S. dollars last

quoted by a major bank as follows:

– investments, other assets and liabilities at the prevail-

ing rate of exchange on the valuation date;

– investment transactions and investment income at the

prevailing rates of exchange on the dates of such

transactions.

Although the net assets of the Portfolio are presented at

the foreign exchange rates and market values at the close

of the period, the Portfolio does not isolate that portion

of the results of operations arising as a result of changes

in the foreign exchange rates from the fluctuations aris-

ing from changes in the market prices of securities held

at period end. Similarly, the Portfolio does not isolate

the effect of changes in foreign exchange rates from the

fluctuations arising from changes in the market prices of

securities sold during the period. Accordingly, realized

and unrealized foreign currency gains (losses) on invest-

ments in securities are included in the reported net real-

ized 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 transac-

tions represent net foreign exchange gains (losses) from

foreign currency forward exchange contracts, disposition

of foreign currencies, currency gains (losses) realized

between the trade and settlement dates on securities

transactions, and the difference between the amount of

investment income and foreign withholding taxes

recorded on the Portfolio’s books and the U.S. dollar

equivalent amounts actually received or paid. Net unre-

alized currency gains (losses) from valuing foreign cur-

rency denominated assets and liabilities at period end

exchange rates are reflected as a component of unreal-

ized appreciation (depreciation) on 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.

The net assets of the Portfolio include foreign denomi-

nated securities and currency. Changes in currency

exchange rates will affect the U.S. Dollar value of and

investment income from such securities. Further, at

times the Portfolio’s investments are focused in a limited

number of countries and regions. This focus may further

increase the risk of the Portfolio.






18

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 owner-

ship limitations also may be imposed by the charters of

individual companies to prevent, among other concerns,

violations of foreign investment limitations. As a result,

an additional class of shares (identified as “Foreign” in

the Portfolio of Investments) may be created and offered

for investment. The “local” and “foreign shares” market

values may differ. In the absence of trading of the

foreign shares in such markets, the Portfolio values the

foreign shares at the closing exchange price of the local

shares.

4. Indemnifications: The Fund enters into contracts that

contain a variety of indemnifications. The Fund’s maxi-

mum exposure under these arrangements is unknown.

However, the Fund has not had prior claims or losses

pursuant to these contracts and expects the risk of loss to

be remote.

5. Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are

recorded on the ex-dividend date. Dividends from net

investment income, if any, are declared and paid

semiannually. Net realized capital gains, if any, are distrib-

uted 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 deter-

mined 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. Inter-

est income is recognized on the accrual basis except where

collection is in doubt. Discounts are accreted and premi-

ums are amortized over the life of the respective securities.

Most expenses of the Fund can be directly attributed to a

particular Portfolio. Expenses which cannot be directly

attributed are apportioned among the Portfolios based

upon relative net assets or other appropriate methods.

Income, expenses (other than class specific expenses) and

realized and unrealized gains or losses are allocated to each

class of shares based upon their relative net assets.

The Portfolio owns shares of REITs which report infor-

mation on the source of their distributions annually in

the following calendar year. A portion of distributions

received from REITs during the year is estimated to be a

return of capital and is recorded as a reduction of their

cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary

of Morgan Stanley, provides the Portfolio with advisory

services under the terms of an Investment Advisory Agreement,

paid quarterly, at the annual rate based on the average daily net

assets as follows:

First $1 Next $1 Next $1 Over $3 billion billion billion billion 0.50% 0.45% 0.40% 0.35%

For the six months ended June 30, 2013, the advisory fee rate(net of rebate) was equivalent to an annual effective rate of0.49% of the Portfolio’s daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reim-

burse the Portfolio so that total annual portfolio operating

expenses, excluding certain investment related expenses, taxes,

interest and other extraordinary expenses (including litigation),

will not exceed 0.80% for Class I shares, 1.05% for Class P

shares, 1.05% for Class H shares and 1.55% for Class L shares.

The fee waivers and/or expense reimbursements will continue

for at least one year or until such time that the Directors act to

discontinue all or a portion of such waivers and/or reimburse-

ments when it deems such action is appropriate.

C. Administration Fees: The Adviser also serves as Admin-

istrator to the Fund and provides administrative services

pursuant to an Administration Agreement for an annual fee,

accrued daily and paid monthly, of 0.08% of the Portfolio’s av-

erage daily net assets. Under a Sub-Administration Agreement

between the Administrator and State Street Bank and Trust

Company (“State Street”), State Street provides certain admin-

istrative services to the Fund. For such services, the Adminis-

trator pays State Street a portion of the fee the Administrator

receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distribu-

tor”), a wholly-owned subsidiary of the Adviser, and an indi-

rect subsidiary of Morgan Stanley, serves as the Fund’s

Distributor of Portfolio shares pursuant to a Distribution






19

Agreement. The Fund has adopted Shareholder Services Plans

with respect to Class P and Class H shares pursuant to

Rule 12b-1 under the Act. Under the Shareholder Services

Plans, the Portfolio pays the Distributor a shareholder services

fee, accrued daily and paid monthly, at an annual rate of

0.25% of the Portfolio’s average daily net assets attributable to

Class P and Class H shares.

