N-CSR 1 tm242071d1_ncsr.htm N-CSR

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number: 811-05624

 

Morgan Stanley Institutional Fund, Inc.
(Exact name of registrant as specified in charter)

 

1585 Broadway, New York, New York                              10036
(Address of principal executive offices)                              (Zip code)

 

John H. Gernon
1585 Broadway, New York, New York 10036
(Name and address of agent for service)

 

Registrant's telephone number, including area code: 212-762-1886

 

Date of fiscal year end: December 31,

 

Date of reporting period: December 31, 2023

 

 

 

 

 

 

Item 1 - Report to Shareholders

 

 

 

 

Morgan Stanley Institutional Fund, Inc.

Advantage Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

7

   

Consolidated Statement of Assets and Liabilities

   

9

   

Consolidated Statement of Operations

   

11

   

Consolidated Statements of Changes in Net Assets

   

12

   

Consolidated Financial Highlights

   

14

   

Notes to Consolidated Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

29

   

Liquidity Risk Management Program

   

30

   

Important Notices

   

31

   

U.S. Customer Privacy Notice

   

32

   

Directors and Officers Information

   

35

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Advantage Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Advantage Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Advantage Portfolio Class I

 

$

1,000.00

   

$

1,083.90

   

$

1,021.27

   

$

4.10

   

$

3.97

     

0.78

%

 

Advantage Portfolio Class A

   

1,000.00

     

1,082.30

     

1,019.76

     

5.67

     

5.50

     

1.08

   

Advantage Portfolio Class L

   

1,000.00

     

1,083.10

     

1,020.67

     

4.73

     

4.58

     

0.90

   

Advantage Portfolio Class C

   

1,000.00

     

1,077.70

     

1,015.93

     

9.64

     

9.35

     

1.84

   

Advantage Portfolio Class R6

   

1,000.00

     

1,083.90

     

1,021.58

     

3.78

     

3.67

     

0.72

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Advantage Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 46.28%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the Russell 1000® Growth Index (the "Index"), which returned 42.68%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Surprised by the economy's resilience amid rising interest rates and persistently high (but falling) inflation, U.S. stocks performed well in 2023. The year saw its share of uncertainty, with recession fears dominating the start of the year, a regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, and multiple geopolitical flashpoints. However, by year-end, the U.S. Federal Reserve signaled it was likely finished lifting interest rates after pausing the hiking cycle halfway through the year. This triggered a stock market rally and retreat in long-term bond yields in the final two months of 2023. Additionally, excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform, adding meaningfully to the broader market's gain in the year.

•  Large-cap growth equities, as measured by the Index, advanced over the year. All sectors in the Index were positive, led by information technology, communication services and consumer discretionary. Energy, utilities and consumer staples posted the smallest gains in the Index.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period due to favorable sector allocations; stock selection was a small detractor.

•  Stock selection in industrials was the greatest contributor to relative performance. A leading global ridesharing services platform that has leveraged its network, on-demand workforce and technology to establish additional marketplace solutions addressing product delivery was the leading contributor in the sector and across the portfolio. The company reported strong fundamental results characterized by continued healthy revenue growth, profit margin expansion and greater traction with new product offerings.

•  Stock selection and an average overweight in consumer discretionary were advantageous to relative performance. A leading food delivery company in the United States was the greatest contributor in the sector and fourth greatest in the portfolio. The company reported better-than-expected results driven by accelerating sales growth, operational efficiencies and disciplined expense management.

•  Consumer staples, energy and real estate — which the portfolio did not have exposure to — were positive contributors to relative performance while the portfolio's lack of exposure to utilities had a neutral impact on relative performance.

•  Conversely, stock selection in health care was the greatest detractor from relative performance. One of the largest buyers of biopharmaceutical royalties and a leading funder of innovation across academic institutions, non-profits, biotechnology and pharmaceutical companies was the greatest detractor in the sector and third greatest across the portfolio. The company reported solid results, but its shares remained pressured due to investors' ongoing concerns around clinical trial results for a few of its partners' new therapies and the impact to potential related royalties.

•  Stock selection in communication services also had an adverse impact on relative performance, although the benefit of an average overweight in the


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Advantage Portfolio

sector partially offset the relative weakness of stock selection. A company that operates a database of employment and contact information to augment sales prospecting for third parties was the top detractor in communication services and second largest in the portfolio. Concerns about slower business growth, longer sales cycles and deal delays weighed on investor sentiment. The position in the stock was eliminated in April 2023 in order to fund other investments we believe offer a superior risk/reward profile.

•  An average underweight in information technology detracted from relative performance, offsetting a small positive contribution from stock selection in the sector.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A , L , C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Advantage Portfolio

Performance Compared to the Russell 1000®​ Growth Index(1) and the Lipper Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(7)
 
Fund — Class I Shares
w/o sales charges(4)
   

46.28

%

   

7.05

%

   

9.13

%

   

10.18

%

 
Fund — Class A Shares
w/o sales charges(4)
   

45.85

     

6.72

     

8.77

     

12.00

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

38.25

     

5.57

     

8.18

     

11.55

   
Fund — Class L Shares
w/o sales charges(4)
   

46.07

     

6.93

     

9.00

     

10.05

   
Fund — Class C Shares
w/o sales charges(6)
   

44.64

     

5.94

     

     

7.71

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(6)
   

43.64

     

5.94

     

     

7.71

   
Fund — Class R6 Shares
w/o sales charges(5)
   

46.31

     

7.10

     

9.18

     

10.40

   

Russell 1000®​ Growth Index

   

42.68

     

19.50

     

14.86

     

13.21

   
Lipper Multi-Cap Growth
Funds Index
   

35.17

     

14.56

     

11.24

     

10.52

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Russell 1000®​ Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000®​ Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000®​ Index is an index of approximately 1,000 of the largest U.S. companies based on a combination of market capitalization and current index membership. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. The Funds' Lipper category changed from Lipper Multi-Cap Growth Funds to Lipper Large-Cap Growth Funds.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  On May 21, 2010 Class C and Class I shares of Van Kampen Core Growth Fund (the "Predecessor Fund") were reorganized into Class L and Class I shares of Morgan Stanley Advantage Portfolio (the "Fund"), respectively. Class L and Class I shares' returns of the Fund will differ from the Predecessor Fund as they have different expenses. Performance shown for the Fund's Class I and Class L shares reflects the performance of the shares of the Predecessor Fund for periods prior to May 21, 2010. The Class C and I shares of the Predecessor Fund commenced operations on June 30, 2008. Class P shares, which were renamed Class A shares effective September 9, 2013, commenced operations on May 21, 2010.

(5)​  Commenced offering on September 13, 2013.

(6)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(7)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Advantage Portfolio

   

Shares

  Value
(000)
 

Common Stocks (95.8%)

 

Automobiles (4.7%)

 

Tesla, Inc. (a)

   

38,772

   

$

9,634

   

Broadline Retail (7.1%)

 

Amazon.com, Inc. (a)

   

45,501

     

6,914

   

MercadoLibre, Inc. (a)

   

4,961

     

7,796

   
     

14,710

   

Capital Markets (1.6%)

 

Intercontinental Exchange, Inc.

   

25,287

     

3,248

   

Entertainment (4.8%)

 

ROBLOX Corp., Class A (a)

   

218,553

     

9,992

   

Financial Services (6.3%)

 

Adyen NV (Netherlands) (a)

   

7,736

     

9,987

   

Block, Inc., Class A (a)

   

40,532

     

3,135

   
     

13,122

   

Ground Transportation (8.6%)

 

Uber Technologies, Inc. (a)

   

238,874

     

14,707

   

Union Pacific Corp.

   

12,857

     

3,158

   
     

17,865

   

Health Care Technology (1.5%)

 

Veeva Systems, Inc., Class A (a)

   

16,369

     

3,151

   

Hotels, Restaurants & Leisure (11.7%)

 

Airbnb, Inc., Class A (a)

   

68,590

     

9,338

   

DoorDash, Inc., Class A (a)

   

151,756

     

15,007

   
     

24,345

   

Information Technology Services (24.7%)

 

Cloudflare, Inc., Class A (a)

   

242,476

     

20,189

   

Shopify, Inc., Class A (Canada) (a)

   

194,987

     

15,189

   

Snowflake, Inc., Class A (a)

   

79,895

     

15,899

   
     

51,277

   

Interactive Media & Services (3.6%)

 

Meta Platforms, Inc., Class A (a)

   

2,949

     

1,044

   

ZoomInfo Technologies, Inc., Class A (a)

   

345,485

     

6,388

   
     

7,432

   

Life Sciences Tools & Services (3.5%)

 

Danaher Corp.

   

13,611

     

3,149

   

Illumina, Inc. (a)

   

29,672

     

4,131

   
     

7,280

   

Media (4.7%)

 

Trade Desk, Inc., Class A (a)

   

135,588

     

9,757

   

Pharmaceuticals (4.3%)

 

Royalty Pharma PLC, Class A

   

317,960

     

8,931

   

Software (5.2%)

 

Bill Holdings, Inc. (a)

   

69,770

     

5,693

   

Datadog, Inc., Class A (a)

   

42,077

     

5,107

   
     

10,800

   
   

Shares

  Value
(000)
 

Specialty Retail (3.5%)

 

Chewy, Inc., Class A (a)

   

149,463

   

$

3,532

   

Floor & Decor Holdings, Inc., Class A (a)

   

33,193

     

3,703

   
     

7,235

   

Total Common Stocks (Cost $164,055)

   

198,779

   

Investment Company (2.6%)

 
Grayscale Bitcoin Trust (a) (Cost $4,055)    

153,835

     

5,326

   

Short-Term Investment (1.0%)

 

Investment Company (1.0%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $2,145)
   

2,144,514

     

2,145

   
Total Investments Excluding Purchased
Options (99.4%) (Cost $170,255)
       

206,250

   
Total Purchased Options Outstanding (0.1%)
(Cost $679)
   

122

   

Total Investments (99.5%) (Cost $170,934) (b)(c)(d)

   

206,372

   

Other Assets in Excess of Liabilities (0.5%)

   

1,058

   

Net Assets (100.0%)

 

$

207,430

   

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $9,987,000 and 4.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(c)  Securities are available for collateral in connection with purchased options.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $189,993,000. The aggregate gross unrealized appreciation is approximately $46,342,000 and the aggregate gross unrealized depreciation is approximately $28,687,000, resulting in net unrealized appreciation of approximately $17,655,000.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Advantage Portfolio

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

  Strike
Price
  Expiration
Date
  Number of
Contracts
  Notional
Amount
(000)
  Value
(000)
  Premiums
Paid
(000)
  Unrealized
Depreciation
(000)
 

JPMorgan Chase Bank NA

  USD/CNH  

CNH

7.43

   

Jan-24

   

43,082,732

   

$

43,083

   

$

4

   

$

203

   

$

(199

)

 

Standard Chartered Bank

  USD/CNH  

CNH

7.57

   

May-24

   

56,717,357

     

56,717

     

60

     

240

     

(180

)

 

JPMorgan Chase Bank NA

  USD/CNH  

CNH

7.79

   

Aug-24

   

57,077,746

     

57,078

     

58

     

236

     

(178

)

 
                       

$

122

   

$

679

   

$

(557

)

 

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

35.9

%

 

Information Technology Services

   

24.9

   

Hotels, Restaurants & Leisure

   

11.8

   

Ground Transportation

   

8.7

   

Broadline Retail

   

7.1

   

Financial Services

   

6.4

   

Software

   

5.2

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Advantage Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $168,789)

 

$

204,227

   

Investment in Security of Affiliated Issuer, at Value (Cost $2,145)

   

2,145

   

Total Investments in Securities, at Value (Cost $170,934)

   

206,372

   

Foreign Currency, at Value (Cost $3)

   

3

   

Receivable for Investments Sold

   

2,242

   

Receivable for Fund Shares Sold

   

63

   

Receivable from Affiliate

   

8

   

Dividends Receivable

   

3

   

Other Assets

   

55

   

Total Assets

   

208,746

   

Liabilities:

 

Payable for Fund Shares Redeemed

   

643

   

Due to Broker

   

280

   

Payable for Advisory Fees

   

241

   

Payable for Sub Transfer Agency Fees — Class I

   

35

   

Payable for Sub Transfer Agency Fees — Class A

   

8

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

3

   

Payable for Shareholder Services Fees — Class A

   

10

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

19

   

Payable for Professional Fees

   

22

   

Payable for Administration Fees

   

14

   

Payable for Custodian Fees

   

6

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

32

   

Total Liabilities

   

1,316

   

Net Assets

 

$

207,430

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

359,098

   

Total Accumulated Loss

   

(151,668

)

 

Net Assets

 

$

207,430

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Advantage Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

120,584

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

6,814,189

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.70

   

CLASS A:

 

Net Assets

 

$

46,114

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,761,844

   

Net Asset Value, Redemption Price Per Share

 

$

16.70

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.93

   

Maximum Offering Price Per Share

 

$

17.63

   

CLASS L:

 

Net Assets

 

$

1,616

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

92,512

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.47

   

CLASS C:

 

Net Assets

 

$

21,811

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,428,815

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.26

   

CLASS R6:

 

Net Assets

 

$

17,305

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

970,988

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.82

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Advantage Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $9 of Foreign Taxes Withheld)

 

$

425

   

Dividends from Security of Affiliated Issuer (Note G)

   

176

   

Total Investment Income

   

601

   

Expenses:

 

Advisory Fees (Note B)

   

1,442

   

Sub Transfer Agency Fees — Class I

   

153

   

Sub Transfer Agency Fees — Class A

   

44

   

Sub Transfer Agency Fees — Class L

   

1

   

Sub Transfer Agency Fees — Class C

   

17

   

Shareholder Services Fees — Class A (Note D)

   

109

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

11

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

217

   

Administration Fees (Note C)

   

177

   

Professional Fees

   

175

   

Registration Fees

   

84

   

Transfer Agency Fees — Class I (Note E)

   

11

   

Transfer Agency Fees — Class A (Note E)

   

8

   

Transfer Agency Fees — Class L (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

8

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Shareholder Reporting Fees

   

30

   

Custodian Fees (Note F)

   

21

   

Directors' Fees and Expenses

   

9

   

Pricing Fees

   

2

   

Other Expenses

   

29

   

Total Expenses

   

2,554

   

Waiver of Advisory Fees (Note B)

   

(173

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(109

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(82

)

 

Distribution Fees — Class L Shares waived (Note D)

   

(11

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(7

)

 

Net Expenses

   

2,167

   

Net Investment Loss

   

(1,566

)

 

Realized Loss:

 

Investments Sold

   

(8,249

)

 

Foreign Currency Translation

   

(1

)

 

Net Realized Loss

   

(8,250

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

89,274

   

Foreign Currency Translation

   

2

   

Net Change in Unrealized Appreciation (Depreciation)

   

89,276

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

81,026

   

Net Increase in Net Assets Resulting from Operations

 

$

79,460

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Advantage Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(1,566

)

 

$

(3,125

)

 

Net Realized Loss

   

(8,250

)

   

(172,836

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

89,276

     

(209,621

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

79,460

     

(385,582

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

     

(28,344

)

 

Class A

   

     

(10,103

)

 

Class L

   

     

(335

)

 

Class C

   

     

(5,539

)

 

Class R6*

   

     

(4,001

)

 

Total Dividends and Distributions to Shareholders

   

     

(48,322

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

45,229

     

124,402

   

Distributions Reinvested

   

     

27,125

   

Redeemed

   

(83,720

)

   

(324,038

)

 

Class A:

 

Subscribed

   

5,695

     

11,681

   

Distributions Reinvested

   

     

9,986

   

Redeemed

   

(15,983

)

   

(29,870

)

 

Class L:

 

Distributions Reinvested

   

     

335

   

Redeemed

   

(213

)

   

(914

)

 

Class C:

 

Subscribed

   

1,188

     

5,442

   

Distributions Reinvested

   

     

5,394

   

Redeemed

   

(7,762

)

   

(19,460

)

 

Class R6:*

 

Subscribed

   

603

     

7,496

   

Distributions Reinvested

   

     

4,001

   

Redeemed

   

(9,070

)

   

(10,010

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(64,033

)

   

(188,430

)

 

Total Increase (Decrease) in Net Assets

   

15,427

     

(622,334

)

 

Net Assets:

 

Beginning of Period

   

192,003

     

814,337

   

End of Period

 

$

207,430

   

$

192,003

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Advantage Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

3,161

     

6,204

   

Shares Issued on Distributions Reinvested

   

     

2,067

   

Shares Redeemed

   

(5,625

)

   

(16,155

)

 

Net Decrease in Class I Shares Outstanding

   

(2,464

)

   

(7,884

)

 

Class A:

 

Shares Subscribed

   

398

     

588

   

Shares Issued on Distributions Reinvested

   

     

804

   

Shares Redeemed

   

(1,121

)

   

(1,547

)

 

Net Decrease in Class A Shares Outstanding

   

(723

)

   

(155

)

 

Class L:

 

Shares Issued on Distributions Reinvested

   

     

26

   

Shares Redeemed

   

(13

)

   

(44

)

 

Net Decrease in Class L Shares Outstanding

   

(13

)

   

(18

)

 

Class C:

 

Shares Subscribed

   

96

     

307

   

Shares Issued on Distributions Reinvested

   

     

471

   

Shares Redeemed

   

(603

)

   

(1,099

)

 

Net Decrease in Class C Shares Outstanding

   

(507

)

   

(321

)

 

Class R6:*

 

Shares Subscribed

   

42

     

332

   

Shares Issued on Distributions Reinvested

   

     

303

   

Shares Redeemed

   

(562

)

   

(562

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(520

)

   

73

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Advantage Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

12.10

   

$

33.57

   

$

43.28

   

$

26.06

   

$

20.98

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.08

)

   

(0.14

)

   

(0.32

)

   

(0.19

)

   

(0.04

)

 

Net Realized and Unrealized Gain (Loss)

   

5.68

     

(17.90

)

   

(1.61

)

   

19.64

     

5.61

   

Total from Investment Operations

   

5.60

     

(18.04

)

   

(1.93

)

   

19.45

     

5.57

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(3.43

)

   

(7.78

)

   

(2.23

)

   

(0.49

)

 

Net Asset Value, End of Period

 

$

17.70

   

$

12.10

   

$

33.57

   

$

43.28

   

$

26.06

   

Total Return(3)

   

46.28

%(4)

   

(54.54

)%

   

(4.45

)%

   

74.79

%

   

26.60

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

120,584

   

$

112,250

   

$

576,158

   

$

656,030

   

$

296,843

   

Ratio of Expenses Before Expense Limitation

   

1.01

%

   

0.97

%

   

0.88

%

   

0.89

%

   

0.93

%

 

Ratio of Expenses After Expense Limitation

   

0.81

%(5)(6)

   

0.85

%(6)

   

0.85

%(6)

   

0.84

%(6)

   

0.84

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.85

%(6)

   

N/A

     

N/A

     

0.84

%(6)

 

Ratio of Net Investment Loss

   

(0.54

)%(5)(6)

   

(0.68

)%(6)

   

(0.73

)%(6)

   

(0.54

)%(6)

   

(0.15

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

42

%

   

51

%

   

69

%

   

73

%

   

70

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.85

%

   

(0.58

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Advantage Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

11.45

   

$

32.26

   

$

42.02

   

$

25.42

   

$

20.54

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.12

)

   

(0.19

)

   

(0.44

)

   

(0.28

)

   

(0.13

)

 

Net Realized and Unrealized Gain (Loss)

   

5.37

     

(17.19

)

   

(1.54

)

   

19.11

     

5.50

   

Total from Investment Operations

   

5.25

     

(17.38

)

   

(1.98

)

   

18.83

     

5.37

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(3.43

)

   

(7.78

)

   

(2.23

)

   

(0.49

)

 

Net Asset Value, End of Period

 

$

16.70

   

$

11.45

   

$

32.26

   

$

42.02

   

$

25.42

   

Total Return(3)

   

45.85

%(4)

   

(54.71

)%

   

(4.72

)%

   

74.27

%

   

26.20

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

46,114

   

$

39,913

   

$

117,424

   

$

130,176

   

$

80,743

   

Ratio of Expenses Before Expense Limitation

   

1.26

%

   

1.23

%

   

1.14

%

   

N/A

     

1.21

%

 

Ratio of Expenses After Expense Limitation

   

1.13

%(5)(6)

   

1.19

%(6)

   

1.14

%(6)

   

1.15

%(6)

   

1.19

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.19

%(6)

   

N/A

     

N/A

     

1.19

%(6)

 

Ratio of Net Investment Loss

   

(0.87

)%(5)(6)

   

(1.02

)%(6)

   

(1.02

)%(6)

   

(0.84

)%(6)

   

(0.50

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

42

%

   

51

%

   

69

%

   

73

%

   

70

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.18

%

   

(0.92

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Advantage Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

11.96

   

$

33.31

   

$

43.04

   

$

25.95

   

$

20.92

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.10

)

   

(0.16

)

   

(0.36

)

   

(0.21

)

   

(0.06

)

 

Net Realized and Unrealized Gain (Loss)

   

5.61

     

(17.76

)

   

(1.59

)

   

19.53

     

5.58

   

Total from Investment Operations

   

5.51

     

(17.92

)

   

(1.95

)

   

19.32

     

5.52

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(3.43

)

   

(7.78

)

   

(2.23

)

   

(0.49

)

 

Net Asset Value, End of Period

 

$

17.47

   

$

11.96

   

$

33.31

   

$

43.04

   

$

25.95

   

Total Return(3)

   

46.07

%(4)

   

(54.61

)%

   

(4.54

)%

   

74.65

%

   

26.44

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,616

   

$

1,261

   

$

4,120

   

$

5,391

   

$

4,363

   

Ratio of Expenses Before Expense Limitation

   

1.92

%

   

1.79

%

   

1.65

%

   

1.66

%

   

1.69

%

 

Ratio of Expenses After Expense Limitation

   

0.94

%(5)(6)

   

0.99

%(6)

   

0.94

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.99

%(6)

   

N/A

     

N/A

     

0.95

%(6)

 

Ratio of Net Investment Loss

   

(0.68

)%(5)(6)

   

(0.81

)%(6)

   

(0.82

)%(6)

   

(0.64

)%(6)

   

(0.25

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

42

%

   

51

%

   

69

%

   

73

%

   

70

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.99

%

   

(0.73

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Advantage Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

10.55

   

$

30.48

   

$

40.44

   

$

24.68

   

$

20.10

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.21

)

   

(0.31

)

   

(0.71

)

   

(0.50

)

   

(0.29

)

 

Net Realized and Unrealized Gain (Loss)

   

4.92

     

(16.19

)

   

(1.47

)

   

18.49

     

5.36

   

Total from Investment Operations

   

4.71

     

(16.50

)

   

(2.18

)

   

17.99

     

5.07

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(3.43

)

   

(7.78

)

   

(2.23

)

   

(0.49

)

 

Net Asset Value, End of Period

 

$

15.26

   

$

10.55

   

$

30.48

   

$

40.44

   

$

24.68

   

Total Return(3)

   

44.64

%(4)

   

(55.02

)%

   

(5.41

)%

   

73.10

%

   

25.27

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

21,811

   

$

20,422

   

$

68,793

   

$

71,419

   

$

42,054

   

Ratio of Expenses Before Expense Limitation

   

2.01

%

   

1.95

%

   

1.84

%

   

N/A

     

1.93

%

 

Ratio of Expenses After Expense Limitation

   

1.89

%(5)(6)

   

1.90

%(5)

   

1.84

%(5)

   

1.85

%(5)

   

1.90

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.90

%(5)

   

N/A

     

N/A

     

1.90

%(5)

 

Ratio of Net Investment Loss

   

(1.62

)%(5)(6)

   

(1.72

)%(5)

   

(1.72

)%(5)

   

(1.55

)%(5)

   

(1.20

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

42

%

   

51

%

   

69

%

   

73

%

   

70

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.93

%

   

(1.66

)%

 

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Advantage Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

12.18

   

$

33.74

   

$

43.41

   

$

26.12

   

$

21.02

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.07

)

   

(0.13

)

   

(0.29

)

   

(0.16

)

   

(0.03

)

 

Net Realized and Unrealized Gain (Loss)

   

5.71

     

(18.00

)

   

(1.60

)

   

19.68

     

5.62

   

Total from Investment Operations

   

5.64

     

(18.13

)

   

(1.89

)

   

19.52

     

5.59

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(3.43

)

   

(7.78

)

   

(2.23

)

   

(0.49

)

 

Net Asset Value, End of Period

 

$

17.82

   

$

12.18

   

$

33.74

   

$

43.41

   

$

26.12

   

Total Return(4)

   

46.31

%(5)

   

(54.53

)%

   

(4.36

)%

   

74.93

%

   

26.64

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

17,305

   

$

18,157

   

$

47,842

   

$

41,263

   

$

28,983

   

Ratio of Expenses Before Expense Limitation

   

0.90

%

   

0.86

%

   

0.77

%

   

N/A

     

0.83

%

 

Ratio of Expenses After Expense Limitation

   

0.77

%(6)(7)

   

0.81

%(7)

   

0.77

%(7)

   

0.79

%(7)

   

0.80

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.81

%(7)

   

N/A

     

N/A

     

0.80

%(7)

 

Ratio of Net Investment Loss

   

(0.50

)%(6)(7)

   

(0.64

)%(7)

   

(0.65

)%(7)

   

(0.47

)%(7)

   

(0.10

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

42

%

   

51

%

   

69

%

   

73

%

   

70

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

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

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

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.81

%

   

(0.54

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

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

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Advantage Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of invest-

ments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $5,671,000 or approximately 2.73% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/ dealer or valued by a pricing service/vendor; (4) fixed income securities may be valued by an outside pricing service/ vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at

the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

9,634

   

$

   

$

   

$

9,634

   

Broadline Retail

   

14,710

     

     

     

14,710

   

Capital Markets

   

3,248

     

     

     

3,248

   

Entertainment

   

9,992

     

     

     

9,992

   

Financial Services

   

3,135

     

9,987

     

     

13,122

   

Ground Transportation

   

17,865

     

     

     

17,865

   

Health Care Technology

   

3,151

     

     

     

3,151

   
Hotels, Restaurants &
Leisure
   

24,345

     

     

     

24,345

   
Information Technology
Services
   

51,277

     

     

     

51,277

   
Interactive Media &
Services
   

7,432

     

     

     

7,432

   
Life Sciences Tools &
Services
   

7,280

     

     

     

7,280

   

Media

   

9,757

     

     

     

9,757

   

Pharmaceuticals

   

8,931

     

     

     

8,931

   

Software

   

10,800

     

     

     

10,800

   

Specialty Retail

   

7,235

     

     

     

7,235

   

Total Common Stocks

   

188,792

     

9,987

     

     

198,779

   

Investment Company

   

5,326

     

     

     

5,326

   

Call Options Purchased

   

     

122

     

     

122

   

Short-Term Investment

 

Investment Company

   

2,145

     

     

     

2,145

   

Total Assets

 

$

196,263

   

$

10,109

   

$

   

$

206,372

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

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

4.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those

associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

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

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

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency ex-change risk in the normal course of pursuing its investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

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

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated Statement
of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

122

(a)

 

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(622

)(a)

 

(a) Amounts are included in Realized Loss on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(332

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

122

(a)

 

$

   

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

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

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


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented
in the
Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received(b)
(000)
  Net Amount
(not less
than $0)
(000)
 

JPMorgan Chase Bank NA

 

$

62

   

$

   

$

(62

)

 

$

0

   

Standard Chartered Bank

   

60

     

     

(60

)

   

0

   

Total

 

$

122

   

$

   

$

(122

)

 

$

0

   

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

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

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

176,833,000

   

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any,

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

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

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.65

%

   

0.60

%

   

0.55

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.57% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 0.99% for Class L shares, 1.95% for Class C shares and 0.81% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $173,000 of advisory fees were waived and approximately $114,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

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

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

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

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares. The Distributor has agreed to waive for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate, the 12b-1 fees on Class L shares of the Fund to the extent it exceeds 0.04% of the average daily net assets of such shares on an annualized basis. For the year ended December 31, 2023, this waiver amounted to approximately $11,000.

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $2,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $90,547,000 and $158,536,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $7,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
At Cost
(000)
  Proceeds
From Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,672

   

$

85,026

   

$

84,553

   

$

176

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

2,145

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable

and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

   

$

   

$

   

$

48,322

   

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

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


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

3,856

   

$

(3,856

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $105,631,000 and $63,035,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 72.0%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which

is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Advantage Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Advantage Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August 1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


40


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIADVANN
6336646 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

American Resilience Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

8

   

Statements of Changes in Net Assets

   

9

   

Financial Highlights

   

11

   

Notes to Financial Statements

   

15

   

Report of Independent Registered Public Accounting Firm

   

21

   

Liquidity Risk Management Program

   

22

   

Federal Tax Notice

   

23

   

Important Notices

   

24

   

U.S. Customer Privacy Notice

   

25

   

Directors and Officers Information

   

28

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in American Resilience Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

American Resilience Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

American Resilience Portfolio Class I

 

$

1,000.00

   

$

1,062.20

   

$

1,023.59

   

$

1.66

   

$

1.63

     

0.32

%

 

American Resilience Portfolio Class A

   

1,000.00

     

1,059.90

     

1,021.78

     

3.53

     

3.47

     

0.68

   

American Resilience Portfolio Class C

   

1,000.00

     

1,055.90

     

1,018.00

     

7.41

     

7.27

     

1.43

   

American Resilience Portfolio Class R6

   

1,000.00

     

1,061.70

     

1,023.79

     

1.46

     

1.43

     

0.28

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

American Resilience Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 19.54%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the S&P 500® Index (the "Index"), which returned 26.29%.

Factors Affecting Performance

•  For the year, the Index delivered +26.3%. Information technology was strong in 2023, helped by its exposure to the artificial intelligence (AI) euphoria. The sector returned an impressive +57% for the full year. Communication services and consumer discretionary were the other two top performers for the year (up +55% and +42%, respectively), while the more cyclical sectors, notably real estate, financials and industrials, finished behind the Index for the year. The portfolio's key defensive sectors of health care and consumer staples lagged for much of 2023, finishing +2% and –0%, respectively, for the year, 25 percentage points behind the index. Energy posted negative performance of –2% for the year after its spectacular 2022.

•  For 2023 overall, the Fund's relative underperformance was due to both stock selection and sector allocation. Negative stock selection relative to the Index was largely driven by relative weakness in information technology, as the portfolio's very healthy 43% return trailed the 61% produced by the Index sector. Financials also underperformed, while industrials outperformed relative to the Index. Sector allocation relative to the Index was hurt by the portfolio's combined 10%+ overweight in the defensive health care and consumer staples sectors, which both lagged the Index by around 25%. Looking at the three most successful sectors in the year, information technology (IT), communication services and consumer discretionary, the relative benefit of the

small overweight in IT was outweighed by the larger underweights in the other two. However, the Fund's relative performance did benefit from the underweights in the lower quality, more cyclical sectors, notably energy.

Management Strategies

•  The Index's earnings are expected to rise 11% in 2024 and by 12%+ in 2025.(i)​ This looks demanding given expected 2024 nominal gross domestic product growth in developed markets of 3% - 4% and seems to imply that margins will have to rise further from levels that are already close to peak.(ii)​ On the negative side, all 11 U.S. recessions since World War II have seen double-digit drawdowns in the S&P 500 Index, with an average fall of 30%.(iii)​ The multiples on these potentially optimistic earnings also look high. The Index finished 2023 at 20x 12-month forward earnings.(i)​ The overall setup strikes us as an unfavorable asymmetry, with upside limited due to the ambitious earnings estimates and high multiples, while there could be plenty of downside if there is a recession.

•  When it comes to the methodology behind the Fund's high quality portfolio, we are "double fussy" — concerned with the sustainability of both the earnings and the multiples. At period-end, our view was that the possibility of a downturn is not reflected in today's earnings expectations, nor in the current market multiple. Given the vulnerability of high earnings and high multiples in the event of an economic slowdown, we would argue that investing in a portfolio of high quality compounders makes sense.

 

(i)​  Source: FactSet

(ii)  ​Source: Bloomberg L.P.

(iii)​  Source: National Bureau of Economic Research


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

American Resilience Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on July 29, 2022.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the S&P 500®​ Index(1)​ the Lipper Large-Cap Core Funds Index(2)​ the Lipper Multi-Cap Core Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(6)
 
Fund — Class I Shares
w/o sales charges(5)
   

19.54

%

   

     

     

7.96

%

 
Fund — Class A Shares
w/o sales charges(5)
   

19.20

     

     

     

7.58

   
Fund — Class A Shares with
maximum 5.25% sales charges(5)
   

12.89

     

     

     

3.61

   
Fund — Class C Shares
w/o sales charges(5)
   

18.21

     

     

     

6.79

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(5)
   

17.21

     

     

     

6.79

   
Fund — Class R6 Shares
w/o sales charges(5)
   

19.60

     

     

     

8.00

   

S&P 500®​ Index

   

26.29

     

     

     

12.52

   

Lipper Large-Cap Core Funds Index

   

24.65

     

     

     

12.78

   

Lipper Multi-Cap Core Funds Index

   

24.16

     

     

     

12.10

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Standard & Poor's 500®​ Index (S&P 500®​ Index) measures the performance of the large cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Large-Cap Core Funds classification.

(3)​  The Lipper Multi-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. The Fund's Lipper category changed from Multi-Cap Core to Large-Cap Core.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  Commenced operations on July 29, 2022.

(6)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

American Resilience Portfolio

   

Shares

  Value
(000)
 

Common Stocks (89.5%)

 

Beverages (1.9%)

 

Coca-Cola Co.

   

350

   

$

21

   

Capital Markets (6.6%)

 

FactSet Research Systems, Inc.

   

22

     

11

   

Intercontinental Exchange, Inc.

   

353

     

45

   

Moody's Corp.

   

46

     

18

   
     

74

   

Commercial Services & Supplies (0.4%)

 

Veralto Corp.

   

57

     

5

   

Electronic Equipment, Instruments & Components (4.5%)

 

Amphenol Corp., Class A

   

249

     

25

   

CDW Corp.

   

110

     

25

   
     

50

   

Financial Services (5.7%)

 

Jack Henry & Associates, Inc.

   

35

     

6

   

Visa, Inc., Class A

   

223

     

58

   
     

64

   

Health Care Equipment & Supplies (7.1%)

 

Abbott Laboratories

   

247

     

27

   

Becton Dickinson & Co.

   

139

     

34

   

Steris PLC

   

81

     

18

   
     

79

   

Household Products (3.0%)

 

Procter & Gamble Co.

   

231

     

34

   

Information Technology Services (5.5%)

 

Accenture PLC, Class A

   

177

     

62

   

Insurance (4.4%)

 

Aon PLC, Class A

   

110

     

32

   

Arthur J Gallagher & Co.

   

77

     

17

   
     

49

   

Interactive Media & Services (3.4%)

 

Alphabet, Inc., Class A (a)

   

271

     

38

   

Life Sciences Tools & Services (12.9%)

 

Danaher Corp.

   

172

     

40

   

IQVIA Holdings, Inc. (a)

   

159

     

37

   

Revvity, Inc.

   

167

     

18

   

Thermo Fisher Scientific, Inc.

   

93

     

49

   
     

144

   

Machinery (3.0%)

 

Otis Worldwide Corp.

   

366

     

33

   

Pharmaceuticals (1.6%)

 

Zoetis, Inc.

   

91

     

18

   

Professional Services (7.5%)

 

Automatic Data Processing, Inc.

   

128

     

30

   

Broadridge Financial Solutions, Inc.

   

141

     

29

   

Equifax, Inc.

   

102

     

25

   
     

84

   

Semiconductors & Semiconductor Equipment (3.5%)

 

Texas Instruments, Inc.

   

232

     

39

   
   

Shares

  Value
(000)
 

Software (13.1%)

 

Constellation Software, Inc. (Canada)

   

15

   

$

37

   

Microsoft Corp.

   

205

     

77

   

Roper Technologies, Inc.

   

60

     

33

   
     

147

   

Textiles, Apparel & Luxury Goods (0.7%)

 

NIKE, Inc., Class B

   

77

     

8

   

Tobacco (4.7%)

 

Philip Morris International, Inc.

   

558

     

52

   

Total Common Stocks (Cost $890)

   

1,001

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Software (0.0%)‡

 
Constellation Software, Inc.,
expires 3/31/40 (a) (Cost $—)
   

16

     

@

 
   

Shares

     

Short-Term Investment (1.9%)

 

Investment Company (1.9%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $21)
   

20,844

     

21

   

Total Investments (91.4%) (Cost $911) (b)

   

1,022

   

Other Assets in Excess of Liabilities (8.6%)

   

96

   

Net Assets (100.0%)

 

$

1,118

   

@  Value is less than $500.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $917,000. The aggregate gross unrealized appreciation is approximately $123,000 and the aggregate gross unrealized depreciation is approximately $18,000, resulting in net unrealized appreciation of approximately $105,000.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

31.1

%

 

Software

   

14.3

   

Life Sciences Tools & Services

   

14.1

   

Professional Services

   

8.1

   

Health Care Equipment & Supplies

   

7.7

   

Capital Markets

   

7.2

   

Financial Services

   

6.3

   

Information Technology Services

   

6.1

   

Tobacco

   

5.1

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

American Resilience Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $890)

 

$

1,001

   

Investment in Security of Affiliated Issuer, at Value (Cost $21)

   

21

   

Total Investments in Securities, at Value (Cost $911)

   

1,022

   

Foreign Currency, at Value (Cost $—@)

   

@

 

Due from Adviser

   

91

   

Dividends Receivable

   

1

   

Receivable from Affiliate

   

@

 

Other Assets

   

33

   

Total Assets

   

1,147

   

Liabilities:

 

Payable for Professional Fees

   

18

   

Payable for Custodian Fees

   

2

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

9

   

Total Liabilities

   

29

   

Net Assets

 

$

1,118

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

1,012

   

Total Distributable Earnings

   

106

   

Net Assets

 

$

1,118

   

CLASS I:

 

Net Assets

 

$

952

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

86,480

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.01

   

CLASS A:

 

Net Assets

 

$

55

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,049

   

Net Asset Value, Redemption Price Per Share

 

$

10.99

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.61

   

Maximum Offering Price Per Share

 

$

11.60

   

CLASS C:

 

Net Assets

 

$

55

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,014

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.95

   

CLASS R6:

 

Net Assets

 

$

56

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,067

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.01

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

American Resilience Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $—@ of Foreign Taxes Withheld)

 

$

14

   

Dividends from Security of Affiliated Issuer (Note G)

   

1

   

Total Investment Income

   

15

   

Expenses:

 

Professional Fees

   

148

   

Offering Costs (Note A-7)

   

78

   

Registration Fees

   

30

   

Shareholder Reporting Fees

   

8

   

Transfer Agency Fees — Class I (Note E)

   

2

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Advisory Fees (Note B)

   

6

   

Custodian Fees (Note F)

   

5

   

Directors' Fees and Expenses

   

4

   

Administration Fees (Note C)

   

1

   

Pricing Fees

   

1

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

1

   

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class A

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

15

   

Total Expenses

   

305

   

Expenses Reimbursed by Adviser (Note B)

   

(284

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Waiver of Advisory Fees (Note B)

   

(6

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

5

   

Net Investment Income

   

10

   

Realized Loss:

 

Investments Sold

   

(—

@)

 

Foreign Currency Translation

   

(—

@)

 

Net Realized Loss

   

(—

@)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

172

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

172

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

172

   

Net Increase in Net Assets Resulting from Operations

 

$

182

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

American Resilience Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Period from
July 29,2022^ to
December 31,2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

10

   

$

3

   

Net Realized Loss

   

(—

@)

   

(9

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

172

     

(61

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

182

     

(67

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(12

)

   

   

Class A

   

(1

)

   

   

Class C

   

(—

@)

   

   

Class R6

   

(1

)

   

   

Total Dividends and Distributions to Shareholders

   

(14

)

   

   

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

3

     

850

   

Distributions Reinvested

   

12

     

   

Redeemed

   

(—

@)

   

   

Class A:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

1

     

   

Class C:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

@

   

   

Class R6:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

1

     

   

Net Increase in Net Assets Resulting from Capital Share Transactions

   

17

     

1,000

   

Total Increase in Net Assets

   

185

     

933

   

Net Assets:

 

Beginning of Period

   

933

     

   

End of Period

 

$

1,118

   

$

933

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

American Resilience Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Period from
July 29,2022^ to
December 31,2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

@@

   

85

   

Shares Issued on Distributions Reinvested

   

1

     

   

Shares Redeemed

   

(—

@@)

   

   

Net Increase in Class I Shares Outstanding

   

1

     

85

   

Class A:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Net Increase in Class A Shares Outstanding

   

@@

   

5

   

Class C:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Net Increase in Class C Shares Outstanding

   

@@

   

5

   

Class R6:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Net Increase in Class R6 Shares Outstanding

   

@@

   

5

   

^  Commencement of Operations.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

American Resilience Portfolio

   

Class I

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.33

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.10

     

0.04

   

Net Realized and Unrealized Gain (Loss)

   

1.72

     

(0.71

)

 

Total from Investment Operations

   

1.82

     

(0.67

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

   

Net Asset Value, End of Period

 

$

11.01

   

$

9.33

   

Total Return(3)

   

19.54

%(4)

   

(6.70

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

952

   

$

793

   

Ratio of Expenses Before Expense Limitation

   

29.44

%

   

36.85

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.50

%(7)(8)

   

0.70

%(6)(8)

 

Ratio of Net Investment Income

   

0.95

%(7)(8)

   

0.91

%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

35

%

   

6

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Performance was positively impacted by approximately 0.22% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 19.32%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.70

%

   

0.75

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

American Resilience Portfolio

   

Class A

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.31

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.06

     

0.02

   

Net Realized and Unrealized Gain (Loss)

   

1.73

     

(0.71

)

 

Total from Investment Operations

   

1.79

     

(0.69

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.11

)

   

   

Net Asset Value, End of Period

 

$

10.99

   

$

9.31

   

Total Return(3)

   

19.20

%(4)

   

(6.90

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

55

   

$

47

   

Ratio of Expenses Before Expense Limitation

   

33.82

%

   

41.47

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.85

%(7)(8)

   

1.05

%(6)(8)

 

Ratio of Net Investment Income

   

0.61

%(7)(8)

   

0.56

%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

35

%

   

6

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Performance was positively impacted by approximately 0.22% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 18.98%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.05

%

   

0.41

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

American Resilience Portfolio

   

Class C

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.29

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.02

)

   

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

1.71

     

(0.70

)

 

Total from Investment Operations

   

1.69

     

(0.71

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.03

)

   

   

Net Asset Value, End of Period

 

$

10.95

   

$

9.29

   

Total Return(3)

   

18.21

%(4)

   

(7.10

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

55

   

$

46

   

Ratio of Expenses Before Expense Limitation

   

34.58

%

   

42.21

%(6)

 

Ratio of Expenses After Expense Limitation

   

1.60

%(7)(8)

   

1.80

%(6)(8)

 

Ratio of Net Investment Loss

   

(0.15

)%(7)(8)

   

(0.20

)%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

35

%

   

6

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Performance was positively impacted by approximately 0.22% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 17.99%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.80

%

   

(0.35

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

American Resilience Portfolio

   

Class R6

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.33

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.10

     

0.04

   

Net Realized and Unrealized Gain (Loss)

   

1.73

     

(0.71

)

 

Total from Investment Operations

   

1.83

     

(0.67

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.15

)

   

   

Net Asset Value, End of Period

 

$

11.01

   

$

9.33

   

Total Return(3)

   

19.60

%(4)

   

(6.70

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

56

   

$

47

   

Ratio of Expenses Before Expense Limitation

   

33.36

%

   

41.22

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.45

%(7)(8)

   

0.65

%(6)(8)

 

Ratio of Net Investment Income

   

1.00

%(7)(8)

   

0.95

%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

35

%

   

6

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Performance was positively impacted by approximately 0.22% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 19.38%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.65

%

   

0.80

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the American Resilience Portfolio. The Fund seeks long-term capital appreciation.

The Fund commenced operations on July 29, 2022 and has issued four classes of shares — Class I, Class A, Class C and Class R6.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are

readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE;


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

(5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

$

1,001

(1)

 

$

   

$

   

$

1,001

   

Warrants

   

     

@

   

     

@

 

Short-Term Investment

 

Investment Company

   

21

     

     

     

21

   

Total Assets

 

$

1,022

   

$

   

$

   

$

1,022

   

@  Value is less than $500.

(1) The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent

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

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

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


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

7.  Offering Cost: Offering costs are accounted for as a deferred charge until operations begin and thereafter are amortized to expense over twelve months on a straight-line basis.