The Fund has adopted a Distribution and Shareholder Services

Plan with respect to Class L shares pursuant to Rule 12b-1

under the Act. Under the Distribution and Shareholder

Services Plan, the Portfolio pays the Distributor a distribution

fee, accrued daily and paid monthly, at an annual rate of

0.50% and a shareholder service fee, accrued daily and paid

monthly, at an annual rate of 0.25% of the Portfolio’s average

daily net assets attributable to Class L shares.

The distribution and shareholder services fees are used to

support the expenses associated with servicing and maintaining

accounts. The Distributor may compensate other parties for

providing shareholder support services to investors who pur-

chase Class P, Class H and Class L shares.

E. Dividend Disbursing and Transfer Agent: The

Fund’s dividend disbursing and transfer agent was Morgan

Stanley Services Company Inc. (“Morgan Stanley Services”).

Pursuant to a Transfer Agency Agreement, the Fund paid

Morgan Stanley Services a fee based on the number of classes,

accounts and transactions relating to the Portfolios of the

Fund. Effective July 1, 2013, the Directors approved changing

the transfer agent to Boston Financial Data Services, Inc.

F. Custodian Fees: State Street (the “Custodian”) serves as

Custodian for the Fund in accordance with a Custodian Agree-

ment. The Custodian holds cash, securities, and other assets of

the Fund as required by the Act. Custody fees are payable

monthly based on assets held in custody, investment purchases

and sales activity and account maintenance fees, plus reim-

bursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2013, purchases

and sales of investment securities for the Portfolio, other than

long-term U.S. Government securities and short-term invest-

ments, were approximately $166,132,000 and $192,293,000,

respectively. There were no purchases and sales of long-term U.S.

Government securities for the six months ended June 30, 2013.

The Portfolio invests in the Institutional Class of the Morgan

Stanley Institutional Liquidity Funds — Money Market

Portfolio (the “Liquidity Funds”), an open-end management

investment company managed by the Adviser. Advisory fees

paid by the Portfolio are reduced by an amount equal to its

pro-rata share of the advisory and administration fees paid by

the Portfolio due to its investment in the Liquidity Funds. For

the six months ended June 30, 2013, advisory fees paid were

reduced by approximately $22,000 relating to the Portfolio’s

investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the Liq-

uidity Funds during the six months ended June 30, 2013 is as

follows:

Value Value December 31, Purchases Dividend June 30, 2012 at Cost Sales Income 2013 (000) (000) (000) (000) (000)

$9,357 $134,941 $131,617 $18 $12,681

During the six months ended June 30, 2013, the Portfolio incurred approximately $11,000 in brokerage commissionswith Morgan Stanley & Co., LLC, an affiliate of the Adviser,Administrator and Distributor, for portfolio transactions executed on behalf of the Portfolio.

During the six months ended June 30, 2013, the Portfolio

incurred approximately $8,000 in brokerage commissions with

Citigroup, Inc., and its affiliated broker-dealers, which may be

deemed affiliates of the Adviser, Administrator and Distributor

under Section 17 of the Act, for portfolio transactions executed

on behalf of the Portfolio.

H. Federal Income Taxes: It is the Portfolio’s intention to

continue to qualify as a regulated investment company and dis-

tribute all of its taxable and tax-exempt income. Accordingly,

no provision for Federal income taxes is required in the finan-

cial statements.

Dividend income and distributions to shareholders are

recorded on the ex-dividend date. Interest income is recognized

on an accrual basis. Dividends from net investment income, if

any, are declared and paid semiannually. Net realized capital

gains, if any, are distributed at least annually.

The Portfolio may be subject to taxes imposed by countries in

which it invests. Such taxes are generally based on income

and/or capital gains earned or repatriated. Taxes are accrued

based on net investment income, net realized gains and net

unrealized appreciation as such income and/or gains are earned.

Taxes may also be based on transactions in foreign currency and

are accrued based on the value of investments denominated in

such currency.






20

FASB ASC 740-10 “Income Taxes — Overall” sets forth a

minimum threshold for financial statement recognition of the

benefit of a tax position taken or expected to be taken in a tax

return. Management has concluded there are no significant

uncertain tax positions that would require recognition in the

financial statements. If applicable, the Portfolio recognizes in-

terest accrued related to unrecognized tax benefits in “Interest

Expense” and penalties in “Other Expenses” in the Statement

of Operations. The Portfolio files tax returns with the U.S.

Internal Revenue Service, New York and various states. Each of

the tax years in the four-year period ended December 31,

2012, 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 distri-

butions paid during fiscal years 2012 and 2011 was as follows:

2012 2011 Distributions Distributions Paid From: Paid From: Ordinary Long-Term Ordinary Long-Term Income Capital Gain Income Capital Gain (000) (000) (000) (000) $1,111 $1,112 $1,728 —

The amount and character of income and gains to be distrib-uted are determined in accordance with income tax regulationswhich may differ from GAAP. These book/tax differences areeither 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 de-

ductibility of certain expenses.