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

First $500
million
  Next $500
million
  Over $1
billion
 
  0.55

%

   

0.50

%

   

0.45

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.70% for Class I shares, 1.05% for Class A shares, 1.80% for Class C shares and 0.65% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $6,000 of advisory fees were waived and approximately $292,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

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

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $353,000 and $461,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

9

   

$

370

   

$

358

   

$

1

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

21

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with

Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023 Distributions
Paid From:
  2022 Distributions
Paid From:
 
Ordinary Income
(000)
  Ordinary Income
(000)
 
$

14

   

$

   

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

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

Permanent differences, due to nondeductible expenses, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

2

   

$

(2

)

 

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

4

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $2,000 that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended December 31, 2023, the Fund utilized capital loss carryforwards for U.S. federal income tax purposes of approximately $6,000.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate

plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund did not have record owners of 10% or greater.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of American Resilience Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of American Resilience Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for the year ended December 31, 2023 and the period from July 29, 2022 (commencement of operations) through December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended and the changes in its net assets and its financial highlights for the year ended December 31, 2023 and the period from July 29, 2022 (commencement of operations) through December 31, 2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 53.45% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $7,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


33


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIARESILANN
6336677 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Asia Opportunity Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

7

   

Consolidated Statement of Operations

   

8

   

Consolidated Statements of Changes in Net Assets

   

9

   

Consolidated Financial Highlights

   

10

   

Notes to Consolidated Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

22

   

Liquidity Risk Management Program

   

23

   

Federal Tax Notice

   

24

   

Important Notices

   

25

   

U.S. Customer Privacy Notice

   

26

   

Directors and Officers Information

   

29

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Asia Opportunity Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Asia Opportunity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Asia Opportunity Portfolio Class I

 

$

1,000.00

   

$

967.40

   

$

1,019.91

   

$

5.21

   

$

5.35

     

1.05

%

 

Asia Opportunity Portfolio Class A

   

1,000.00

     

965.20

     

1,018.15

     

6.93

     

7.12

     

1.40

   

Asia Opportunity Portfolio Class C

   

1,000.00

     

961.80

     

1,014.47

     

10.53

     

10.82

     

2.13

   

Asia Opportunity Portfolio Class R6

   

1,000.00

     

967.20

     

1,020.22

     

4.91

     

5.04

     

0.99

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Asia Opportunity Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of –6.83%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI All Country Asia ex Japan Net Index (the "Index"), which returned 5.98%.

Factors Affecting Performance

•  Asian equities advanced during the 12-month period ended December 31, 2023.

•  China's economic rebound since ending the COVID lockdowns in late 2022 has been weaker than expected, with markets focused on property sector challenges, underwhelming consumer spending, local government debt and youth unemployment. The government responded with short-term stimulus measures that targeted the private sector to boost growth, and has eased housing policies to spur growth in the housing market and related industries.

•  Our team remained focused on assessing company prospects over a longer-term period of five to ten years, and owning a portfolio of high quality companies with diverse business drivers not tied to a particular market environment.

•  The team manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Our longer-term focus results in lower turnover than many of our peers. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process. For the 12-month period, the Fund underperformed the Index due to unfavorable stock selection and sector allocation.

•  The main detractors from relative performance were a sector underweight allocation to information technology and stock selection in consumer discretionary and consumer staples.

•  The top contributors to the Fund's relative performance were stock selection in real estate and financials, as well as a sector underweight allocation to health care.

Management Strategies

•  There were no changes to our bottom-up investment process during the period. The Fund seeks long-term capital appreciation by investing in high quality established and emerging companies located in Asia (excluding Japan) that the investment team believes are undervalued at the time of purchase. To achieve its objective, the investment team typically favors companies it believes have sustainable competitive advantages that can be monetized through growth. The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental and social externalities and governance (also referred to as ESG).

•  At the close of the period, consumer discretionary represented the largest sector weight in the portfolio, followed by financials and consumer staples. Our bottom-up investment process resulted in sector overweight positions in consumer discretionary, consumer staples, financials, real estate and communication services, and underweight positions in materials, utilities, energy, industrials, health care and information technology. The Fund had no holdings in energy and utilities at the end of the reporting period.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Asia Opportunity Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on December 29, 2015.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country Asia ex Japan Net Index(1) and the Lipper Pacific Region ex Japan Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

–6.83

%

   

4.98

%

   

     

8.54

%

 
Fund — Class A Shares
w/o sales charges(4)
   

–7.17

     

4.66

     

     

8.19

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

–12.04

     

3.53

     

     

7.47

   
Fund — Class C Shares
w/o sales charges(4)
   

–7.82

     

3.90

     

     

7.39

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(4)
   

–8.74

     

3.90

     

     

7.39

   
Fund — Class R6 Shares
w/o sales charges(4)
   

–6.80

     

5.03

     

     

8.59

   
MSCI All Country Asia
ex Japan Net Index
   

5.98

     

3.69

     

     

5.46

   
Lipper Pacific Region
ex Japan Funds Index
   

–0.44

     

3.35

     

     

4.15

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country Asia ex Japan Net Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of Asia, excluding Japan. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Pacific Region ex Japan Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Pacific Region ex Japan Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Pacific Region ex Japan Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on December 29, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Asia Opportunity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (100.5%)

 

China (47.6%)

 

China Resources Beer Holdings Co. Ltd. (a)

   

472,300

   

$

2,073

   

China Resources Mixc Lifestyle Services Ltd. (a)

   

466,600

     

1,664

   
Foshan Haitian Flavouring & Food Co. Ltd.,
Class A
   

323,225

     

1,730

   

Greentown Service Group Co. Ltd. (a)

   

1,646,000

     

614

   

Haidilao International Holding Ltd. (a)

   

3,023,000

     

5,639

   
Inner Mongolia Yili Industrial Group Co. Ltd.,
Class A
   

851,886

     

3,214

   

KE Holdings, Inc. ADR

   

409,402

     

6,636

   

Kuaishou Technology (a)(b)

   

535,700

     

3,645

   

Kweichow Moutai Co. Ltd., Class A

   

31,094

     

7,569

   

Meituan, Class B (a)(b)

   

637,620

     

6,694

   

Qifu Technology, Inc. ADR

   

225,350

     

3,565

   
Shenzhen Mindray Bio-Medical Electronics
Co. Ltd., Class A
   

66,500

     

2,727

   

Shenzhou International Group Holdings Ltd. (a)

   

390,600

     

4,007

   

Tencent Holdings Ltd. (a)

   

158,800

     

5,996

   

Trip.com Group Ltd. ADR (b)

   

193,246

     

6,959

   

Tsingtao Brewery Co. Ltd. (a)

   

270,000

     

1,814

   

Wuliangye Yibin Co. Ltd., Class A

   

138,200

     

2,736

   
     

67,282

   

Hong Kong (2.7%)

 

AIA Group Ltd.

   

439,900

     

3,828

   

India (26.5%)

 

Axis Bank Ltd.

   

440,261

     

5,827

   

HDFC Bank Ltd.

   

569,615

     

11,663

   

ICICI Bank Ltd. ADR

   

342,973

     

8,177

   

IndusInd Bank Ltd.

   

141,058

     

2,708

   

Shree Cement Ltd.

   

3,330

     

1,146

   

Titan Co. Ltd.

   

123,682

     

5,459

   

Zomato Ltd. (b)

   

1,710,718

     

2,539

   
     

37,519

   

Korea, Republic of (13.3%)

 

Coupang, Inc. (b)

   

516,016

     

8,354

   

KakaoBank Corp. (b)

   

212,189

     

4,673

   

NAVER Corp.

   

32,962

     

5,703

   
     

18,730

   

Singapore (3.9%)

 

Grab Holdings Ltd., Class A (b)

   

1,631,175

     

5,497

   

Super Hi International Holding Ltd. (a)(b)

   

38,299

     

51

   
     

5,548

   

Taiwan (6.5%)

 

Nien Made Enterprise Co. Ltd.

   

95,000

     

1,092

   

Silergy Corp.

   

132,000

     

2,142

   

Taiwan Semiconductor Manufacturing Co. Ltd.

   

310,000

     

5,943

   
     

9,177

   

Total Common Stocks (Cost $128,185)

   

142,084

   

Total Investments (100.5%) (Cost $128,185) (c)(d)

   

142,084

   

Liabilities in Excess of Other Assets (–0.5%)

   

(654

)

 

Net Assets (100.0%)

 

$

141,430

   

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

(a)  Security trades on the Hong Kong exchange.

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $102,896,000 and 72.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $137,210,000. The aggregate gross unrealized appreciation is approximately $29,345,000 and the aggregate gross unrealized depreciation is approximately $25,112,000, resulting in net unrealized appreciation of approximately $4,233,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Banks

   

23.3

%

 

Other*

   

16.1

   

Hotels, Restaurants & Leisure

   

15.4

   

Interactive Media & Services

   

10.8

   

Beverages

   

9.9

   

Textiles, Apparel & Luxury Goods

   

6.6

   

Real Estate Management & Development

   

6.3

   

Broadline Retail

   

5.9

   

Semiconductors & Semiconductor Equipment

   

5.7

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Asia Opportunity Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $128,185)

 

$

142,084

   

Foreign Currency, at Value (Cost $342)

   

342

   

Receivable for Investments Sold

   

126

   

Receivable for Fund Shares Sold

   

105

   

Dividends Receivable

   

28

   

Receivable from Affiliate

   

6

   

Other Assets

   

58

   

Total Assets

   

142,749

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

664

   

Payable to Bank

   

256

   

Payable for Advisory Fees

   

145

   

Payable for Fund Shares Redeemed

   

85

   

Payable for Custodian Fees

   

46

   

Payable for Sub Transfer Agency Fees — Class I

   

22

   

Payable for Sub Transfer Agency Fees — Class A

   

6

   

Payable for Sub Transfer Agency Fees — Class C

   

2

   

Payable for Investments Purchased

   

25

   

Payable for Professional Fees

   

23

   

Payable for Shareholder Services Fees Class A

   

5

   

Payable for Distribution and Shareholder Services Fees Class C

   

8

   

Payable for Administration Fees

   

10

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

21

   

Total Liabilities

   

1,319

   

Net Assets

 

$

141,430

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

272,526

   

Total Accumulated Loss

   

(131,096

)

 

Net Assets

 

$

141,430

   

CLASS I:

 

Net Assets

 

$

99,101

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,472,352

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.11

   

CLASS A:

 

Net Assets

 

$

23,418

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,319,261

   

Net Asset Value, Redemption Price Per Share

 

$

17.75

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.98

   

Maximum Offering Price Per Share

 

$

18.73

   

CLASS C:

 

Net Assets

 

$

9,174

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

544,237

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

16.86

   

CLASS R6:

 

Net Assets

 

$

9,737

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

536,376

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.15

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Asia Opportunity Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $214 of Foreign Taxes Withheld)

 

$

2,361

   

Dividends from Security of Affiliated Issuer (Note G)

   

252

   

Income from Securities Loaned — Net

   

41

   

Total Investment Income

   

2,654

   

Expenses:

 

Advisory Fees (Note B)

   

1,607

   

Professional Fees

   

229

   

Shareholder Services Fees — Class A (Note D)

   

74

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

121

   

Custodian Fees (Note F)

   

165

   

Administration Fees (Note C)

   

161

   

Sub Transfer Agency Fees — Class I

   

105

   

Sub Transfer Agency Fees — Class A

   

32

   

Sub Transfer Agency Fees — Class C

   

9

   

Registration Fees

   

65

   

Transfer Agency Fees — Class I (Note E)

   

7

   

Transfer Agency Fees — Class A (Note E)

   

7

   

Transfer Agency Fees — Class C (Note E)

   

6

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Shareholder Reporting Fees

   

16

   

Directors' Fees and Expenses

   

9

   

Pricing Fees

   

3

   

Other Expenses

   

38

   

Total Expenses

   

2,657

   

Waiver of Advisory Fees (Note B)

   

(184

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(42

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(37

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(11

)

 

Net Expenses

   

2,380

   

Net Investment Income

   

274

   

Realized Loss:

 

Investments Sold (Net of $279 of Capital Gain Country Tax)

   

(30,056

)

 

Foreign Currency Translation

   

(78

)

 

Net Realized Loss

   

(30,134

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $515)

   

11,802

   

Foreign Currency Translation

   

(1

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

11,801

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

(18,333

)

 

Net Decrease in Net Assets Resulting from Operations

 

$

(18,059

)

 

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Asia Opportunity Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

274

   

$

(230

)

 

Net Realized Loss

   

(30,134

)

   

(30,944

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

11,801

     

(69,156

)

 

Net Decrease in Net Assets Resulting from Operations

   

(18,059

)

   

(100,330

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(275

)

   

   

Class R6*

   

(33

)

   

   

Total Dividends and Distributions to Shareholders

   

(308

)

   

   
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

57,083

     

87,996

   

Distributions Reinvested

   

272

     

   

Redeemed

   

(98,173

)

   

(176,956

)

 

Class A:

 

Subscribed

   

8,380

     

6,972

   

Redeemed

   

(11,576

)

   

(39,635

)

 

Class C:

 

Subscribed

   

460

     

3,936

   

Redeemed

   

(4,113

)

   

(4,929

)

 

Class R6:*

 

Subscribed

   

22

     

63

   

Distributions Reinvested

   

33

     

   

Redeemed

   

(82

)

   

(11

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(47,694

)

   

(122,564

)

 

Redemption Fees

   

1

     

7

   

Total Decrease in Net Assets

   

(66,060

)

   

(222,887

)

 

Net Assets:

 

Beginning of Period

   

207,490

     

430,377

   

End of Period

 

$

141,430

   

$

207,490

   

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

2,873

     

4,219

   

Shares Issued on Distributions Reinvested

   

15

     

   

Shares Redeemed

   

(5,320

)

   

(9,141

)

 

Net Decrease in Class I Shares Outstanding

   

(2,432

)

   

(4,922

)

 

Class A:

 

Shares Subscribed

   

435

     

332

   

Shares Redeemed

   

(636

)

   

(1,965

)

 

Net Decrease in Class A Shares Outstanding

   

(201

)

   

(1,633

)

 

Class C:

 

Shares Subscribed

   

25

     

220

   

Shares Redeemed

   

(236

)

   

(265

)

 

Net Decrease in Class C Shares Outstanding

   

(211

)

   

(45

)

 

Class R6:*

 

Shares Subscribed

   

1

     

4

   

Shares Issued on Distributions Reinvested

   

2

     

   

Shares Redeemed

   

(4

)

   

(1

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(1

)

   

3

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Asia Opportunity Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.49

   

$

24.99

   

$

31.72

   

$

21.02

   

$

14.53

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.05

     

0.00

(3)

   

(0.12

)

   

(0.12

)

   

0.02

   

Net Realized and Unrealized Gain (Loss)

   

(1.38

)

   

(5.50

)

   

(6.39

)

   

11.16

     

6.47

   

Total from Investment Operations

   

(1.33

)

   

(5.50

)

   

(6.51

)

   

11.04

     

6.49

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.05

)

   

     

     

     

(0.01

)

 

Net Realized Gain

   

     

     

(0.22

)

   

(0.34

)

   

   

Total Distributions

   

(0.05

)

   

     

(0.22

)

   

(0.34

)

   

(0.01

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.01

   

Net Asset Value, End of Period

 

$

18.11

   

$

19.49

   

$

24.99

   

$

31.72

   

$

21.02

   

Total Return(4)

   

(6.83

)%(5)

   

(22.01

)%

   

(20.52

)%

   

52.53

%

   

44.74

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

99,101

   

$

154,092

   

$

320,534

   

$

366,758

   

$

83,805

   

Ratio of Expenses Before Expense Limitation

   

1.22

%

   

1.17

%

   

1.05

%

   

N/A

     

1.28

%

 

Ratio of Expenses After Expense Limitation

   

1.07

%(6)(7)

   

1.10

%(7)

   

1.05

%(7)

   

1.06

%(7)

   

1.08

%(7)

 

Ratio of Net Investment Income (Loss)

   

0.25

%(6)(7)

   

0.01

%(7)

   

(0.41

)%(7)

   

(0.48

)%(7)

   

0.11

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

16

%

   

14

%

   

65

%

   

44

%

   

27

%

 

(1)  Not consolidated.

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

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

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

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.09

%

   

0.23

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Asia Opportunity Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.12

   

$

24.58

   

$

31.29

   

$

20.79

   

$

14.42

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.02

)

   

(0.06

)

   

(0.20

)

   

(0.19

)

   

(0.06

)

 

Net Realized and Unrealized Gain (Loss)

   

(1.35

)

   

(5.40

)

   

(6.29

)

   

11.03

     

6.42

   

Total from Investment Operations

   

(1.37

)

   

(5.46

)

   

(6.49

)

   

10.84

     

6.36

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.22

)

   

(0.34

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.01

   

Net Asset Value, End of Period

 

$

17.75

   

$

19.12

   

$

24.58

   

$

31.29

   

$

20.79

   

Total Return(4)

   

(7.17

)%(5)

   

(22.21

)%

   

(20.74

)%

   

52.15

%

   

44.17

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

23,418

   

$

29,072

   

$

77,496

   

$

98,559

   

$

45,111

   

Ratio of Expenses Before Expense Limitation

   

1.53

%

   

1.42

%

   

1.32

%

   

N/A

     

1.56

%

 

Ratio of Expenses After Expense Limitation

   

1.40

%(6)(7)

   

1.38

%(7)

   

1.32

%(7)

   

1.34

%(7)

   

1.37

%(7)

 

Ratio of Net Investment Loss

   

(0.08

)%(6)(7)

   

(0.29

)%(7)

   

(0.69

)%(7)

   

(0.76

)%(7)

   

(0.33

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

16

%

   

14

%

   

65

%

   

44

%

   

27

%

 

(1)  Not consolidated.

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

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

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

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.43

%

   

(0.11

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Asia Opportunity Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

18.29

   

$

23.69

   

$

30.39

   

$

20.35

   

$

14.21

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.15

)

   

(0.19

)

   

(0.41

)

   

(0.36

)

   

(0.17

)

 

Net Realized and Unrealized Gain (Loss)

   

(1.28

)

   

(5.21

)

   

(6.07

)

   

10.74

     

6.30

   

Total from Investment Operations

   

(1.43

)

   

(5.40

)

   

(6.48

)

   

10.38

     

6.13

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.22

)

   

(0.34

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.01

   

Net Asset Value, End of Period

 

$

16.86

   

$

18.29

   

$

23.69

   

$

30.39

   

$

20.35

   

Total Return(4)

   

(7.82

)%(5)

   

(22.79

)%

   

(21.32

)%

   

51.02

%

   

43.21

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9,174

   

$

13,816

   

$

18,947

   

$

19,042

   

$

8,445

   

Ratio of Expenses Before Expense Limitation

   

2.26

%

   

2.15

%

   

2.05

%

   

N/A

     

2.33

%

 

Ratio of Expenses After Expense Limitation

   

2.14

%(6)(7)

   

2.11

%(7)

   

2.05

%(7)

   

2.08

%(7)

   

2.14

%(7)

 

Ratio of Net Investment Loss

   

(0.82

)%(6)(7)

   

(1.00

)%(7)

   

(1.41

)%(7)

   

(1.49

)%(7)

   

(0.95

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

16

%

   

14

%

   

65

%

   

44

%

   

27

%

 

(1)  Not consolidated.

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

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

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

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.16

%

   

(0.84

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Asia Opportunity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

19.55

   

$

25.04

   

$

31.76

   

$

21.04

   

$

14.54

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

0.06

     

0.01

     

(0.09

)

   

(0.09

)

   

0.03

   

Net Realized and Unrealized Gain (Loss)

   

(1.40

)

   

(5.50

)

   

(6.41

)

   

11.15

     

6.48

   

Total from Investment Operations

   

(1.34

)

   

(5.49

)

   

(6.50

)

   

11.06

     

6.51

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.06

)

   

     

     

     

(0.02

)

 

Net Realized Gain

   

     

     

(0.22

)

   

(0.34

)

   

   

Total Distributions

   

(0.06

)

   

     

(0.22

)

   

(0.34

)

   

(0.02

)

 

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.01

   

Net Asset Value, End of Period

 

$

18.15

   

$

19.55

   

$

25.04

   

$

31.76

   

$

21.04

   

Total Return(5)

   

(6.80

)%(6)

   

(21.96

)%

   

(20.46

)%

   

52.58

%

   

44.82

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9,737

   

$

10,510

   

$

13,400

   

$

26,707

   

$

21

   

Ratio of Expenses Before Expense Limitation

   

1.17

%

   

1.12

%

   

0.98

%

   

1.03

%

   

11.85

%

 

Ratio of Expenses After Expense Limitation

   

1.02

%(7)(8)

   

1.05

%(8)

   

0.98

%(8)

   

1.01

%(8)

   

1.03

%(8)

 

Ratio of Net Investment Income (Loss)

   

0.29

%(7)(8)

   

0.06

%(8)

   

(0.31

)%(8)

   

(0.32

)%(8)

   

0.19

%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(9)

   

0.00

%(9)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

16

%

   

14

%

   

65

%

   

44

%

   

27

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

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

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

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

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.04

%

   

0.27

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

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

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Asia Opportunity Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent

with those of the Fund. As of December 31, 2023, the Subsidiary represented 0% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously

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

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Banks

 

$

8,177

   

$

24,871

   

$

   

$

33,048

   

Beverages

   

     

14,192

     

     

14,192

   

Broadline Retail

   

8,354

     

     

     

8,354

   

Construction Materials

   

     

1,146

     

     

1,146

   

Consumer Finance

   

3,565

     

     

     

3,565

   

Food Products

   

     

4,944

     

     

4,944

   

Ground Transportation

   

5,497

     

     

     

5,497

   
Health Care Equipment &
Supplies
   

     

2,727

     

     

2,727

   
Hotels, Restaurants &
Leisure
   

6,959

     

14,923

     

     

21,882

   

Household Durables

   

     

1,092

     

     

1,092

   

Insurance

   

     

3,828

     

     

3,828

   
Interactive Media &
Services
   

     

15,344

     

     

15,344

   
Real Estate
Management &
Development
   

6,636

     

2,278

     

     

8,914

   
Semiconductors &
Semiconductor
Equipment
   

     

8,085

     

     

8,085

   
Textiles, Apparel &
Luxury Goods
   

     

9,466

     

     

9,466

   

Total Common Stocks

 

$

39,188

   

$

102,896

   

$

   

$

142,084

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

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

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

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

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

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

At December 31, 2023, the Fund did not have any outstanding securities on loan.

5.  Redemption Fees: The Fund will assess a 2% redemption fee on Class I shares, Class A shares, Class C shares and Class R6 shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption

fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Consolidated Statements of Changes in Net Assets.

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

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

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

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.80

%

   

0.75

%

   

0.70

%

 


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.70% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.10% for Class I shares, 1.45% for Class A shares, 2.20% for Class C shares and 1.05% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $184,000 of advisory fees were waived and approximately $40,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

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

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

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $1,000.


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $30,085,000 and $55,646,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $11,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

3,119

   

$

78,858

   

$

81,977

   

$

252

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Ordinary
Income
(000)
 
$

308

   

$

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

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

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

973

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $80,184,000 and $56,078,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 80.0%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Asia Opportunity Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Asia Opportunity Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $798,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $491,000 and has derived net income from sources within foreign countries amounting to approximately $2,577,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August
1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


34


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIASOPPANN
6336788 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Counterpoint
Global Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

10

   

Consolidated Statement of Operations

   

11

   

Consolidated Statements of Changes in Net Assets

   

12

   

Consolidated Financial Highlights

   

13

   

Notes to Consolidated Financial Statements

   

17

   

Report of Independent Registered Public Accounting Firm

   

28

   

Liquidity Risk Management Program

   

29

   

Important Notices

   

30

   

U.S. Customer Privacy Notice

   

31

   

Directors and Officers Information

   

34

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Counterpoint Global Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Counterpoint Global Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Counterpoint Global Portfolio Class I

 

$

1,000.00

   

$

1,101.00

   

$

1,021.37

   

$

4.02

   

$

3.87

     

0.76

%

 

Counterpoint Global Portfolio Class A

   

1,000.00

     

1,098.70

     

1,019.56

     

5.92

     

5.70

     

1.12

   

Counterpoint Global Portfolio Class C

   

1,000.00

     

1,094.30

     

1,015.58

     

10.08

     

9.70

     

1.91

   

Counterpoint Global Portfolio Class R6

   

1,000.00

     

1,101.80

     

1,021.63

     

3.76

     

3.62

     

0.71

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Counterpoint Global Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 49.06%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World Net Index (the "Index"), which returned 22.20%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Global equities performed well in 2023, as economies did a better-than-expected job of withstanding the rapid increases in interest rates needed to cool inflation from post-pandemic highs and excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform. While tightening conditions had become a headwind to the eurozone and U.K. economies toward the end of 2023, the widely predicted recessions did not materialize and the U.S. economy remained particularly resilient. Over the year, softening inflation data and relatively tight labor markets allowed central banks to slow and eventually pause interest rate increases, bolstering sentiment that rate hiking cycles were ending and rate cuts would follow. Meanwhile, markets also faced a U.S. regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, a disappointing economic recovery in China and multiple geopolitical flashpoints.

•  Global equities, as measured by the Index, advanced in the 12-month period. All sectors had positive performance, led by information technology, communication services and consumer discretionary. Utilities, consumer staples and health care were the weakest performing sectors in the Index over this period.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our

conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period due to favorable stock selection and sector allocations.

•  Information technology was the greatest contributor to the Fund's relative performance in the period with both stock selection and an average overweight position adding to relative performance. A company that offers a global cloud platform that provides security, performance and reliability services to the applications of its customers was the greatest contributor across the portfolio. Despite facing a tougher demand environment and longer sales cycles, the company's shares performed well based on improving investor sentiment toward the software sector.

•  Stock selection and an average overweight in consumer discretionary contributed to relative performance. A leader in selling used cars online in the United States was the top contributor in the second and second greatest in the portfolio. Its shares advanced as the company reported better-than-expected results characterized by improving profitability, stronger inventory management and better capital structure management following an aggressive debt restructure.

•  Stock selection in financials was another contributor to relative performance. A technology platform specializing in consumer buy-now-pay-later point of sale financing and payment processing was the largest contributor in the sector and third largest in the portfolio. The company reported results that came in ahead of expectations, driven primarily by strong credit execution, including better-than-expected provisioning, as the company continues to proactively manage loan performance in an uncertain and volatile macroeconomic environment.

•  Stock selection in health care was the greatest detractor from relative performance. One of the largest buyers of biopharmaceutical royalties and a leading funder of innovation across academic


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Counterpoint Global Portfolio

institutions, non-profits, biotechnology and pharmaceutical companies was the greatest detractor in the sector and one of greatest across the portfolio. The company reported solid results, but its shares remained pressured due to investors' ongoing concerns around clinical trial results for a few of its partners' new therapies and the impact to potential related royalties.

•  Stock selection in consumer staples was the only other sector-level material detractor from relative performance in this period. A discount retailer that provides various merchandise products across the United States was the main detractor in the sector. Its shares underperformed due to concerns about softer sales trends, weaker near-term profitability and greater inventory shrink. We continued to monitor the company management's progress in restoring the business to prior profitability levels and getting shrink under control.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

**  Commenced Operations on June 29, 2018.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country World Net Index(1) and the Lipper Global Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

49.06

%

   

10.75

%

   

     

6.67

%

 
Fund — Class A Shares
w/o sales charges(4)
   

48.44

     

10.36

     

     

6.31

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

40.59

     

9.18

     

     

5.29

   
Fund — Class C Shares
w/o sales charges(4)
   

47.46

     

9.52

     

     

5.50

   
Fund — Class C Shares with
maximum 1.00% deferred sales
charges(4)
   

46.46

     

9.52

     

     

5.50

   
Fund — Class R6 Shares
w/o sales charges(4)
   

49.06

     

10.81

     

     

6.72

   

MSCI All Country World Net Index

   

22.20

     

11.72

     

     

8.70

   
Lipper Global Multi-Cap Growth
Funds Index
   

22.35

     

11.65

     

     

8.10

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Multi Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on June 29, 2018.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Counterpoint Global Portfolio

   

Shares

  Value
(000)
 

Common Stocks (93.2%)

 

Argentina (0.1%)

 

Globant SA (a)

   

52

   

$

12

   

Brazil (0.2%)

 

B3 SA — Brasil Bolsa Balcao

   

592

     

2

   

NU Holdings Ltd., Class A (a)

   

2,586

     

21

   

Vale SA

   

69

     

1

   
     

24

   

Canada (3.9%)

 

Brookfield Corp.

   

221

     

9

   

Brookfield Infrastructure Partners LP

   

192

     

6

   

Canada Goose Holdings, Inc. (a)

   

450

     

5

   

Canadian National Railway Co.

   

336

     

42

   

Canadian Pacific Kansas City Ltd.

   

146

     

12

   

Constellation Software, Inc.

   

13

     

32

   

FirstService Corp.

   

6

     

1

   

Lumine Group, Inc. (a)

   

41

     

1

   

Shopify, Inc., Class A (a)

   

3,407

     

265

   

Topicus.com, Inc. (a)

   

422

     

29

   
     

402

   

China (1.1%)

 

China Resources Mixc Lifestyle Services Ltd. (b)

   

400

     

1

   

Foshan Haitian Flavouring & Food Co. Ltd., Class A

   

167

     

1

   

Greentown Service Group Co. Ltd. (b)

   

2,000

     

1

   

Haidilao International Holding Ltd. (b)

   

3,000

     

6

   

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

   

700

     

3

   

KE Holdings, Inc. ADR

   

366

     

6

   

Kuaishou Technology (a)(b)

   

500

     

3

   

Meituan, Class B (a)(b)

   

4,220

     

44

   

Qifu Technology, Inc. ADR

   

188

     

3

   

Shenzhou International Group Holdings Ltd. (b)

   

400

     

4

   

Tencent Holdings Ltd. (b)

   

200

     

8

   

Trip.com Group Ltd. ADR (a)

   

956

     

34

   

Wuliangye Yibin Co. Ltd., Class A

   

100

     

2

   
     

116

   

Denmark (1.0%)

 

DSV AS

   

556

     

98

   

Novo Nordisk AS, Class B

   

76

     

8

   
     

106

   

France (2.7%)

 

Airbus SE

   

84

     

13

   

Christian Dior SE

   

40

     

31

   

EssilorLuxottica SA

   

21

     

4

   

Eurofins Scientific SE

   

1,817

     

119

   

Hermes International

   

36

     

76

   

L'Oreal SA

   

2

     

1

   

LVMH Moet Hennessy Louis Vuitton SE

   

10

     

8

   

Pernod Ricard SA

   

30

     

5

   

Remy Cointreau SA

   

36

     

5

   

Safran SA

   

49

     

9

   
     

271

   
   

Shares

  Value
(000)
 

Hong Kong (0.1%)

 

AIA Group Ltd.

   

1,200

   

$

10

   

India (1.8%)

 

Axis Bank Ltd.

   

708

     

9

   

HDFC Bank Ltd. ADR

   

1,696

     

114

   

ICICI Bank Ltd. ADR

   

1,816

     

43

   

IndusInd Bank Ltd.

   

130

     

3

   

Titan Co. Ltd.

   

250

     

11

   

Zomato Ltd. (a)

   

1,688

     

3

   
     

183

   

Israel (2.9%)

 

Global-e Online Ltd. (a)

   

6,799

     

269

   

Oddity Tech Ltd., Class A (a)

   

226

     

11

   

Wix.com Ltd. (a)

   

142

     

17

   
     

297

   

Italy (0.9%)

 

Brunello Cucinelli SpA

   

54

     

5

   

Davide Campari-Milano NV

   

602

     

7

   

Ferrari NV

   

3

     

1

   

Moncler SpA

   

1,250

     

77

   
     

90

   

Japan (0.4%)

 

Keyence Corp.

   

100

     

44

   

Korea, Republic of (1.1%)

 

Coupang, Inc. (a)

   

4,897

     

80

   

KakaoBank Corp. (a)

   

509

     

11

   

NAVER Corp.

   

104

     

18

   
     

109

   

Netherlands (3.1%)

 

Adyen NV (a)

   

193

     

249

   
ASML Holding NV    

36

     

27

   

ASML Holding NV (Registered)

   

19

     

14

   

Basic-Fit NV (a)

   

923

     

29

   

Universal Music Group NV

   

34

     

1

   
     

320

   

Norway (0.0%)‡

 

AutoStore Holdings Ltd. (a)

   

768

     

2

   

Poland (0.0%)‡

 

Allegro.eu SA (a)

   

218

     

2

   

Singapore (0.9%)

 

Grab Holdings Ltd., Class A (a)

   

24,811

     

84

   

Sea Ltd. ADR (a)

   

147

     

6

   
     

90

   

Sweden (0.2%)

 

Evolution AB

   

139

     

17

   

Vitrolife AB

   

127

     

2

   
     

19

   

Switzerland (0.9%)

 

Cie Financiere Richemont SA, Class A (Registered)

   

36

     

5

   

Kuehne & Nagel International AG (Registered)

   

39

     

13

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Counterpoint Global Portfolio

   

Shares

  Value
(000)
 

Switzerland (cont'd)

 

On Holding AG, Class A (a)

   

2,001

   

$

54

   

Straumann Holding AG (Registered)

   

121

     

20

   
     

92

   

Taiwan (0.2%)

 

Taiwan Semiconductor Manufacturing Co. Ltd.

   

1,000

     

19

   

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

30

     

3

   
     

22

   

United Kingdom (3.4%)

 

Babcock International Group PLC

   

18,457

     

93

   

Deliveroo PLC (a)

   

1,893

     

3

   

Diageo PLC

   

118

     

4

   

Fevertree Drinks PLC

   

7

     

@

 

London Stock Exchange Group PLC

   

114

     

14

   

Rentokil Initial PLC

   

7,158

     

40

   

Rightmove PLC

   

1,103

     

8

   

Victoria PLC (a)

   

47,775

     

184

   
     

346

   

United States (68.3%)

 

10X Genomics, Inc., Class A (a)

   

729

     

41

   

Adobe, Inc. (a)

   

110

     

66

   

Affirm Holdings, Inc. (a)

   

6,015

     

296

   

Agilon Health, Inc. (a)

   

10,006

     

126

   

Airbnb, Inc., Class A (a)

   

645

     

88

   

Alnylam Pharmaceuticals, Inc. (a)

   

3

     

1

   

Altimmune, Inc. (a)

   

408

     

5

   

Amazon.com, Inc. (a)

   

752

     

114

   

American Tower Corp. REIT

   

109

     

24

   

Appian Corp., Class A (a)

   

1,882

     

71

   

Arbutus Biopharma Corp. (a)

   

8,602

     

22

   

ATAI Life Sciences NV (a)

   

1,058

     

2

   

Aurora Innovation, Inc. (a)

   

20,066

     

88

   

Axon Enterprise, Inc. (a)

   

1

     

@

 

Ball Corp.

   

34

     

2

   

Beam Therapeutics, Inc. (a)

   

89

     

2

   

Bill Holdings, Inc. (a)

   

2,158

     

176

   

Birkenstock Holding PLC (a)

   

438

     

21

   

Block, Inc., Class A (a)

   

437

     

34

   

Brown & Brown, Inc.

   

129

     

9

   

Cadence Design Systems, Inc. (a)

   

1

     

@

 

Cardlytics, Inc. N (a)

   

267

     

3

   

Carvana Co. (a)

   

4,423

     

234

   

Cava Group, Inc. (a)

   

24

     

1

   

Celsius Holdings, Inc. (a)

   

438

     

24

   

Chewy, Inc., Class A (a)

   

65

     

2

   

Cloudflare, Inc., Class A (a)

   

20,643

     

1,719

   

Coinbase Global, Inc., Class A (a)

   

5

     

1

   

Confluent, Inc., Class A (a)

   

186

     

4

   

Copart, Inc. (a)

   

1

     

@

 

Cricut, Inc., Class A

   

15,423

     

102

   

Crowdstrike Holdings, Inc., Class A (a)

   

131

     

33

   

Danaher Corp.

   

145

     

34

   
   

Shares

  Value
(000)
 

Datadog, Inc., Class A (a)

   

19

   

$

2

   

Deckers Outdoor Corp. (a)

   

26

     

17

   

Dexcom, Inc. (a)

   

18

     

2

   

Dlocal Ltd. (a)

   

319

     

6

   

Dollar General Corp.

   

678

     

92

   

DoorDash, Inc., Class A (a)

   

2,198

     

217

   

Doximity, Inc., Class A (a)

   

1,498

     

42

   

Duolingo, Inc. (a)

   

19

     

4

   

Ecolab, Inc.

   

14

     

3

   

Endeavor Group Holdings, Inc., Class A

   

630

     

15

   

Estee Lauder Cos., Inc., Class A

   

1

     

@

 

Etsy, Inc. (a)

   

44

     

4

   

Eventbrite, Inc., Class A (a)

   

537

     

5

   

Fastenal Co.

   

1

     

@

 

Fastly, Inc., Class A (a)

   

4,578

     

82

   

Figs, Inc., Class A (a)

   

1,239

     

9

   

Floor & Decor Holdings, Inc., Class A (a)

   

1,400

     

156

   

Gartner, Inc. (a)

   

1

     

@

 

GH Research PLC (a)

   

183

     

1

   

Ginkgo Bioworks Holdings, Inc. (a)

   

8,481

     

14

   

Gitlab, Inc., Class A (a)

   

1,144

     

72

   

HEICO Corp., Class A

   

1

     

@

 

Hilton Worldwide Holdings, Inc.

   

118

     

22

   

Home Depot, Inc.

   

1

     

@

 

HubSpot, Inc. (a)

   

92

     

53

   

Illumina, Inc. (a)

   

25

     

4

   

Inspire Medical Systems, Inc. (a)

   

12

     

2

   

Installed Building Products, Inc.

   

34

     

6

   

Intellia Therapeutics, Inc. (a)

   

242

     

7

   

Interactive Brokers Group, Inc., Class A

   

223

     

19

   

Intercontinental Exchange, Inc.

   

411

     

53

   

Intuitive Surgical, Inc. (a)

   

1

     

@

 

IonQ, Inc. N (a)

   

51

     

1

   

Joby Aviation, Inc. (a)

   

770

     

5

   

Klaviyo, Inc., Class A (a)

   

96

     

3

   

Linde PLC

   

2

     

1

   

Lithia Motors, Inc., Class A

   

95

     

31

   

Lululemon Athletica, Inc. (a)

   

12

     

6

   

Maplebear, Inc. (a)

   

95

     

2

   

Mastercard, Inc., Class A

   

83

     

35

   

MaxCyte, Inc. (a)

   

1,990

     

9

   

McCormick & Co., Inc.

   

4

     

@

 

McDonald's Corp.

   

1

     

@

 

MercadoLibre, Inc. (a)

   

139

     

218

   

Meta Platforms, Inc., Class A (a)

   

193

     

68

   

MicroStrategy, Inc., Class A (a)

   

108

     

68

   

Moderna, Inc. (a)

   

1

     

@

 

MongoDB, Inc. (a)

   

62

     

25

   

MP Materials Corp. (a)

   

89

     

2

   

MSCI, Inc.

   

2

     

1

   

Netflix, Inc. (a)

   

1

     

1

   

Opendoor Technologies, Inc. (a)

   

1,117

     

5

   

Outset Medical, Inc. (a)

   

167

     

1

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Counterpoint Global Portfolio

   

Shares

  Value
(000)
 

United States (cont'd)

 

Peloton Interactive, Inc., Class A (a)

   

13,751

   

$

84

   

Penumbra, Inc. N (a)

   

7

     

2

   

Pool Corp.

   

1

     

@

 

Privia Health Group, Inc. (a)

   

96

     

2

   

Procore Technologies, Inc. (a)

   

1,026

     

71

   

ProKidney Corp. (a)

   

4,936

     

9

   

Recursion Pharmaceuticals, Inc., Class A (a)

   

269

     

3

   

Redfin Corp. (a)

   

504

     

5

   

Restoration Hardware, Inc. (a)

   

16

     

5

   

Rivian Automotive, Inc., Class A (a)

   

8

     

@

 

ROBLOX Corp., Class A (a)

   

4,565

     

209

   

Roivant Sciences Ltd. (a)

   

5,474

     

62

   

Rollins, Inc.

   

1

     

@

 

Royal Gold, Inc.

   

176

     

21

   

Royalty Pharma PLC, Class A

   

7,924

     

223

   

S&P Global, Inc.

   

34

     

15

   

Salesforce, Inc. (a)

   

133

     

35

   

Samsara, Inc., Class A (a)

   

3,470

     

116

   

Schrodinger, Inc. (a)

   

64

     

2

   

Service Corp. International

   

1

     

@

 

ServiceNow, Inc. (a)

   

159

     

112

   

Sherwin-Williams Co.

   

1

     

@

 

SilverSun Technologies, Inc.

   

1,130

     

19

   

Snowflake, Inc., Class A (a)

   

766

     

152

   

SomaLogic, Inc. (a)

   

1,807

     

5

   

Spotify Technology SA (a)

   

390

     

73

   

Standard BioTools, Inc. (a)

   

2,568

     

6

   

Starbucks Corp.

   

1

     

@

 

Tesla, Inc. (a)

   

1,607

     

399

   

Texas Pacific Land Corp.

   

2

     

3

   

TKO Group Holdings, Inc.

   

187

     

15

   

Toast, Inc., Class A (a)

   

2,807

     

51

   

Tractor Supply Co.

   

2

     

@

 

Trade Desk, Inc., Class A (a)

   

2,022

     

146

   

Tyler Technologies, Inc. (a)

   

1

     

@

 

Uber Technologies, Inc. (a)

   

4,556

     

281

   

Union Pacific Corp.

   

16

     

4

   

Veeva Systems, Inc., Class A (a)

   

10

     

2

   

Veralto Corp.

   

31

     

3

   

Visa, Inc., Class A

   

163

     

42

   

Walt Disney Co.

   

454

     

41

   

Waste Connections, Inc.

   

6

     

1

   

Watsco, Inc.

   

1

     

@

 

Wayfair, Inc., Class A (a)

   

227

     

14

   

XPEL, Inc. (a)

   

14

     

1

   

Zoetis, Inc.

   

1

     

@

 

ZoomInfo Technologies, Inc., Class A (a)

   

1,483

     

27

   

Zscaler, Inc. (a)

   

81

     

18

   
     

7,015

   

Total Common Stocks (Cost $6,851)

   

9,572

   
   

Shares

  Value
(000)
 

Preferred Stocks (0.4%)

 

United States (0.4%)

 
Databricks, Inc., Series H (a)(c)(d)
(acquisition cost — $44; acquired 8/31/21)
   

594

   

$

42

   
Databricks, Inc., Series I (a)(c)(d)
(acquisition cost — $1; acquired 9/15/23)
   

19

     

1

   
Stripe, Inc., Series I (a)(c)(d)
(acquisition cost — $3; acquired 3/17/23)
   

123

     

3

   

Total Preferred Stocks (Cost $48)

   

46

   

Investment Company (1.9%)

 

United States (1.9%)

 
Grayscale Bitcoin Trust (a) (Cost $190)    

5,642

     

195

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Canada (0.0%)‡

 

Constellation Software, Inc. expires 3/31/40 (a)

   

18

     

@

 

United States (0.0%)‡

 
Ginkgo Bioworks Holdings, Inc.
expires 8/01/26 (a)
   

261

     

@

 

SomaLogic, Inc. expires 8/31/26 (a)

   

96

     

@

 
     

@

 

Total Warrants (Cost $1)

   

@

 
   

Shares

     

Short-Term Investment (3.7%)

 

Investment Company (3.7%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $375)
   

374,973

     

375

   
Total Investments Excluding Purchased
Options (99.2%) (Cost $7,465)
   

10,188

   
Total Purchased Options Outstanding (0.0%)‡
(Cost $17)
   

4

   

Total Investments (99.2%) (Cost $7,482) (e)(f)(g)

   

10,192

   

Other Assets in Excess of Liabilities (0.8%)

   

79

   

Net Assets (100.0%)

 

$

10,271

   

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

‡  Amount is less than 0.05%.

@  Value is less than $500.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at December 31, 2023 amounts to approximately $46,000 and represents 0.4% of net assets.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Counterpoint Global Portfolio

(d)  At December 31, 2023, the Fund held fair valued securities valued at approximately $46,000, representing 0.4% of net assets. These securities have been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(e)  Securities are available for collateral in connection with purchased options.

(f)  The approximate fair value and percentage of net assets, $1,383,000 and 13.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(g)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $8,999,000. The aggregate gross unrealized appreciation is approximately $3,214,000 and the aggregate gross unrealized depreciation is approximately $1,994,000, resulting in net unrealized appreciation of approximately $1,220,000.

ADR  American Depositary Receipt.

REIT  Real Estate Investment Trust.

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

 

Strike
Price

 

Expiration
Date

 

Number of
Contracts

 

Notional
Amount
(000)

 

Value
(000)

 

Premiums
Paid
(000)

 

Unrealized
Depreciation
(000)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.43

   

Jan-24

   

1,001,997

   

$

1,002

   

$

@

 

$

5

   

$

(5

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.57

   

May-24

   

1,505,000

     

1,505

     

2

     

6

     

(4

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.79

   

Aug-24

   

1,505,059

     

1,505

     

2

     

6

     

(4

)

 
                       

$

4

   

$

17

   

$

(13

)

 

@    Value is less than $500.