Permanent differences, primarily due to differing treatments of

gains (losses) related to foreign currency transactions and a div-

idend redesignation, resulted in the following reclassifications

among the components of net assets at December 31, 2012:

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

At December 31, 2012, the components of distributable earn-ings for the Portfolio on a tax basis were as follows:

Undistributed Undistributed Ordinary Long-Term Income Capital Gain (000) (000) $3,475 —

At June 30, 2013, the aggregate cost for federal income tax

purposes approximates the aggregate cost for book purposes.

The aggregate gross unrealized appreciation is approximately

$259,249,000 and the aggregate gross unrealized depreciation

is approximately $27,991,000 resulting in net unrealized

appreciation of approximately $231,258,000.

On December 22, 2010, the Regulated Investment Company

Modernization Act of 2010 (the “Modernization Act”) was

signed into law. The Modernization Act modernizes several tax

provisions related to Regulated Investment Companies

(“RICs”) and their shareholders. One key change made by the

Modernization Act is that capital losses will generally retain

their character as short-term or long-term and may be carried

forward indefinitely to offset future gains. These losses are

utilized before other capital loss carryforwards that expire.

Generally, the Modernization Act is effective for taxable years

beginning after December 22, 2010.

During the year ended December 31, 2012, the Portfolio

utilized capital loss carryforwards for U.S. Federal income tax

purposes of approximately $90,712,000.

Capital losses and specified ordinary losses, including currency

losses, incurred after October 31 but within the taxable year

are deemed to arise on the first day of the Portfolio’s next

taxable year. For the year ended December 31, 2012, the

Portfolio deferred to January 1, 2013 for U.S. Federal income

tax purposes the following losses:

Specified Ordinary Capital Losses Losses (000) (000) — $19,193

I. Other: At June 30, 2013, the Portfolio had otherwise unaf-filiated record owners of 10% or greater. Investment activitiesof these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 56.6%and 55.8%, for Class I and Class P shares, respectively.






21

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

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

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

WE RESPECT YOUR PRIVACY

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

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

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

1. WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

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

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

• We may obtain information about account balances, your use of account(s) and the types of products and services you preferto 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 tocomply with various regulatory requirements.

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

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

U.S. Privacy Policy (unaudited)





22

a. Information we disclose to affiliated companies.

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

b. Information we disclose to third parties.

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

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

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

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

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

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

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

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products orservices to you based on personal information we disclose to them. This information may include, for example, your income andaccount history with us. Please note that, even if you choose to limit our affiliated companies from using personal informationabout you that we may share with them for marketing their products and services to you, our affiliated companies may use yourpersonal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated partyhas 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 our affiliated companies, or our affiliated companies’ useof personal information for marketing purposes, as described in this notice, you may do so by:

• Calling us at (800) 548-7786Monday–Friday between 8a.m. and 5p.m. (EST)

• Writing to us at the following address:

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

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

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

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

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

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

SPECIAL NOTICE TO RESIDENTS OF VERMONTThe following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in theabove Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third

parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal

information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to

share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIAThe following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary inthe above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as

permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

23



Adviser and AdministratorMorgan Stanley Investment Management Inc.522 Fifth AvenueNew York, New York 10036

DistributorMorgan Stanley Distribution, Inc.522 Fifth AvenueNew York, New York 10036

Dividend Disbursing and Transfer AgentBoston Financial Data Services, Inc.2000 Crown Colony DriveQuincy, Massachusetts 02169

CustodianState Street Bank and Trust CompanyOne Lincoln StreetBoston, Massachusetts 02111

Legal CounselDechert LLP1095 Avenue of the AmericasNew York, New York 10036

Independent Registered Public Accounting FirmErnst & Young LLP200 Clarendon StreetBoston, Massachusetts 02116



Director and Officer Information (unaudited)

Reporting to ShareholdersEach 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’ssecond and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filedon Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders andmakes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley fund also files a complete schedule of portfolioholdings 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 fiscalquarters 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 theForm 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 inWashington, 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 canalso request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address ([email protected]) or by writingthe Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting RecordYou may obtain a copy of the Fund’s Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securitiesduring 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 atwww.morganstanley.com/im. This information is also available on the SEC’s website at www.sec.gov.

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

DirectorsFrank L. BowmanMichael BozicKathleen A. DennisJames F. HigginsDr. Manuel H. JohnsonJoseph J. KearnsMichael F. KleinMichael E. NugentW. Allen ReedFergus Reid

OfficersMichael E. NugentChairperson of the Board


Mary Ann PicciottoChief Compliance Officer

Stefanie V. Chang YuVice President

Mary E. MullinSecretary

Francis J. SmithTreasurer and Principal Financial Officer

24



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

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

© 2013 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWSAN709667 EXP [08/31/14]

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