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

53.0

%

 

Information Technology Services

   

22.4

   

Software

   

10.9

   

Financial Services

   

7.1

   

Broadline Retail

   

6.6

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Counterpoint Global Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $7,107)

 

$

9,817

   

Investment in Security of Affiliated Issuer, at Value (Cost $375)

   

375

   

Total Investments in Securities, at Value (Cost $7,482)

   

10,192

   

Foreign Currency, at Value (Cost $26)

   

26

   

Cash

   

@

 

Due from Adviser

   

112

   

Receivable for Investments Sold

   

23

   

Tax Reclaim Receivable

   

1

   

Dividends Receivable

   

1

   

Receivable from Affiliate

   

1

   

Other Assets

   

26

   

Total Assets

   

10,382

   

Liabilities:

 

Payable for Custodian Fees

   

30

   

Payable for Investments Purchased

   

24

   

Payable for Professional Fees

   

23

   

Payable for Administration Fees

   

1

   

Deferred Capital Gain Country Tax

   

1

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Sub Transfer Agency Fees — Class I

   

@

 

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

32

   

Total Liabilities

   

111

   

Net Assets

 

$

10,271

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

13,903

   

Total Accumulated Loss

   

(3,632

)

 

Net Assets

 

$

10,271

   

CLASS I:

 

Net Assets

 

$

9,491

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

853,150

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.12

   

CLASS A:

 

Net Assets

 

$

665

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

60,968

   

Net Asset Value, Redemption Price Per Share

 

$

10.91

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.60

   

Maximum Offering Price Per Share

 

$

11.51

   

CLASS C:

 

Net Assets

 

$

101

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

9,684

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.44

   

CLASS R6:

 

Net Assets

 

$

14

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,267

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.15

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Counterpoint Global Portfolio


Consolidated Statement of Operations
  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $3 of Foreign Taxes Withheld)

 

$

46

   

Dividends from Security of Affiliated Issuer (Note G)

   

12

   

Total Investment Income

   

58

   

Expenses:

 

Professional Fees

   

166

   

Custodian Fees (Note F)

   

132

   

Advisory Fees (Note B)

   

71

   

Registration Fees

   

63

   

Shareholder Reporting Fees

   

20

   

Pricing Fees

   

16

   

Transfer Agency Fees — Class I (Note E)

   

4

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Administration Fees (Note C)

   

7

   

Shareholder Services Fees — Class A (Note D)

   

2

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

1

   

Directors' Fees and Expenses

   

2

   

Sub Transfer Agency Fees — Class I

   

1

   

Sub Transfer Agency Fees — Class A

   

1

   

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

19

   

Total Expenses

   

514

   

Expenses Reimbursed by Adviser (Note B)

   

(336

)

 

Waiver of Advisory Fees (Note B)

   

(71

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(13

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

84

   

Net Investment Loss

   

(26

)

 

Realized Gain (Loss):

 

Investments Sold (Net of $—@ of Capital Gain Country Tax)

   

(126

)

 

Foreign Currency Translation

   

1

   

Net Realized Loss

   

(125

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $1)

   

3,622

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

3,622

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

3,497

   

Net Increase in Net Assets Resulting from Operations

 

$

3,471

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Counterpoint Global Portfolio


Consolidated Statements of Changes in Net Assets
  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(26

)

 

$

(90

)

 

Net Realized Loss

   

(125

)

   

(5,587

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

3,622

     

(6,479

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

3,471

     

(12,156

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

88

     

1,364

   

Redeemed

   

(475

)

   

(9,746

)

 

Class A:

 

Subscribed

   

85

     

1,344

   

Redeemed

   

(160

)

   

(3,101

)

 

Class C:

 

Subscribed

   

43

     

   

Redeemed

   

(38

)

   

(34

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(457

)

   

(10,173

)

 

Total Increase (Decrease) in Net Assets

   

3,014

     

(22,329

)

 

Net Assets:

 

Beginning of Period

   

7,257

     

29,586

   

End of Period

 

$

10,271

   

$

7,257

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

9

     

129

   

Shares Redeemed

   

(51

)

   

(917

)

 

Net Decrease in Class I Shares Outstanding

   

(42

)

   

(788

)

 

Class A:

 

Shares Subscribed

   

10

     

136

   

Shares Redeemed

   

(17

)

   

(305

)

 

Net Decrease in Class A Shares Outstanding

   

(7

)

   

(169

)

 

Class C:

 

Shares Subscribed

   

5

     

   

Shares Redeemed

   

(4

)

   

(3

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

1

     

(3

)

 

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Counterpoint Global Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.46

   

$

15.33

   

$

19.01

   

$

11.32

   

$

8.46

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.02

)

   

(0.07

)

   

(0.16

)

   

(0.11

)

   

(0.03

)

 

Net Realized and Unrealized Gain (Loss)

   

3.68

     

(7.80

)

   

(0.01

)

   

8.34

     

2.89

   

Total from Investment Operations

   

3.66

     

(7.87

)

   

(0.17

)

   

8.23

     

2.86

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(3.51

)

   

(0.54

)

   

   

Net Asset Value, End of Period

 

$

11.12

   

$

7.46

   

$

15.33

   

$

19.01

   

$

11.32

   

Total Return(3)

   

49.06

%(4)

   

(51.34

)%

   

(0.58

)%

   

72.70

%

   

33.81

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9,491

   

$

6,681

   

$

25,794

   

$

23,717

   

$

10,097

   

Ratio of Expenses Before Expense Limitation

   

5.63

%

   

4.57

%

   

2.39

%

   

3.29

%

   

5.22

%

 

Ratio of Expenses After Expense Limitation

   

0.89

%(5)(6)

   

1.06

%(6)

   

1.05

%(6)

   

1.04

%(6)

   

1.03

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.05

%(6)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.25

)%(5)(6)

   

(0.67

)%(6)

   

(0.76

)%(6)

   

(0.79

)%(6)

   

(0.25

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

55

%

   

59

%

   

68

%

   

116

%

   

67

%

 

(1)  Not consolidated.

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

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

(4)  Performance was positively impacted by approximately 0.26% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 48.80%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.04

%

   

(0.40

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Counterpoint Global Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.35

   

$

15.14

   

$

18.89

   

$

11.28

   

$

8.47

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.06

)

   

(0.10

)

   

(0.23

)

   

(0.19

)

   

(0.06

)

 

Net Realized and Unrealized Gain (Loss)

   

3.62

     

(7.69

)

   

(0.01

)

   

8.34

     

2.87

   

Total from Investment Operations

   

3.56

     

(7.79

)

   

(0.24

)

   

8.15

     

2.81

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(3.51

)

   

(0.54

)

   

   

Net Asset Value, End of Period

 

$

10.91

   

$

7.35

   

$

15.14

   

$

18.89

   

$

11.28

   

Total Return(3)

   

48.44

%(4)

   

(51.45

)%

   

(0.95

)%

   

72.25

%

   

33.18

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

665

   

$

502

   

$

3,598

   

$

696

   

$

15

   

Ratio of Expenses Before Expense Limitation

   

6.49

%

   

5.11

%

   

2.89

%

   

4.61

%

   

23.73

%

 

Ratio of Expenses After Expense Limitation

   

1.25

%(5)(6)

   

1.41

%(6)

   

1.40

%(6)

   

1.39

%(6)

   

1.39

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.40

%(6)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.61

)%(5)(6)

   

(1.02

)%(6)

   

(1.12

)%(6)

   

(1.16

)%(6)

   

(0.62

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

55

%

   

59

%

   

68

%

   

116

%

   

67

%

 

(1)  Not consolidated.

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

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

(4)  Performance was positively impacted by approximately 0.14% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 48.30%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.39

%

   

(0.75

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Counterpoint Global Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.09

   

$

14.71

   

$

18.60

   

$

11.20

   

$

8.47

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.12

)

   

(0.16

)

   

(0.38

)

   

(0.27

)

   

(0.14

)

 

Net Realized and Unrealized Gain (Loss)

   

3.47

     

(7.46

)

   

0.00

(3)

   

8.21

     

2.87

   

Total from Investment Operations

   

3.35

     

(7.62

)

   

(0.38

)

   

7.94

     

2.73

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(3.51

)

   

(0.54

)

   

   

Net Asset Value, End of Period

 

$

10.44

   

$

7.09

   

$

14.71

   

$

18.60

   

$

11.20

   

Total Return(4)

   

47.46

%(5)

   

(51.87

)%

   

(1.73

)%

   

70.89

%

   

32.23

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

101

   

$

65

   

$

175

   

$

27

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

9.25

%

   

8.47

%

   

6.40

%

   

18.57

%

   

24.53

%

 

Ratio of Expenses After Expense Limitation

   

2.02

%(6)(7)

   

2.16

%(7)

   

2.15

%(7)

   

2.14

%(7)

   

2.14

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.15

%(7)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(1.37

)%(6)(7)

   

(1.77

)%(7)

   

(1.93

)%(7)

   

(1.90

)%(7)

   

(1.37

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

55

%

   

59

%

   

68

%

   

116

%

   

67

%

 

(1)  Not consolidated.

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

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

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

(5)  Performance was positively impacted by approximately 0.28% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 47.18%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.14

%

   

(1.49

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Counterpoint Global Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

7.48

   

$

15.35

   

$

19.03

   

$

11.32

   

$

8.46

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.02

)

   

(0.06

)

   

(0.15

)

   

(0.10

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

3.69

     

(7.81

)

   

(0.02

)

   

8.35

     

2.88

   

Total from Investment Operations

   

3.67

     

(7.87

)

   

(0.17

)

   

8.25

     

2.86

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(3.51

)

   

(0.54

)

   

   

Net Asset Value, End of Period

 

$

11.15

   

$

7.48

   

$

15.35

   

$

19.03

   

$

11.32

   

Total Return(4)

   

49.06

%(5)

   

(51.27

)%

   

(0.59

)%

   

72.88

%

   

33.81

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

14

   

$

9

   

$

19

   

$

20

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

26.73

%

   

20.79

%

   

12.66

%

   

19.31

%

   

23.44

%

 

Ratio of Expenses After Expense Limitation

   

0.84

%(6)(7)

   

1.01

%(7)

   

1.00

%(7)

   

0.99

%(7)

   

0.99

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(7)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.21

)%(6)(7)

   

(0.62

)%(7)

   

(0.71

)%(7)

   

(0.74

)%(7)

   

(0.22

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

55

%

   

59

%

   

68

%

   

116

%

   

67

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

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

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

(5)  Performance was positively impacted by approximately 0.13% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 48.93%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.00

%

   

(0.37

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Counterpoint Global Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Counterpoint Global Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $201,000 or approximately 1.96% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which clarifies the guidance in ASC Topic No. 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and introduces new disclosures related to such equity security. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security's fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by ASU 2022-03). In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The new guidance is effective for public companies with annual reporting periods in fiscal years beginning after December 15, 2023, and interim periods in the following year, with early adoption permitted. An investment company that holds equity securities that are subject to contractual sale restrictions executed before the date at which the investment company first adopts ASU 2022-03 shall continue to account for that equity security using the accounting policy applied before the adoption of ASU 2022-03 until the contractual sale restriction expires or is modified.


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/dealer or valued by a pricing service/vendor; (4) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing

service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

2.  Fair Value Measurement: FASB ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

   

$

115

   

$

   

$

115

   

Air Freight & Logistics

   

     

98

     

     

98

   

Automobile Components

   

1

     

     

     

1

   

Automobiles

   

400

     

     

     

400

   

Banks

   

178

     

23

     

     

201

   

Beverages

   

24

     

23

     

     

47

   

Biotechnology

   

111

     

2

     

     

113

   

Broadline Retail

   

685

     

2

     

     

687

   

Capital Markets

   

98

     

16

     

     

114

   

Chemicals

   

18

     

     

     

18

   
Commercial Services &
Supplies
   

4

     

40

     

     

44

   

Consumer Finance

   

3

     

     

     

3

   
Consumer Staples
Distribution & Retail
   

94

     

     

     

94

   

Containers & Packaging

   

2

     

     

     

2

   

Distributors

   

@

   

     

     

   
Diversified Consumer
Services
   

4

     

     

     

4

   
Electronic Equipment,
Instruments &
Components
   

     

44

     

     

44

   

Entertainment

   

360

     

1

     

     

361

   

Financial Services

   

464

     

249

     

     

713

   

Food Products

   

     

4

     

     

4

   

Ground Transportation

   

423

     

     

     

423

   
Health Care Equipment &
Supplies
   

7

     

24

     

     

31

   
Health Care Providers &
Services
   

128

     

     

     

128

   

Health Care Technology

   

46

     

     

     

46

   
Hotels, Restaurants &
Leisure
   

362

     

102

     

     

464

   

Household Durables

   

108

     

184

     

     

292

   
Information Technology
Services
   

2,272

     

     

     

2,272

   

Insurance

   

9

     

10

     

     

19

   
Interactive Media &
Services
   

100

     

37

     

     

137

   

Leisure Products

   

84

     

     

     

84

   
Life Sciences Tools &
Services
   

99

     

119

     

     

218

   

Machinery

   

     

2

     

     

2

   

Marine Transportation

   

     

13

     

     

13

   

Media

   

149

     

     

     

149

   

Metals & Mining

   

23

     

1

     

     

24

   

Multi-Utilities

   

6

     

     

     

6

   
Oil, Gas & Consumable
Fuels
   

3

     

     

     

3

   

Passenger Airlines

   

5

     

     

     

5

   

Personal Care Products

   

11

     

1

     

     

12

   

Pharmaceuticals

   

226

     

8

     

     

234

   
Real Estate
Management &
Development
   

17

     

2

     

     

19

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Semiconductors &
Semiconductor
Equipment
 

$

17

   

$

46

   

$

   

$

63

   

Software

   

1,069

     

     

     

1,069

   

Specialized REITs

   

24

     

     

     

24

   

Specialty Retail

   

442

     

     

     

442

   
Tech Hardware,
Storage &
Peripherals
   

1

     

     

     

1

   
Textiles, Apparel &
Luxury Goods
   

112

     

217

     

     

329

   
Trading Companies &
Distributors
   

@

   

     

     

@

 

Total Common Stocks

   

8,189

     

1,383

     

     

9,572

   

Preferred Stocks

 

Financial Services

   

     

     

3

     

3

   

Software

   

     

     

43

     

43

   

Total Preferred Stocks

   

     

     

46

     

46

   

Investment Company

   

195

     

     

     

195

   

Warrants

   

     

@

   

     

@

 

Call Options Purchased

   

     

4

     

     

4

   

Short-Term Investment

 

Investment Company

   

375

     

     

     

375

   

Total Assets

 

$

8,759

   

$

1,387

   

$

46

   

$

10,192

   

@  Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

    Preferred
Stocks
(000)
 

Beginning Balance

 

$

33

   

Purchases

   

4

   

Sales

   

   

Transfers in

   

   

Transfers out

   

   

Corporate actions

   

   

Change in unrealized appreciation (depreciation)

   

9

   

Realized gains (losses)

   

   

Ending Balance

 

$

46

   
Net change in unrealized appreciation (depreciation) from
investments still held as of December 31, 2023
 

$

9

   

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2023. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance. The Fund calculated the weighted averages of the unobservable inputs relative to each investment's fair value as of December 31, 2023:

    Fair Value at
December 31, 2023
(000)
  Valuation
Technique
  Unobservable
Input
 

Amount*

  Impact to
Valuation from an
Increase in Input**
 
Preferred Stocks
 
 

$

46
 
  Market Transaction
Method
 

Transaction Price

 

$

71.38

   

Increase

 
     
 
  Discounted Cash Flow
 
  Weighted Average
Cost of Capital
    17.5%    

Decrease

 
   

 

 

 

 

Perpetual Growth Rate

   

3.5

%

 

Increase

 
     
 
  Market Comparable
Companies
  Enterprise Value/
Revenue
    9.0x    

Increase

 
     
 
   
 
  Discount for Lack
of Marketability
   

12.0

%

 

Decrease

 

*  Amount is indicative of the weighted average.

**  Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange

rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

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

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


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

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

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

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency ex-change risk in the normal course of pursuing its investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are

purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

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

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated
Statement of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

4

(a)

 

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(12

)(a)

 

(a) Amounts are included in Realized Gain (Loss) on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(9

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

4

(a)

 

$

   

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

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

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

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented in
the Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
JPMorgan Chase
Bank NA
 

$

4

   

$

   

$

   

$

4

   

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

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

4,139,000

   

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

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

7.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

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

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

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 2.15% for Class C shares and 1.00% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of

such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $71,000 of advisory fees were waived and approximately $346,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

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

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

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

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to less than $500.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $4,748,000 and $5,331,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year

ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

287

   

$

2,326

   

$

2,238

   

$

12

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

375

   

During the year ended December 31, 2023, the Fund incurred less than $500 in brokerage commissions with Morgan Stanley & Co. LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated 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 consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during fiscal years 2023 and 2022.

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

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

Permanent differences, primarily due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

66

   

$

(66

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital

losses of approximately $3,067,000 and $1,749,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 68.6%.

K. Market Risk and Risks Relating to Certain Financial Instruments:
Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be

adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Counterpoint Global Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Counterpoint Global Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


39


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCPTANN
6336957 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Developing Opportunity Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

7

   

Consolidated Statement of Operations

   

8

   

Consolidated Statements of Changes in Net Assets

   

9

   

Consolidated Financial Highlights

   

10

   

Notes to Consolidated Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

21

   

Liquidity Risk Management Program

   

22

   

Important Notices

   

23

   

U.S. Customer Privacy Notice

   

24

   

Directors and Officers Information

   

27

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Developing Opportunity Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Developing Opportunity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Developing Opportunity Portfolio Class I

 

$

1,000.00

   

$

1,017.60

   

$

1,019.86

   

$

5.39

   

$

5.40

     

1.06

%

 

Developing Opportunity Portfolio Class A

   

1,000.00

     

1,015.40

     

1,018.15

     

7.11

     

7.12

     

1.40

   

Developing Opportunity Portfolio Class C

   

1,000.00

     

1,011.00

     

1,014.27

     

11.00

     

11.02

     

2.17

   

Developing Opportunity Portfolio Class R6

   

1,000.00

     

1,017.60

     

1,020.27

     

4.98

     

4.99

     

0.98

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Developing Opportunity Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 5.36%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI Emerging Markets Net Index (the "Index"), which returned 9.83%.

Factors Affecting Performance

•  Emerging market equities advanced during the 12-month period ended December 31, 2023. The move was driven by signs of moderating inflation and optimism that interest rates may have peaked with central banks expected to lower interest rates in 2024.

•  Our team remained focused on assessing company prospects over a longer-term period of five to ten years, and owning a portfolio of high quality companies with diverse business drivers not tied to a particular market environment.

•  The team manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Our longer-term focus results in lower turnover than many of our peers. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process. For the 12-month period, the Fund underperformed the Index due to unfavorable sector allocation despite favorable stock selection.

•  The main detractors from relative performance were a sector overweight allocation to consumer discretionary, stock selection in consumer staples and a sector underweight allocation to information technology.

•  The top contributors to the Fund's relative performance were stock selection in consumer discretionary, financials and real estate.

Management Strategies

•  There were no changes to our bottom-up investment process during the period. The Fund seeks long-term capital appreciation by investing primarily in high quality companies located or operating in developing or emerging market

countries, with capitalizations within the range of companies in the MSCI Emerging Markets Net Index. To achieve its objective, the investment team typically favors companies it believes have sustainable competitive advantages that can be monetized through growth. The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental and social externalities and governance (also referred to as ESG).

•  At the close of the period, consumer discretionary represented the largest sector weight in the portfolio, followed by financials and information technology. Our bottom-up investment process resulted in sector overweight positions in consumer discretionary, financials, real estate, consumer staples, and underweight positions in communications services, industrials, utilities, health care, materials, energy and information technology. The Fund had no holdings in energy and utilities at the end of the reporting period.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Developing Opportunity Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on February 14, 2020.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI Emerging Markets Net Index(1)​ and the Lipper Emerging Markets Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

5.36

%

   

     

     

–3.67

%

 
Fund — Class A Shares
w/o sales charges(4)
   

4.91

     

     

     

–3.96

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

–0.58

     

     

     

–5.27

   
Fund — Class C Shares
w/o sales charges(4)
   

4.15

     

     

     

–4.72

   
Fund — Class C Shares
with maximum 1.00% deferred
sales charges(4)
   

3.15

     

     

     

–4.72

   
Fund — Class R6 Shares
w/o sales charges(4)
   

5.35

     

     

     

–3.61

   
MSCI Emerging Markets
Net Index
   

9.83

     

     

     

0.49

   
Lipper Emerging Markets
Funds Index
   

13.10

     

     

     

1.29

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI Emerging Markets Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI Emerging Markets Net Index currently consists of 24 emerging market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Emerging Markets Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Markets Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Emerging Markets Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on February 14, 2020.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Developing Opportunity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (100.0%)

 

Argentina (3.1%)

 

Globant SA (a)

   

4,526

   

$

1,077

   

Brazil (6.8%)

 

B3 SA — Brasil Bolsa Balcao

   

288,885

     

864

   

NU Holdings Ltd., Class A (a)

   

184,327

     

1,536

   
     

2,400

   

China (35.2%)

 

China Resources Beer Holdings Co. Ltd. (b)

   

92,000

     

404

   

China Resources Mixc Lifestyle Services Ltd. (b)

   

107,800

     

384

   

Haidilao International Holding Ltd. (b)

   

567,000

     

1,058

   
Inner Mongolia Yili Industrial Group Co. Ltd.,
Class A
   

152,500

     

575

   

KE Holdings, Inc. ADR

   

79,226

     

1,284

   

Kuaishou Technology (a)(b)

   

93,200

     

634

   

Kweichow Moutai Co. Ltd., Class A

   

6,389

     

1,555

   

Meituan, Class B (a)(b)

   

149,880

     

1,574

   

Qifu Technology, Inc. ADR

   

36,662

     

580

   
Shenzhen Mindray Bio-Medical Electronics Co. Ltd.,
Class A
   

10,700

     

439

   

Shenzhou International Group Holdings Ltd. (b)

   

74,300

     

762

   

Tencent Holdings Ltd. (b)

   

28,200

     

1,065

   

Trip.com Group Ltd. ADR (a)

   

44,703

     

1,610

   

Wuliangye Yibin Co. Ltd., Class A

   

24,700

     

489

   
     

12,413

   

India (24.3%)

 

Axis Bank Ltd.

   

98,554

     

1,304

   

HDFC Bank Ltd.

   

129,659

     

2,655

   

ICICI Bank Ltd. ADR

   

74,782

     

1,783

   

IndusInd Bank Ltd.

   

33,284

     

639

   

Shree Cement Ltd.

   

834

     

287

   

Titan Co. Ltd.

   

29,051

     

1,282

   

Zomato Ltd. (a)

   

412,046

     

612

   
     

8,562

   

Korea, Republic of (12.4%)

 

Coupang, Inc. (a)

   

126,217

     

2,044

   

KakaoBank Corp. (a)

   

42,386

     

933

   

NAVER Corp.

   

8,057

     

1,394

   
     

4,371

   

Singapore (3.7%)

 

Grab Holdings Ltd., Class A (a)

   

386,266

     

1,302

   

Super Hi International Holding Ltd. (a)(b)

   

5,000

     

6

   
     

1,308

   

Taiwan (6.2%)

 

Nien Made Enterprise Co. Ltd.

   

15,000

     

172

   

Silergy Corp.

   

33,000

     

536

   

Taiwan Semiconductor Manufacturing Co. Ltd.

   

78,000

     

1,495

   
     

2,203

   
   

Shares

  Value
(000)
 

United States (8.3%)

 

MercadoLibre, Inc. (a)

   

1,860

   

$

2,923

   

Total Common Stocks (Cost $31,414)

   

35,257

   

Short-Term Investment (0.3%)

 

Investment Company (0.3%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $95)
   

95,337

     

95

   

Total Investments (100.3%) (Cost $31,509) (c)(d)

   

35,352

   

Liabilities in Excess of Other Assets (– 0.3%)

   

(117

)

 

Net Assets (100.0%)

 

$

35,235

   

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

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  The approximate fair value and percentage of net assets, $21,118,000 and 59.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $37,230,000. The aggregate gross unrealized appreciation is approximately $7,012,000 and the aggregate gross unrealized depreciation is approximately $9,039,000, resulting in net unrealized depreciation of approximately $2,027,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Banks

   

25.1

%

 

Other*

   

19.8

   

Broadline Retail

   

14.1

   

Hotels, Restaurants & Leisure

   

13.8

   

Interactive Media & Services

   

8.8

   

Beverages

   

6.9

   

Textiles, Apparel & Luxury Goods

   

5.8

   

Semiconductors & Semiconductor Equipment

   

5.7

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Developing Opportunity Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $31,414)

 

$

35,257

   

Investment in Security of Affiliated Issuer, at Value (Cost $95)

   

95

   

Total Investments in Securities, at Value (Cost $31,509)

   

35,352

   

Foreign Currency, at Value (Cost $83)

   

83

   

Cash

   

1

   

Receivable for Investments Sold

   

170

   

Dividends Receivable

   

31

   

Receivable for Fund Shares Sold

   

4

   

Due from Adviser

   

2

   

Receivable from Affiliate

   

2

   

Other Assets

   

51

   

Total Assets

   

35,696

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

153

   

Payable for Fund Shares Redeemed

   

123

   

Payable for Investments Purchased

   

113

   

Payable for Professional Fees

   

20

   

Payable for Custodian Fees

   

17

   

Payable for Sub Transfer Agency Fees — Class I

   

14

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

1

   

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class C

   

3

   

Payable for Administration Fees

   

2

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

13

   

Total Liabilities

   

461

   

Net Assets

 

$

35,235

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

115,253

   

Total Accumulated Loss

   

(80,018

)

 

Net Assets

 

$

35,235

   

CLASS I:

 

Net Assets

 

$

26,984

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

3,120,831

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.65

   

CLASS A:

 

Net Assets

 

$

4,981

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

582,814

   

Net Asset Value, Redemption Price Per Share

 

$

8.55

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.47

   

Maximum Offering Price Per Share

 

$

9.02

   

CLASS C:

 

Net Assets

 

$

3,260

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

393,021

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.29

   

CLASS R6:

 

Net Assets

 

$

10

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,115

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.67

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Developing Opportunity Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $56 of Foreign Taxes Withheld)

 

$

560

   

Dividends from Security of Affiliated Issuer (Note G)

   

38

   

Total Investment Income

   

598

   

Expenses:

 

Advisory Fees (Note B)

   

500

   

Professional Fees

   

167

   

Registration Fees

   

61

   

Custodian Fees (Note F)

   

60

   

Shareholder Services Fees — Class A (Note D)

   

13

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

38

   

Sub Transfer Agency Fees — Class I

   

44

   

Sub Transfer Agency Fees — Class A

   

4

   

Sub Transfer Agency Fees — Class C

   

3

   

Administration Fees (Note C)

   

44

   

Shareholder Reporting Fees

   

15

   

Transfer Agency Fees — Class I (Note E)

   

5

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Directors' Fees and Expenses

   

7

   

Pricing Fees

   

3

   

Other Expenses

   

26

   

Total Expenses

   

998

   

Waiver of Advisory Fees (Note B)

   

(272

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(26

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(—

@)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(18

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(2

)

 

Net Expenses

   

678

   

Net Investment Loss

   

(80

)

 

Realized Loss:

 

Investments Sold (Net of $37 of Capital Gain Country Tax)

   

(7,983

)

 

Foreign Currency Translation

   

(30

)

 

Net Realized Loss

   

(8,013

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $143)

   

11,309

   

Foreign Currency Translation

   

(—

@)

 

Net Change in Unrealized Appreciation (Depreciation)

   

11,309

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

3,296

   

Net Increase in Net Assets Resulting from Operations

 

$

3,216

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Developing Opportunity Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(80

)

 

$

(571

)

 

Net Realized Loss

   

(8,013

)

   

(42,494

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

11,309

     

(19,376

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

3,216

     

(62,441

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

4,936

     

55,026

   

Redeemed

   

(46,845

)

   

(129,518

)

 

Class A:

 

Subscribed

   

1,028

     

2,262

   

Redeemed

   

(1,334

)

   

(5,690

)

 

Class C:

 

Subscribed

   

51

     

974

   

Redeemed

   

(1,021

)

   

(1,754

)

 

Class R6:*

 

Subscribed

   

1

     

   

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(43,184

)

   

(78,700

)

 

Redemption Fees

   

6

     

6

   

Total Decrease in Net Assets

   

(39,962

)

   

(141,135

)

 

Net Assets:

 

Beginning of Period

   

75,197

     

216,332

   

End of Period

 

$

35,235

   

$

75,197

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

578

     

5,776

   

Shares Redeemed

   

(5,498

)

   

(14,479

)

 

Net Decrease in Class I Shares Outstanding

   

(4,920

)

   

(8,703

)

 

Class A:

 

Shares Subscribed

   

121

     

252

   

Shares Redeemed

   

(159

)

   

(652

)

 

Net Decrease in Class A Shares Outstanding

   

(38

)

   

(400

)

 

Class C:

 

Shares Subscribed

   

6

     

116

   

Shares Redeemed

   

(125

)

   

(203

)

 

Net Decrease in Class C Shares Outstanding

   

(119

)

   

(87

)

 

Class R6:*

 

Shares Subscribed

   

@@

   

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Developing Opportunity Portfolio

   

Class I

 
   

Year Ended December 31,

  Period from
February 14, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

8.21

   

$

11.79

   

$

14.50

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.00

)(4)

   

(0.04

)

   

(0.10

)

   

(0.10

)

 

Net Realized and Unrealized Gain (Loss)

   

0.44

     

(3.54

)

   

(2.61

)

   

4.60

   

Total from Investment Operations

   

0.44

     

(3.58

)

   

(2.71

)

   

4.50

   

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

 

Net Asset Value, End of Period

 

$

8.65

   

$

8.21

   

$

11.79

   

$

14.50

   

Total Return(5)

   

5.36

%(6)

   

(30.36

)%

   

(18.69

)%

   

45.00

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

26,984

   

$

66,056

   

$

197,435

   

$

234,923

   

Ratio of Expenses Before Expense Limitation

   

1.69

%

   

1.45

%

   

1.23

%

   

1.41

%(8)

 

Ratio of Expenses After Expense Limitation

   

1.12

%(9)(10)

   

1.15

%(10)

   

1.15

%(10)

   

1.14

%(8)(10)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.15

%(10)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.04

)%(9)(10)

   

(0.42

)%(10)

   

(0.73

)%(10)

   

(0.87

)%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(11)

   

0.01

%(8)

 

Portfolio Turnover Rate

   

15

%

   

31

%

   

64

%

   

18

%(7)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

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

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

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

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.15

%

   

(0.07

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Developing Opportunity Portfolio

   

Class A

 
   

Year Ended December 31,

  Period from
February 14, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

8.15

   

$

11.73

   

$

14.47

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.03

)

   

(0.06

)

   

(0.14

)

   

(0.13

)

 

Net Realized and Unrealized Gain (Loss)

   

0.43

     

(3.52

)

   

(2.60

)

   

4.60

   

Total from Investment Operations

   

0.40

     

(3.58

)

   

(2.74

)

   

4.47

   

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

 

Net Asset Value, End of Period

 

$

8.55

   

$

8.15

   

$

11.73

   

$

14.47

   

Total Return(5)

   

4.91

%(6)

   

(30.52

)%

   

(18.94

)%

   

44.70

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,981

   

$

5,057

   

$

11,974

   

$

11,721

   

Ratio of Expenses Before Expense Limitation

   

1.99

%

   

1.69

%

   

1.48

%

   

1.72

%(8)

 

Ratio of Expenses After Expense Limitation

   

1.44

%(9)(10)

   

1.45

%(10)

   

1.46

%(10)

   

1.44

%(8)(10)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.44

%(10)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.38

)%(9)(10)

   

(0.69

)%(10)

   

(1.03

)%(10)

   

(1.17

)%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(11)

   

0.01

%(8)

 

Portfolio Turnover Rate

   

15

%

   

31

%

   

64

%

   

18

%(7)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

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

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

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

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.50

%

   

(0.44

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Developing Opportunity Portfolio

   

Class C

 
   

Year Ended December 31,

  Period from
February 14, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

7.97

   

$

11.55

   

$

14.36

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.09

)

   

(0.12

)

   

(0.24

)

   

(0.22

)

 

Net Realized and Unrealized Gain (Loss)

   

0.41

     

(3.46

)

   

(2.57

)

   

4.58

   

Total from Investment Operations

   

0.32

     

(3.58

)

   

(2.81

)

   

4.36

   

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

 

Net Asset Value, End of Period

 

$

8.29

   

$

7.97

   

$

11.55

   

$

14.36

   

Total Return(5)

   

4.15

%(6)

   

(31.08

)%

   

(19.57

)%

   

43.60

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,260

   

$

4,076

   

$

6,911

   

$

5,893

   

Ratio of Expenses Before Expense Limitation

   

2.74

%

   

2.45

%

   

2.21

%

   

2.53

%(8)

 

Ratio of Expenses After Expense Limitation

   

2.20

%(9)(10)

   

2.21

%(10)

   

2.19

%(10)

   

2.24

%(8)(10)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.20

%(10)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(1.12

)%(9)(10)

   

(1.44

)%(10)

   

(1.78

)%(10)

   

(1.97

)%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(11)

   

0.01

%(8)

 

Portfolio Turnover Rate

   

15

%

   

31

%

   

64

%

   

18

%(7)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

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

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

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

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.25

%

   

(1.17

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Developing Opportunity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
February 14, 2020(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(3)

 

Net Asset Value, Beginning of Period

 

$

8.23

   

$

11.80

   

$

14.51

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(4)

   

0.00

(5)

   

(0.03

)

   

(0.10

)

   

(0.07

)

 

Net Realized and Unrealized Gain (Loss)

   

0.44

     

(3.54

)

   

(2.61

)

   

4.58

   

Total from Investment Operations

   

0.44

     

(3.57

)

   

(2.71

)

   

4.51

   

Redemption Fees

   

0.00

(5)

   

0.00

(5)

   

0.00

(5)

   

0.00

(5)

 

Net Asset Value, End of Period

 

$

8.67

   

$

8.23

   

$

11.80

   

$

14.51

   

Total Return(6)

   

5.35

%(7)

   

(30.25

)%

   

(18.68

)%

   

45.10

%(8)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

10

   

$

8

   

$

12

   

$

15

   

Ratio of Expenses Before Expense Limitation

   

29.92

%

   

24.48

%

   

17.42

%

   

17.67

%(9)

 

Ratio of Expenses After Expense Limitation

   

1.03

%(10)(11)

   

1.11

%(11)(12)

   

1.10

%(11)

   

1.09

%(9)(11)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.10

%(11)

   

N/A

     

N/A

   

Ratio of Net Investment Income (Loss)

   

0.05

%(10)(11)

   

(0.34

)%(11)

   

(0.69

)%(11)

   

(0.67

)%(9)(11)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(13)

   

0.00

%(13)

   

0.00

%(13)

   

0.01

%(9)

 

Portfolio Turnover Rate

   

15

%

   

31

%

   

64

%

   

18

%(8)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

(3)  Not consolidated.

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

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

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

(7)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(8)  Not annualized.

(9)  Annualized.

(10)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.09

%

   

(0.01

)%

 

(11)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(12)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to Consolidated Financial Statements.

(13)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Developing Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Developing Opportunity Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented 0% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-thecounter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight

of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Banks

 

$

3,319

   

$

5,531

   

$

   

$

8,850

   

Beverages

   

     

2,448

     

     

2,448

   

Broadline Retail

   

4,967

     

     

     

4,967

   

Capital Markets

   

     

864

     

     

864

   

Construction Materials

   

     

287

     

     

287

   

Consumer Finance

   

580

     

     

     

580

   

Food Products

   

     

575

     

     

575

   

Ground Transportation

   

1,302

     

     

     

1,302

   
Health Care Equipment &
Supplies
   

     

439

     

     

439

   
Hotels, Restaurants &
Leisure
   

1,610

     

3,250

     

     

4,860

   

Household Durables

   

     

172

     

     

172

   
Information Technology
Services
   

1,077

     

     

     

1,077

   
Interactive Media &
Services
   

     

3,093

     

     

3,093

   
Real Estate
Management &
Development
   

1,284

     

384

     

     

1,668

   
Semiconductors &
Semiconductor
Equipment
   

     

2,031

     

     

2,031

   
Textiles, Apparel &
Luxury Goods
   

     

2,044

     

     

2,044

   

Total Common Stocks

   

14,139

     

21,118

     

     

35,257

   

Short-Term Investment

 

Investment Company

   

95

     

     

     

95

   

Total Assets

 

$

14,234

   

$

21,118

   

$

   

$

35,352

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

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

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

4.  Redemption Fees: The Fund will assess a 2% redemption fee on Class I shares, Class A shares, Class C shares and Class R6 shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Consolidated Statements of Changes in Net Assets.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in

doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

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

First $1
billion
  Over $1
billion
 
  0.90

%

   

0.85

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.41% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.15% for Class I shares, 1.50% for Class A shares, 2.25% for Class C shares and 1.10% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $272,000 of advisory fees were waived and approximately $28,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

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

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

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of

classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $1,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $8,006,000 and $50,134,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $2,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

292

   

$

22,916

   

$

23,113

   

$

38

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

95

   


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

During the year ended December 31, 2023, the Fund incurred less than $500 in brokerage commissions with Morgan Stanley & Co. LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of

Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during fiscal years 2023 and 2022.

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

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

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

60

   

$

(60

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $44,215,000 and $33,704,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 75.0%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global

economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Developing Opportunity Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Developing Opportunity Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for the period from February 14, 2020 (commencement of operations) through December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for the period from February 14, 2020 (commencement of operations) through December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


32


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIDOANN
6337013 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Emerging Markets ex China Portfolio

(formerly Sustainable Emerging Markets Portfolio)

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

14

   

Notes to Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

26

   

Liquidity Risk Management Program

   

27

   

Federal Tax Notice

   

28

   

Important Notices

   

29

   

U.S. Customer Privacy Notice

   

30

   

Directors and Officers Information

   

33

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Emerging Markets ex China Portfolio (the "Fund") (formerly MSIF Sustainable Emerging Markets Portfolio) performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Emerging Markets ex China Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Emerging Markets ex China Portfolio Class I

 

$

1,000.00

   

$

1,094.20

   

$

1,020.52

   

$

4.91

   

$

4.74

     

0.93

%

 

Emerging Markets ex China Portfolio Class A

   

1,000.00

     

1,091.60

     

1,018.65

     

6.85

     

6.61

     

1.30

   

Emerging Markets ex China Portfolio Class C

   

1,000.00

     

1,088.00

     

1,014.87

     

10.79

     

10.41

     

2.05

   

Emerging Markets ex China Portfolio Class R6

   

1,000.00

     

1,094.50

     

1,020.67

     

4.75

     

4.58

     

0.90

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Emerging Markets ex China Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 21.57%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI Emerging Markets ex China Net Index (the "Index"), which returned 20.03%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Poland was the top contributor to the Fund's relative performance, led by its overweight allocations to an aluminum producer and an apparel retailer. Poland (+48%)(i)​ was among the best performing markets in the Index during the year. The broad market rallied on the back of the election outcome, with the opposition party's win and expectations for improved economic policy, an end of institutional erosion and the release of European Union fund flows all leading to a lower country risk premium. As of the close of the period, we continued to believe the apparel retailer is a quality growth company with a strong management team and attractive prospects for further expansion in the region.

•  The stock selection in and overweight allocation to India was also a top contributor to relative returns, led by the Fund's allocations to a two-wheeler automotive manufacturer, a real estate developer and a private hospital operator. India outperformed the broader MSCI Emerging Markets Index(ii)​ by over 11% (returning almost 21% in 2023 versus 10% for the index).(i)​ As of the close of the reporting period, India was the largest country

overweight in the portfolio given our positive outlook for the country's secular, endogenous-driven growth supported by a low base, supply-side investments and digitization.

•  Mexico was one of the best performing emerging markets (EM) countries for the year (returning nearly 41%),(i)​ and the portfolio's relative performance benefited from an overweight allocation. The Fund's allocation to one of the leading vehicle insurance companies in Mexico was a top stock contributor to relative returns.

•  The overweight to Brazil contributed to relative performance; however, gains were more than offset by our stock selection, with the allocation to an apparel retailer the largest relative performance detractor. Elsewhere in Brazil, the Fund's allocations to an investment bank, a financial services company and a drugstore chain contributed to relative performance. Energy finished the period as the second-best performing sector in EM, returning 27%, and our allocation to an oil and gas producer in Brazil also added to relative returns. As of the close of the period, we were positive on the outlook for energy given significant underinvestment and supply constraints, particularly for oil, while demand has continued to rise.

•  Relative performance benefited from stock selection in Korea and Indonesia. Within Indonesia, the allocation to select banks contributed to relative performance. Information technology (+32%) was the best performing sector in EM over the 12-month period, and the overweight allocations to a memory chipmaker and a manufacturer of memory chips and semiconductors in Korea contributed strongly to relative performance.

•  The underweight allocation to Taiwan detracted from returns. The positioning in and overweight allocation to South Africa also detracted from

 

(i)​  Regional and country returns are represented by their respective MSCI regional/country indexes, which are broad measures of the region/country's stock market performance.

(ii)​  The MSCI Emerging Markets Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI Emerging Markets Index currently consists of 24 emerging-market country indices. The performance of the index is listed in U.S. dollars and assumes reinvestment of net dividends. The index does not include any expenses, fees or sales charges, which would lower performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets ex China Portfolio

relative performance, driven by the allocations to a global mining company and a platinum producer. Aggregate positioning within the materials sector also detracted from relative performance. These positions suffered from broader equity market volatility in South Africa during the year, negatively impacted by a short-term surge in electrical costs and commodity price weakness for the metals companies.

Management Strategies

•  2023 was a strong year for global equity markets including emerging markets. As an example of China's fading impact on the EM universe, emerging markets excluding China rose nearly +20% in 2023 (as measured by the Index), outperforming the MSCI Emerging Markets Index and U.S. equities excluding the "Magnificent Seven" mega-cap stocks,(iii)​ due to increasing dispersion of returns at the country and sector levels among other factors in EM.

•  We continue to believe that our integrated top-down and bottom-up analysis is important to identify the most attractive macro and stock investments across emerging markets excluding China. As dispersion in the asset class returns has increased, both levers are important drivers of the portfolio. In what we expect to be a mixed growth environment and realigning global economy, we believe our portfolio is well positioned and diversified with active positioning across countries, themes and stocks.

•  As of the end of the period, the Fund remained overweight India given secular, endogenous-driven growth supported by a low base, supply-side investments and digitization. Key drivers for our view on the equity market include India's ability to withstand external shocks, a continued growth outlook (led largely by increased investment), a large domestic market to drive consumption and a strong institutional framework. We have remained constructive on the secular growth story for India and have been confident that forward earnings justify the current multiples of our holdings. The

Fund's exposure in India, as of the close of the period, included well-managed financials, industrials and consumer names, along with select IT, health care, energy and materials companies.

•  At the close of the period, the Fund was overweight Brazil, which remains a rate-sensitive market. Brazil's central bank was among the most aggressive in EM in raising rates to fight inflation in 2021 and 2022. The central bank continued with its rate-cutting policy, lowering the Selic target rate by an additional 50 basis points(iv)​ to 11.75% at its December 2023 meeting, and indicated more rate cuts of a similar pace in 2024. Even with a slowing economy, interest-rate sensitive stocks should respond to monetary policy, and we expect them to continue rebounding into the second half of 2024. The country is well into disinflation and a rate-cutting cycle that we expect to continue through 2024. Additionally, cumulative reforms undertaken since 2016 have further boosted the potential growth of the economy. As of period-end, the Brazilian real looked attractive on our currency framework, with external balances in good shape and valuations at low levels relative to its own history. The Fund's exposure in Brazil remained focused on companies with quality management and solid earnings growth, including significant exposure to stocks that we believe can benefit from declining rates.

•  The Fund remained overweight Mexico at the end of the period. We think Mexico offers a combination of growth and strong macroeconomic fundamentals, which supports medium-term economic growth. The country should continue to benefit from rising investment led by foreign direct investment and its attractive strategic positioning in the global supply chain, particularly given the competitiveness of its economy and its nexus with the U.S. The outlook for the consumer remains promising, with rising employment, real wage growth and strong U.S. remittances. We believe the domestic companies owned in the Fund should continue to benefit from current yield, attractive valuations and earnings growth.

 

(iii)​  U.S. equities are represented by the S&P 500 Index, which measures the performance of the large-cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P Index is one of the most widely used benchmarks of U.S. equity performance. The "Magnificent Seven" are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

(iv)​  One basis point = 0.01%


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets ex China Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on September 30, 2022.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI Emerging Markets ex China Net Index(1)​ and the Lipper Emerging Markets Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

21.57

%

   

     

     

25.12

%

 
Fund — Class A Shares
w/o sales charges(4)
   

21.10

     

     

     

24.64

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

14.77

     

     

     

19.42

   
Fund — Class C Shares
w/o sales charges(4)
   

20.22

     

     

     

23.73

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

19.22

     

     

     

23.73

   
Fund — Class R6 Shares
w/o sales charges(4)
   

21.61

     

     

     

25.16

   
MSCI Emerging Markets ex
China Net Index
   

20.03

     

     

     

23.01

   
Lipper Emerging Markets
Funds Index
   

13.10

     

     

     

18.88

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI Emerging Markets ex China Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets excluding China. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Emerging Markets Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Markets Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Emerging Markets Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on September 30, 2022.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Emerging Markets ex China Portfolio

   

Shares

  Value
(000)
 

Common Stocks (95.6%)

 

Brazil (8.9%)

 

Banco BTG Pactual SA (Units) (a)

   

13,862

   

$

107

   

Itau Unibanco Holding SA (Preference)

   

12,241

     

85

   

Localiza Rent a Car SA

   

8,299

     

109

   

Petroleo Brasileiro SA (Preference)

   

12,994

     

99

   

Raia Drogasil SA

   

18,297

     

111

   

Santos Brasil Participacoes SA

   

24,906

     

48

   

WEG SA

   

4,267

     

33

   
     

592

   

Chile (0.7%)

 

SMU SA

   

266,509

     

49

   

India (29.2%)

 

Axis Bank Ltd.

   

2,435

     

32

   

Bajaj Auto Ltd.

   

1,349

     

110

   

Bajaj Finance Ltd.

   

1,024

     

90

   

Delhivery Ltd. (b)

   

7,787

     

36

   

HDFC Asset Management Co. Ltd.

   

847

     

33

   

HDFC Bank Ltd.

   

11,868

     

243

   

Hindalco Industries Ltd.

   

14,710

     

109

   

ICICI Bank Ltd.

   

14,170

     

169

   

ICICI Prudential Life Insurance Co. Ltd.

   

8,411

     

54

   

Infosys Ltd.

   

4,928

     

91

   

Infosys Ltd. ADR

   

3,149

     

58

   

Larsen & Toubro Ltd.

   

1,915

     

81

   

Macrotech Developers Ltd.

   

6,752

     

83

   

Mahindra & Mahindra Ltd.

   

6,931

     

144

   

MakeMyTrip Ltd. (b)

   

952

     

45

   

Max Healthcare Institute Ltd.

   

9,017

     

74

   

Pidilite Industries Ltd.

   

1,858

     

61

   

Reliance Industries Ltd.

   

6,384

     

198

   

Star Health & Allied Insurance Co. Ltd. (b)

   

8,897

     

57

   

State Bank of India

   

17,247

     

133

   

United Breweries Ltd.

   

1,566

     

34

   
     

1,935

   

Indonesia (5.1%)

 

Bank Central Asia Tbk. PT

   

132,600

     

81

   

Bank Mandiri Persero Tbk. PT

   

249,600

     

98

   

Bank Rakyat Indonesia Persero Tbk. PT

   

303,200

     

113

   

Cisarua Mountain Dairy Tbk. PT

   

169,700

     

44

   
     

336

   

Korea, Republic of (11.9%)

 

KB Financial Group, Inc.

   

2,004

     

84

   

Kia Corp.

   

692

     

53

   

Korea Zinc Co. Ltd.

   

145

     

56

   

Samsung Electronics Co. Ltd.

   

7,281

     

442

   

SK Hynix, Inc.

   

1,384

     

151

   
     

786

   

Malaysia (0.5%)

 

Frontken Corp. Bhd.

   

47,400

     

33

   
   

Shares

  Value
(000)
 

Mexico (7.1%)

 

Gruma SAB de CV , Class B

   

5,401

   

$

99

   

Grupo Financiero Banorte SAB de CV Series O

   

6,966

     

70

   

Qualitas Controladora SAB de CV

   

8,877

     

90

   

Regional SAB de CV

   

9,786

     

93

   

Wal-Mart de Mexico SAB de CV

   

28,306

     

119

   
     

471

   

Poland (5.2%)

 

Allegro.eu SA (b)

   

3,844

     

33

   

Grupa Kety SA

   

635

     

120

   

LPP SA

   

38

     

156

   

Powszechny Zaklad Ubezpieczen SA

   

2,650

     

32

   
     

341

   

South Africa (4.4%)

 

Anglo American PLC

   

3,642

     

93

   

AVI Ltd.

   

14,619

     

65

   

Capitec Bank Holdings Ltd.

   

877

     

98

   

OUTsurance Group Ltd.

   

13,939

     

32

   
     

288

   

Sweden (1.1%)

 

Medicover AB

   

4,953

     

74

   

Switzerland (1.3%)

 

SIG Group AG (b)

   

3,707

     

85

   

Taiwan (15.7%)

 

Advantech Co. Ltd.

   

1,000

     

12

   

Airtac International Group

   

1,000

     

33

   

Chailease Holding Co. Ltd.

   

14,220

     

89

   

CTBC Financial Holding Co. Ltd.

   

47,000

     

43

   

Delta Electronics, Inc.

   

7,000

     

71

   

MediaTek, Inc.

   

1,000

     

33

   

Taiwan Semiconductor Manufacturing Co. Ltd.

   

20,000

     

384

   

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

2,329

     

242

   

Unimicron Technology Corp.

   

1,000

     

6

   

United Microelectronics Corp.

   

41,000

     

70

   

Voltronic Power Technology Corp.

   

1,000

     

56

   
     

1,039

   

Thailand (2.4%)

 

Central Retail Corp. PCL

   

21,400

     

26

   
CP ALL PCL    

13,400

     

22

   

Kasikornbank PCL

   

12,200

     

48

   

Tisco Financial Group PCL

   

21,100

     

62

   
     

158

   

United Kingdom (2.1%)

 

Antofagasta PLC

   

4,708

     

101

   

Mondi PLC

   

1,997

     

39

   
     

140

   

Total Common Stocks (Cost $5,049)

   

6,327

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Emerging Markets ex China Portfolio

    No. of
Rights
  Value
(000)
 

Rights (0.0%)‡

 

Brazil (0.0%)‡

 
Localiza Rent a Car SA,
expires 02/05/24 (b) (Cost $—)
   

29

   

$

@

 
   

Shares

     

Short-Term Investment (3.3%)

 

Investment Company (3.3%)

 
Morgan Stanley Institutional Liquidity
Funds — Government Portfolio —
Institutional Class (See Note G)
(Cost $214)
   

213,629

     

214

   

Total Investments (98.9%) (Cost $5,263) (c)(d)

   

6,541

   

Other Assets in Excess of Liabilities (1.1%)

   

75

   

Net Assets (100.0%)

 

$

6,616

   

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

@  Value is less than $500.

‡  Amount is less than 0.05%.

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

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $5,511,000 and 83.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $5,286,000. The aggregate gross unrealized appreciation is approximately $1,346,000 and the aggregate gross unrealized depreciation is approximately $153,000, resulting in net unrealized appreciation of approximately $1,193,000.

ADR  American Depositary Receipt.

 

Futures Contract:

The Fund had the following futures contract open at December 31, 2023:

    Number of
Contracts
  Expiration
Date
  Notional
Amount
(000)
  Value
(000)
  Unrealized
Appreciation
(000)
 

Long:

 

MSCI Saudi Arabia Index (Germany)

   

5

   

Mar-24

 

$

@

 

$

90

   

$

2

   

@  Value is less than $500.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

50.1

%

 

Banks

   

22.2

   

Semiconductors & Semiconductor Equipment

   

13.5

   

Metals & Mining

   

7.3

   

Tech Hardware, Storage & Peripherals

   

6.9

   

Total Investments

   

100.0

%**

 

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

**  Does not include an open futures contract with a value of approximately $90,000 and unrealized appreciation of approximately $2,000.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets ex China Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,049)

 

$

6,327

   

Investment in Security of Affiliated Issuer, at Value (Cost $214)

   

214

   

Total Investments in Securities, at Value (Cost $5,263)

   

6,541

   

Foreign Currency, at Value (Cost $13)

   

13

   

Due from Adviser

   

99

   

Receivable for Investments Sold

   

33

   

Receivable for Variation Margin on Futures Contracts

   

12

   

Dividends Receivable

   

12

   

Tax Reclaim Receivable

   

2

   

Receivable from Affiliate

   

1

   

Other Assets

   

39

   

Total Assets

   

6,752

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

64

   

Payable for Investments Purchased

   

37

   

Payable for Professional Fees

   

20

   

Payable for Custodian Fees

   

5

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

10

   

Total Liabilities

   

136

   

Net Assets

 

$

6,616

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

5,384

   

Total Distributable Earnings

   

1,232

   

Net Assets

 

$

6,616

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets ex China Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

6,419

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

516,582

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.43

   

CLASS A:

 

Net Assets

 

$

66

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,308

   

Net Asset Value, Redemption Price Per Share

 

$

12.41

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.69

   

Maximum Offering Price Per Share

 

$

13.10

   

CLASS C:

 

Net Assets

 

$

65

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,273

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.38

   

CLASS R6:

 

Net Assets

 

$

66

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,327

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.43

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets ex China Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $27 of Foreign Taxes Withheld)

 

$

150

   

Dividends from Security of Affiliated Issuer (Note G)

   

6

   

Total Investment Income

   

156

   

Expenses:

 

Professional Fees

   

206

   

Offering Costs (Note A-9)

   

74

   

Advisory Fees (Note B)

   

44

   

Custodian Fees (Note F)

   

23

   

Registration Fees

   

22

   

Shareholder Reporting Fees

   

17

   

Transfer Agency Fees — Class I (Note E)

   

2

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Administration Fees (Note C)

   

5

   

Directors' Fees and Expenses

   

4

   

Pricing Fees

   

2

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

1

   

Other Expenses

   

17

   

Total Expenses

   

423

   

Expenses Reimbursed by Adviser (Note B)

   

(314

)

 

Waiver of Advisory Fees (Note B)

   

(44

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

57

   

Net Investment Income

   

99

   

Realized Gain (Loss):

 

Investments Sold (Net of $7 of Capital Gain Country Tax)

   

171

   

Foreign Currency Translation

   

(2

)

 

Futures Contracts

   

22

   

Net Realized Gain

   

191

   

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $59)

   

879

   

Foreign Currency Translation

   

@

 

Futures Contracts

   

2

   

Net Change in Unrealized Appreciation (Depreciation)

   

881

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

1,072

   

Net Increase in Net Assets Resulting from Operations

 

$

1,171

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets ex China Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Period from
September 30,2022^ to
December 31,2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

99

   

$

3

   

Net Realized Gain

   

191

     

107

   

Net Change in Unrealized Appreciation (Depreciation)

   

881

     

335

   

Net Increase in Net Assets Resulting from Operations

   

1,171

     

445

   

Dividends and Distributions to Shareholders:

 

Class I

   

(382

)

   

   

Class A

   

(4

)

   

   

Class C

   

(3

)

   

   

Class R6

   

(4

)

   

   

Total Dividends and Distributions to Shareholders

   

(393

)

   

   

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

     

4,850

   

Distributions Reinvested

   

382

     

   

Class A:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

4

     

   

Class C:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

3

     

   

Class R6:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

4

     

   

Net Increase in Net Assets Resulting from Capital Share Transactions

   

393

     

5,000

   

Total Increase in Net Assets

   

1,171

     

5,445

   

Net Assets:

 

Beginning of Period

   

5,445

     

   

End of Period

 

$

6,616

   

$

5,445

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets ex China Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Period from
September 30,2022^ to
December 31,2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

     

485

   

Shares Issued on Distributions Reinvested

   

32

     

   

Net Increase in Class I Shares Outstanding

   

32

     

485

   

Class A:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@

   

   

Net Increase in Class A Shares Outstanding

   

@

   

5

   

Class C:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@

   

   

Net Increase in Class C Shares Outstanding

   

@

   

5

   

Class R6:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@

   

   

Net Increase in Class R6 Shares Outstanding

   

@

   

5

   

^  Commencement of Operations.

@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets ex China Portfolio

   

Class I

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
September 30, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

10.89

   

$

10.00

   

Income from Investment Operations:

 

Net Investment Income(2)

   

0.20

     

0.01

   

Net Realized and Unrealized Gain

   

2.13

     

0.88

   

Total from Investment Operations

   

2.33

     

0.89

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

   

Net Realized Gain

   

(0.58

)

   

   

Total Distributions

   

(0.79

)

   

   

Net Asset Value, End of Period

 

$

12.43

   

$

10.89

   

Total Return(3)

   

21.57

%(4)

   

8.90

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

6,419

   

$

5,283

   

Ratio of Expenses Before Expense Limitation

   

7.05

%

   

8.64

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.96

%(7)(8)

   

0.98

%(6)(8)

 

Ratio of Net Investment Income

   

1.70

%(7)(8)

   

0.25

%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.01

%(6)

 

Portfolio Turnover Rate

   

40

%

   

21

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period tranfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.99

%

   

1.67

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets ex China Portfolio

   

Class A

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
September 30, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

10.88

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.16

     

(0.00

)(3)

 

Net Realized and Unrealized Gain

   

2.11

     

0.88

   

Total from Investment Operations

   

2.27

     

0.88

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.16

)

   

   

Net Realized Gain

   

(0.58

)

   

   

Total Distributions

   

(0.74

)

   

   

Net Asset Value, End of Period

 

$

12.41

   

$

10.88

   

Total Return(4)

   

21.10

%(5)

   

8.80

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

66

   

$

54

   

Ratio of Expenses Before Expense Limitation

   

10.80

%

   

13.28

%(7)

 

Ratio of Expenses After Expense Limitation

   

1.32

%(8)(9)

   

1.34

%(7)(8)

 

Ratio of Net Investment Income (Loss)

   

1.34

%(8)(9)

   

(0.11

)%(7)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.01

%(7)

 

Portfolio Turnover Rate

   

40

%

   

21

%(6)

 

(1)  Commencement of Operations.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  Not annualized.

(7)  Annualized.

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.35

%

   

1.31

%

 

(10)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets ex China Portfolio

   

Class C

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
September 30, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

10.86

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.07

     

(0.02

)

 

Net Realized and Unrealized Gain

   

2.11

     

0.88

   

Total from Investment Operations

   

2.18

     

0.86

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.08

)

   

   

Net Realized Gain

   

(0.58

)

   

   

Total Distributions

   

(0.66

)

   

   

Net Asset Value, End of Period

 

$

12.38

   

$

10.86

   

Total Return(3)

   

20.22

%(4)

   

8.60

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

65

   

$

54

   

Ratio of Expenses Before Expense Limitation

   

11.57

%

   

14.04

%(6)

 

Ratio of Expenses After Expense Limitation

   

2.07

%(7)(8)

   

2.09

%(6)(7)

 

Ratio of Net Investment Income (Loss)

   

0.58

%(7)(8)

   

(0.85

)%(6)(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.01

%(6)

 

Portfolio Turnover Rate

   

40

%

   

21

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  Not annualized.

(6)  Annualized.

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.10

%

   

0.55

%

 

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets ex China Portfolio

   

Class R6

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
September 30, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

10.89

   

$

10.00

   

Income from Investment Operations:

 

Net Investment Income(2)

   

0.20

     

0.01

   

Net Realized and Unrealized Gain

   

2.13

     

0.88

   

Total from Investment Operations

   

2.33

     

0.89

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

   

Net Realized Gain

   

(0.58

)

   

   

Total Distributions

   

(0.79

)

   

   

Net Asset Value, End of Period

 

$

12.43

   

$

10.89

   

Total Return(3)

   

21.61

%(4)

   

8.90

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

66

   

$

54

   

Ratio of Expenses Before Expense Limitation

   

10.54

%

   

13.03

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.92

%(7)(8)

   

0.94

%(6)(8)

 

Ratio of Net Investment Income

   

1.74

%(7)(8)

   

0.29

%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.01

%(6)

 

Portfolio Turnover Rate

   

40

%

   

21

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

1.71

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Emerging Markets ex China Portfolio (name changed on June 21, 2023, formerly Sustainable Emerging Markets Portfolio). The Fund seeks to provide long-term capital appreciation.

The Fund commenced operations on September 30, 2022 and has issued four classes of shares — Class I, Class A, Class C and Class R6.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available

are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) futures are valued at the


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Air Freight & Logistics

 

$

   

$

36

   

$

   

$

36

   

Automobiles

   

     

307

     

     

307

   

Banks

   

163

     

1,289

     

     

1,452

   

Beverages

   

     

34

     

     

34

   

Broadline Retail

   

     

59

     

     

59

   

Capital Markets

   

     

140

     

     

140

   

Chemicals

   

     

61

     

     

61

   
Commercial Services &
Supplies
   

     

33

     

     

33

   

Construction & Engineering

   

     

81

     

     

81

   

Consumer Finance

   

     

90

     

     

90

   
Consumer Staples
Distribution & Retail
   

119

     

182

     

     

301

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Containers & Packaging

 

$

   

$

85

   

$

   

$

85

   

Electrical Equipment

   

     

89

     

     

89

   
Electronic Equipment,
Instruments &
Components
   

     

77

     

     

77

   

Financial Services

   

     

89

     

     

89

   

Food Products

   

99

     

109

     

     

208

   

Ground Transportation

   

     

109

     

     

109

   
Health Care Providers &
Services
   

     

148

     

     

148

   
Hotels, Restaurants &
Leisure
   

45

     

     

     

45

   
Information Technology
Services
   

58

     

91

     

     

149

   

Insurance

   

90

     

175

     

     

265

   

Machinery

   

     

33

     

     

33

   

Metals & Mining

   

     

479

     

     

479

   
Oil, Gas & Consumable
Fuels
   

     

297

     

     

297

   

Paper & Forest Products

   

     

39

     

     

39

   
Real Estate Management &
Development
   

     

83

     

     

83

   
Semiconductors &
Semiconductor
Equipment
   

242

     

638

     

     

880

   
Tech Hardware, Storage &
Peripherals
   

     

454

     

     

454

   
Textiles, Apparel & Luxury
Goods
   

     

156

     

     

156

   
Transportation
Infrastructure
   

     

48

     

     

48

   

Total Common Stocks

   

816

     

5,511

     

     

6,327

   

Rights

   

@

   

     

     

@

 

Short-Term Investment

 

Investment Company

   

214

     

     

     

214

   

Futures Contract

   

2

     

     

     

2

   

Total Assets

 

$

1,032

   

$

5,511

   

$

   

$

6,543

   

@ Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

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

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

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

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

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

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

Primary Risk Exposure

  Asset Derivatives
Statement of Assets and
Liabilities Location
  Fair
Value
 

Equity Risk

  Variation Margin on
Futures Contracts
 

$

2

   

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Equity Risk

 

Futures Contracts

 

$

22

   

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Equity Risk

 

Futures Contracts

 

$

2

   

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Futures Contracts:

 

Average monthly notional value

 

$

56,000

   

5.  Redemption Fees The Fund will assess a 2% redemption fee on Class I shares, Class A shares, Class C shares and Class R6 shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is

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

9.  Offering Cost: Offering costs are accounted for as a deferred charge until operations begin and thereafter are amortized to expense over twelve months on a straight-line basis.

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

First $1
billion
  Over $1
billion
 
  0.75

%

   

0.70

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.99% for Class I shares, 1.35% for Class A shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $44,000 of advisory fees were waived and approximately $320,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support

services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $2,314,000 and $2,443,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

81

   

$

1,426

   

$

1,293

   

$

6

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

214

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the

benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:

 

2022
Distributions
Paid From:

 

Ordinary
Income
(000)

 

Long-Term
Capital Gain
(000)

 

Ordinary
Income
(000)

 

Long-Term
Capital Gain
(000)

 

$

360

   

$

33

 

$

   

$

 

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

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

Permanent differences, due to a nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

1

   

$

(1

)

 

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

35

   

$

4

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund did not have record owners of 10% or greater.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate preexisting risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in

turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Emerging Markets ex China Portfolio
(formerly Sustainable Emerging Markets Portfolio) and the
Board of Directors of Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Emerging Markets ex China Portfolio (formerly Sustainable Emerging Markets Portfolio) (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for the year ended December 31, 2023 and the period from September 30, 2022 (commencement of operations) through December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended and the changes in its net assets and its financial highlights for the year ended December 31, 2023 and the period from September 30, 2022 (commencement of operations) through December 31, 2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated and paid approximately $33,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $108,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $34,000 and has derived net income from sources within foreign countries amounting to approximately $177,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


38


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISEMKTANN
6338418 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Emerging Markets
Leaders Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Important Notices

   

27

   

U.S. Customer Privacy Notice

   

28

   

Directors and Officers Information

   

31

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Emerging Markets Leaders Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Emerging Markets Leaders Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Emerging Markets Leaders Portfolio Class I

 

$

1,000.00

   

$

1,059.60

   

$

1,020.06

   

$

5.30

   

$

5.19

     

1.02

%

 

Emerging Markets Leaders Portfolio Class A

   

1,000.00

     

1,057.40

     

1,018.40

     

7.00

     

6.87

     

1.35

   

Emerging Markets Leaders Portfolio Class C

   

1,000.00

     

1,053.80

     

1,014.47

     

11.03

     

10.82

     

2.13

   

Emerging Markets Leaders Portfolio Class R6

   

1,000.00

     

1,060.10

     

1,020.16

     

5.19

     

5.09

     

1.00

   

Emerging Markets Leaders Portfolio Class IR

   

1,000.00

     

1,060.20

     

1,020.32

     

5.04

     

4.94

     

0.97

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Emerging Markets Leaders Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 12.17%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, MSCI Emerging Markets Net Index (the "Index"), which returned 9.83%.

Factors Affecting Performance

•  2023 ended on a positive note driven by market momentum from November carried into December, with "the Index" recording positive gains for full-year 2023, even as China recorded a third year of decline (–11.2% for 2023).(i)​ The late surge in the market, however, could not prevent the relative underperformance against the developed markets as China continued to face economic and regulatory uncertainties. Quality stocks, in general, underperformed in markets like India during the year. However, the Fund has done well primarily through our stock selection, where holdings have benefited from earnings upgrades and/or investors' increased belief in the durability of their growth.

•  The Fund's stock selection in and overweight allocations to India and Brazil contributed to the relative outperformance, primarily driven by strong earnings performance or the market's recognition of the strong earnings profiles of the businesses we invested in. The Fund's overweight allocation to Argentina also contributed to relative returns. The Fund's underweight selection to China contributed to relative performance but was significantly offset by our stock selection there, which detracted as significant investor outflows from China continued to work against our investment style of holding high quality businesses showcasing durable earnings growth. Our stock selection and underweight to Taiwan also detracted from relative performance.

•  At the stock level, the largest contributors to the Fund's relative performance in 2023 were a Latin American e-commerce company and a Latin American technology-savvy online bank. Both successively beat earnings expectations over every

quarter in calendar year 2023, delivering 55% and 187% upgrades, respectively, for the year according to FactSet data. The Fund's overweight to an Indian wires and cables manufacturer performed well in 2023, on anticipation of earnings upgrades from ongoing demand. The Fund's holding in an Indian apparel retailer also contributed to returns as the company sustained a good performance streak with the runaway success of its relatively younger apparel format, which drove strong same-store sales growth, store expansion and margin improvement.

•  The largest detractors from relative performance were the Fund's overweight holdings in Chinese consumer companies, which declined on a weaker-than-expected consumption recovery. The Fund held a Chinese athleisure company that experienced a cyclical patch in its business execution, and the stock turned out to be the largest detractor in the portfolio for the year. The Fund's overweight to a Chinese premium auto dealership operator also hindered relative returns as the stock fell –68.88% over the year. The Fund's underweight to Taiwanese and Korean semiconductor companies detracted from relative performance as the stocks rallied on artificial intelligence hype.

Management Strategies

•  The Fund has remained an all-cap growth strategy investing in structural growth opportunities in emerging market equities. We believe that growth-oriented companies offer the most attractive return prospects in the emerging markets and that these opportunities can be found across the market cap spectrum; however, we look to minimize market and liquidity risks by generally investing in companies with market capitalizations larger than $1 billion to try to ensure better liquidity.

•  We have remained focused on bottom-up stock picking, and that has kept us in good stead in the period since the Fund's inception to December 31, 2023 — including in 2023, except for our performance in China. Our belief is that, over time, a stock's earnings growth should be reflected in its share price returns. However, this wasn't the case in China in 2023. Previously we had noted the likelihood of a more extended recovery period in

 

(i)​  Regional and country returns are represented by their respective MSCI regional/country indexes, which are broad measures of the region/country's stock market performance. Data as of December 31, 2023.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets Leaders Portfolio

China; however, we have been negatively surprised by investors' lack of reaction to earnings growth, as there has been a consistent flight away from China. We have been trimming our exposure to China.

•  Also in 2023, quality companies saw a meaningful relative derating across markets, especially in markets like India. As of the end of the reporting period, we believe the gap in multiples has narrowed significantly and the durability of earnings/cash flows is currently underappreciated, as markets have focused on short-term/cyclical stocks. We see many opportunities in quality stocks emerging now and remain hopeful about another strong year in 2024. Financials in India; rate cuts in Brazil; restocking cycles in apparel, chemicals and industrials companies post a major destocking in 2023; and the overall restoration of the valuations gap between quality compounders and cyclicals could be some of the meaningful drivers of performance in 2024, in our view.

•  Given the Fund's high-conviction strategy, periods of underperformance, whether over months or quarters, are an inherent part of the Fund's return profile. In the last three years, there have been a number of quarters where the portfolio has shown significant divergence from Index returns on the downside as well as the upside, and that will remain the likely scenario in the future as well. We firmly believe that the Fund's performance over the longer term can converge with the earnings growth of the portfolio.

•  We remain focused on our goal of seeking strong performance over a full market cycle. The Fund's investment team members plans to spend early part of 2024 on the road, making stops in India, Taiwan and Central America, among other countries, to gather on-the-ground feedback from companies and make onsite visits, in our committed pursuit of new ideas and continuous revaluation of existing portfolio ideas.

*  Minimum Investment for Class I shares

**  Performance shown for the Fund's Class I shares reflects the performance of the Morgan Stanley Emerging Markets Leaders Fund (Cayman) LP, a private fund managed by the Adviser for periods prior to close of business on January 5, 2015, when the Fund acquired substantially all of the assets and liabilities of the Private Fund in exchange for shares of the Fund (the "Emerging Markets Leaders Reorganization").

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets Leaders Portfolio

Performance Compared to the MSCI Emerging Markets Net Index(1)​ and the Lipper Emerging Markets Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(7)
 
Fund — Class I Shares
w/o sales charges(4)
   

12.17

%

   

8.92

%

   

4.53

%

   

4.58

%

 
Fund — Class A Shares
w/o sales charges(4)
   

11.84

     

8.56

     

4.19

     

4.31

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

5.98

     

7.39

     

3.64

     

3.86

   
Fund — Class C Shares
w/o sales charges(5)
   

11.01

     

7.74

     

     

4.01

   
Fund — Class C Shares
with maximum 1.00% deferred
sales charges(5)
   

10.01

     

7.74

     

     

4.01

   
Fund — Class R6 Shares
w/o sales charges(4)
   

12.28

     

9.01

     

4.59

     

4.63

   
Fund — Class IR Shares
w/o sales charges(6)
   

12.29

     

     

     

–9.39

   

MSCI Emerging Markets Net Index

   

9.83

     

3.68

     

2.66

     

1.54

   
Lipper Emerging Markets Funds
Index
   

13.10

     

4.77

     

3.06

     

2.14

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI Emerging Markets Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI Emerging Markets Net Index currently consists of 24 emerging market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Emerging Markets Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Markets Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Emerging Markets Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Pursuant to an agreement and plan of reorganization, between Morgan Stanley Institutional Fund, Inc., on behalf of the Fund, and Morgan Stanley Emerging Markets Leaders Fund (Cayman) LP, a private fund managed by the Adviser (the "Private Fund"), following close of business on January 5, 2015, the Fund acquired substantially all of the assets and liabilities of the Private Fund in exchange for shares of the Fund (the "Emerging Markets Leaders Reorganization"). The Private Fund commenced operations on June 30, 2011. The Fund adopted the performance history of the Private Fund. Performance shown for the Fund's Class I, Class A and Class R6 shares reflects the performance of the limited partnership interests of the Private Fund, adjusted to reflect any applicable sales charge of the Class, but not adjusted for any other differences in expenses. If adjusted for other expenses, the historical returns would be different.

(5)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(6)​  Commenced offering on April 12, 2021.

(7)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Emerging Markets Leaders Portfolio

   

Shares

  Value
(000)
 

Common Stocks (100.4%)

 

Argentina (5.2%)

 

Globant SA (a)

   

59,342

   

$

14,122

   

Brazil (13.4%)

 

Localiza Rent a Car SA

   

917,924

     

12,018

   

NU Holdings Ltd., Class A (a)

   

2,200,810

     

18,333

   

Raia Drogasil SA

   

943,230

     

5,710

   

WEG SA

   

19,490

     

148

   
     

36,209

   

China (15.8%)

 

BYD Co. Ltd., H Shares (b)

   

367,500

     

10,137

   

China Meidong Auto Holdings Ltd. (b)

   

4,106,000

     

2,501

   

Li Ning Co. Ltd. (b)

   

2,649,500

     

7,110

   

Shenzhou International Group Holdings Ltd. (b)

   

1,742,500

     

17,876

   

Sunresin New Materials Co. Ltd., Class A

   

687,895

     

5,146

   
     

42,770

   

India (42.8%)

 

Aarti Industries Ltd.

   

1,338,854

     

10,444

   

Aarti Pharmalabs Ltd. (a)

   

288,541

     

1,749

   

Astral Ltd.

   

246,865

     

5,656

   

AU Small Finance Bank Ltd.

   

1,451,410

     

13,722

   

Avenue Supermarts Ltd. (a)

   

228,478

     

11,206

   

Bajaj Finance Ltd.

   

157,209

     

13,833

   

Cholamandalam Investment & Finance Co. Ltd.

   

8,853

     

134

   

GMR Airports Infrastructure Ltd. (a)

   

5,290,902

     

5,117

   

ICICI Bank Ltd.

   

965,247

     

11,534

   

KEI Industries Ltd.

   

292,094

     

11,400

   

Laurus Labs Ltd.

   

28,839

     

149

   

Timken India Ltd.

   

78,788

     

3,078

   

Titan Co. Ltd.

   

168,443

     

7,435

   

Trent Ltd.

   

300,511

     

11,026

   

TVS Motor Co. Ltd.

   

389,461

     

9,477

   
     

115,960

   

Korea, Republic of (3.4%)

 

SK Hynix, Inc.

   

84,783

     

9,253

   

Mexico (1.0%)

 

Grupo Aeroportuario del Sureste SAB de CV ADR

   

4,736

     

1,394

   
Grupo Aeroportuario del Sureste SAB de CV,
Class B
   

47,874

     

1,402

   
     

2,796

   

Singapore (0.6%)

 

TDCX, Inc. ADR (a)

   

312,087

     

1,514

   

Taiwan (10.2%)

 

Delta Electronics, Inc.

   

194,000

     

1,978

   

Taiwan Semiconductor Manufacturing Co. Ltd.

   

650,000

     

12,462

   

Unimicron Technology Corp.

   

781,000

     

4,462

   

Voltronic Power Technology Corp.

   

157,334

     

8,750

   
     

27,652

   
   

Shares

  Value
(000)
 

United States (8.0%)

 

EPAM Systems, Inc. (a)

   

522

   

$

155

   

MercadoLibre, Inc. (a)

   

13,588

     

21,354

   
     

21,509

   

Total Common Stocks (Cost $220,034)

   

271,785

   
    No. of
Rights
     

Rights (0.0%)‡

 

Brazil (0.0%)‡

 
Localiza Rent a Car SA,
expires 02/05/24 (a) (Cost $—)
   

3,293

     

14

   
   

Shares

     

Short-Term Investment (1.5%)

 

Investment Company (1.5%)

 
Morgan Stanley Institutional Liquidity
Funds — Government Portfolio —
Institutional Class (See Note G)
(Cost $3,947)
   

3,946,558

     

3,947

   

Total Investments (101.9%) (Cost $223,981) (c)(d)

   

275,746

   

Liabilities in Excess of Other Assets (–1.9%)

   

(5,035

)

 

Net Assets (100.0%)

 

$

270,711

   

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

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  The approximate fair value and percentage of net assets, $213,511,000 and 78.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $232,438,000. The aggregate gross unrealized appreciation is approximately $68,959,000 and the aggregate gross unrealized depreciation is approximately $30,085,000, resulting in net unrealized appreciation of approximately $38,874,000.

ADR  American Depositary Receipt.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Emerging Markets Leaders Portfolio

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

20.4

%

 

Banks

   

15.8

   

Textiles, Apparel & Luxury Goods

   

11.8

   

Semiconductors & Semiconductor Equipment

   

7.9

   

Broadline Retail

   

7.7

   

Electrical Equipment

   

7.3

   

Automobiles

   

7.1

   

Consumer Staples Distribution & Retail

   

6.2

   

Chemicals

   

5.6

   

Information Technology Services

   

5.2

   

Consumer Finance

   

5.0

   

Total Investments

   

100.0

%

 

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

 

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $220,034)

 

$

271,799

   

Investment in Security of Affiliated Issuer, at Value (Cost $3,947)

   

3,947

   

Total Investments in Securities, at Value (Cost $223,981)

   

275,746

   

Foreign Currency, at Value (Cost $61)

   

62

   

Receivable for Fund Shares Sold

   

266

   

Dividends Receivable

   

201

   

Receivable from Affiliate

   

13

   

Tax Reclaim Receivable

   

7

   

Other Assets

   

54

   

Total Assets

   

276,349

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

4,444

   

Payable for Fund Shares Redeemed

   

632

   

Payable for Advisory Fees

   

378

   

Payable for Sub Transfer Agency Fees — Class I

   

67

   

Payable for Sub Transfer Agency Fees — Class A

   

2

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Custodian Fees

   

45

   

Payable for Professional Fees

   

20

   

Payable for Administration Fees

   

18

   

Payable for Shareholder Services Fees — Class A

   

2

   

Payable for Distribution and Shareholder Services Fees — Class C

   

3

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

1

   

Payable for Transfer Agency Fees — Class IR

   

@

 

Other Liabilities

   

25

   

Total Liabilities

   

5,638

   

Net Assets

 

$

270,711

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

348,263

   

Total Accumulated Loss

   

(77,552

)

 

Net Assets

 

$

270,711

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

255,999

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

17,350,674

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.75

   

CLASS A:

 

Net Assets

 

$

10,912

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

759,713

   

Net Asset Value, Redemption Price Per Share

 

$

14.36

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.80

   

Maximum Offering Price Per Share

 

$

15.16

   

CLASS C:

 

Net Assets

 

$

3,421

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

253,222

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

13.51

   

CLASS R6:

 

Net Assets

 

$

371

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

25,045

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.81

   

CLASS IR:

 

Net Assets

 

$

8

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

517

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.80

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Leaders Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $289 of Foreign Taxes Withheld)

 

$

2,436

   

Dividends from Security of Affiliated Issuer (Note G)

   

429

   

Total Investment Income

   

2,865

   

Expenses:

 

Advisory Fees (Note B)

   

2,259

   

Sub Transfer Agency Fees — Class I

   

309

   

Sub Transfer Agency Fees — Class A

   

12

   

Sub Transfer Agency Fees — Class C

   

3

   

Administration Fees (Note C)

   

241

   

Professional Fees

   

200

   

Custodian Fees (Note F)

   

177

   

Registration Fees

   

105

   

Shareholder Services Fees — Class A (Note D)

   

30

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

41

   

Shareholder Reporting Fees

   

40

   

Transfer Agency Fees — Class I (Note E)

   

8

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

6

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Directors' Fees and Expenses

   

10

   

Pricing Fees

   

2

   

Other Expenses

   

35

   

Total Expenses

   

3,487

   

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(179

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(7

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Waiver of Advisory Fees (Note B)

   

(57

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(42

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(15

)

 

Net Expenses

   

3,185

   

Net Investment Loss

   

(320

)

 

Realized Loss:

 

Investments Sold (Net of $1,108 of Capital Gain Country Tax)

   

(30,482

)

 

Foreign Currency Translation

   

(444

)

 

Net Realized Loss

   

(30,926

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $3,108)

   

62,133

   

Foreign Currency Translation

   

1

   

Net Change in Unrealized Appreciation (Depreciation)

   

62,134

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

31,208

   

Net Increase in Net Assets Resulting from Operations

 

$

30,888

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Leaders Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31,2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(320

)

 

$

(1,810

)

 

Net Realized Loss

   

(30,926

)

   

(76,825

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

62,134

     

(68,571

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

30,888

     

(147,206

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

102,975

     

282,397

   

Redeemed

   

(135,373

)

   

(234,633

)

 

Class A:

 

Subscribed

   

2,068

     

6,849

   

Redeemed

   

(5,617

)

   

(10,722

)

 

Class C:

 

Subscribed

   

365

     

976

   

Redeemed

   

(1,483

)

   

(2,298

)

 

Class R6:*

 

Subscribed

   

379

     

65

   

Redeemed

   

(10,090

)

   

(22,927

)

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(46,776

)

   

19,707

   

Redemption Fees

   

@

   

9

   

Total Decrease in Net Assets

   

(15,888

)

   

(127,490

)

 

Net Assets:

 

Beginning of Period

   

286,599

     

414,089

   

End of Period

 

$

270,711

   

$

286,599

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

7,547

     

18,586

   

Shares Redeemed

   

(9,964

)

   

(15,973

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

(2,417

)

   

2,613

   

Class A:

 

Shares Subscribed

   

157

     

459

   

Shares Redeemed

   

(418

)

   

(730

)

 

Net Decrease in Class A Shares Outstanding

   

(261

)

   

(271

)

 

Class C:

 

Shares Subscribed

   

29

     

69

   

Shares Redeemed

   

(119

)

   

(170

)

 

Net Decrease in Class C Shares Outstanding

   

(90

)

   

(101

)

 

Class R6:*

 

Shares Subscribed

   

27

     

5

   

Shares Redeemed

   

(711

)

   

(1,400

)

 

Net Decrease in Class R6 Shares Outstanding

   

(684

)

   

(1,395

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Leaders Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.15

   

$

19.77

   

$

19.43

   

$

12.70

   

$

10.38

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.01

)

   

(0.08

)

   

(0.19

)

   

(0.11

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

1.61

     

(6.54

)

   

0.55

     

7.62

     

2.78

   

Total from Investment Operations

   

1.60

     

(6.62

)

   

0.36

     

7.51

     

2.76

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.02

)

   

(0.78

)

   

(0.44

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.75

   

$

13.15

   

$

19.77

   

$

19.43

   

$

12.70

   

Total Return(3)

   

12.17

%(4)

   

(33.49

)%

   

1.84

%

   

59.36

%

   

26.63

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

255,999

   

$

259,940

   

$

339,152

   

$

80,465

   

$

32,651

   

Ratio of Expenses Before Expense Limitation

   

1.13

%

   

1.27

%

   

1.23

%

   

1.47

%

   

1.57

%

 

Ratio of Expenses After Expense Limitation

   

1.03

%(5)(6)

   

1.15

%(6)(7)

   

1.18

%(6)

   

1.15

%(6)

   

1.17

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.18

%(6)

   

N/A

     

1.16

%(6)

 

Ratio of Net Investment Loss

   

(0.08

)%(5)(6)

   

(0.50

)%(6)

   

(0.92

)%(6)

   

(0.73

)%(6)

   

(0.14

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

54

%

   

62

%

   

27

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.05

%

   

(0.10

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective October 1, 2022, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.05% for Class I shares. Prior to October 1, 2022, the maximum ratio was 1.20% for Class I shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Leaders Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

12.84

   

$

19.37

   

$

19.09

   

$

12.53

   

$

10.29

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.05

)

   

(0.12

)

   

(0.24

)

   

(0.17

)

   

(0.05

)

 

Net Realized and Unrealized Gain (Loss)

   

1.57

     

(6.41

)

   

0.54

     

7.51

     

2.73

   

Total from Investment Operations

   

1.52

     

(6.53

)

   

0.30

     

7.34

     

2.68

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.02

)

   

(0.78

)

   

(0.44

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.36

   

$

12.84

   

$

19.37

   

$

19.09

   

$

12.53

   

Total Return(3)

   

11.84

%(4)

   

(33.71

)%

   

1.56

%

   

58.81

%

   

26.08

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

10,912

   

$

13,113

   

$

25,015

   

$

7,925

   

$

1,191

   

Ratio of Expenses Before Expense Limitation

   

1.40

%

   

1.55

%

   

1.52

%

   

1.82

%

   

2.04

%

 

Ratio of Expenses After Expense Limitation

   

1.36

%(5)(6)

   

1.45

%(6)(7)

   

1.47

%(6)

   

1.50

%(6)

   

1.55

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.47

%(6)

   

N/A

     

1.54

%(6)

 

Ratio of Net Investment Loss

   

(0.41

)%(5)(6)

   

(0.83

)%(6)

   

(1.21

)%(6)

   

(1.13

)%(6)

   

(0.45

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

54

%

   

62

%

   

27

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.38

%

   

(0.43

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective October 1, 2022, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.40% for Class A shares. Prior to October 1, 2022, the maximum ratio was 1.55% for Class A shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Leaders Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

12.17

   

$

18.49

   

$

18.37

   

$

12.17

   

$

10.08

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.15

)

   

(0.22

)

   

(0.38

)

   

(0.27

)

   

(0.13

)

 

Net Realized and Unrealized Gain (Loss)

   

1.49

     

(6.10

)

   

0.52

     

7.25

     

2.66

   

Total from Investment Operations

   

1.34

     

(6.32

)

   

0.14

     

6.98

     

2.53

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.02

)

   

(0.78

)

   

(0.44

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

13.51

   

$

12.17

   

$

18.49

   

$

18.37

   

$

12.17

   

Total Return(3)

   

11.01

%(4)

   

(34.18

)%

   

0.75

%

   

57.59

%

   

25.14

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,421

   

$

4,179

   

$

8,220

   

$

3,395

   

$

1,007

   

Ratio of Expenses Before Expense Limitation

   

2.16

%

   

2.28

%

   

2.29

%

   

2.63

%

   

2.82

%

 

Ratio of Expenses After Expense Limitation

   

2.12

%(5)(6)

   

2.17

%(6)(7)

   

2.24

%(6)

   

2.29

%(6)

   

2.30

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

2.24

%(6)

   

N/A

     

2.29

%(6)

 

Ratio of Net Investment Loss

   

(1.17

)%(5)(6)

   

(1.56

)%(6)

   

(1.98

)%(6)

   

(1.88

)%(6)

   

(1.18

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

54

%

   

62

%

   

27

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.14

%

   

(1.19

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective October 1, 2022, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.15% for Class C shares. Prior to October 1, 2022, the maximum ratio was 2.30% for Class C shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Leaders Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.19

   

$

19.81

   

$

19.45

   

$

12.71

   

$

10.38

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

(0.01

)

   

(0.09

)

   

(0.17

)

   

(0.09

)

   

0.00

(3)

 

Net Realized and Unrealized Gain (Loss)

   

1.63

     

(6.53

)

   

0.55

     

7.61

     

2.77

   

Total from Investment Operations

   

1.62

     

(6.62

)

   

0.38

     

7.52

     

2.77

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.02

)

   

(0.78

)

   

(0.44

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

14.81

   

$

13.19

   

$

19.81

   

$

19.45

   

$

12.71

   

Total Return(4)

   

12.28

%(5)

   

(33.42

)%

   

1.94

%

   

59.39

%

   

26.73

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

371

   

$

9,360

   

$

41,692

   

$

27,230

   

$

19,838

   

Ratio of Expenses Before Expense Limitation

   

1.08

%

   

1.20

%

   

1.16

%

   

1.42

%

   

1.53

%

 

Ratio of Expenses After Expense Limitation

   

0.99

%(6)(7)

   

1.08

%(7)(8)

   

1.10

%(7)

   

1.09

%(7)

   

1.10

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.10

%(7)

   

N/A

     

1.09

%(7)

 

Ratio of Net Investment Income (Loss)

   

(0.03

)%(6)(7)

   

(0.59

)%(7)

   

(0.84

)%(7)

   

(0.65

)%(7)

   

0.00

%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.01

%

   

0.00

%(9)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

54

%

   

62

%

   

27

%

   

57

%

   

58

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.00

%

   

(0.04

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Effective October 1, 2022, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.00% for Class R6 shares. Prior to October 1, 2022, the maximum ratio was 1.10% for Class R6 shares.

(9)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Leaders Portfolio

   

Class IR

 
   

Year Ended December 31,

  Period from
April 12, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

13.18

   

$

19.81

   

$

19.37

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.01

)

   

(0.07

)

   

(0.12

)

 

Net Realized and Unrealized Gain (Loss)

   

1.63

     

(6.56

)

   

0.58

   

Total from Investment Operations

   

1.62

     

(6.63

)

   

0.46

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.02

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

14.80

   

$

13.18

   

$

19.81

   

Total Return(4)

   

12.29

%(5)

   

(33.47

)%

   

2.36

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8

   

$

7

   

$

10

   

Ratio of Expenses Before Expense Limitation

   

29.98

%

   

11.47

%

   

14.15

%(10)

 

Ratio of Expenses After Expense Limitation

   

0.98

%(7)(8)

   

1.08

%(8)(9)

   

1.10

%(8)(10)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.10

%(8)(10)

 

Ratio of Net Investment Loss

   

(0.04

)%(7)(8)

   

(0.44

)%(8)

   

(0.80

)%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.01

%

   

0.00

%(11)

 

Portfolio Turnover Rate

   

54

%

   

62

%

   

27

%

 

(1)  Commencement of Offering.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(6)  Not annualized.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.00

%

   

(0.06

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Effective October 1, 2022, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.00% for Class IR shares. Prior to October 1, 2022, the maximum ratio was 1.10% for Class IR shares.

(10)  Annualized.

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

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

The Fund has issued five classes of shares — Class I, Class A, Class C, Class R6 and Class IR. Effective April 29, 2022, Class IS shares were renamed Class R6 shares. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market;

(2) all other equity portfolio securities for which over-thecounter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub- Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

   

$

19,614

   

$

   

$

19,614

   

Banks

   

18,333

     

25,256

     

     

43,589

   

Broadline Retail

   

21,354

     

     

     

21,354

   

Building Products

   

     

5,656

     

     

5,656

   

Chemicals

   

     

15,590

     

     

15,590

   

Consumer Finance

   

     

13,967

     

     

13,967

   
Consumer Staples
Distribution & Retail
   

     

16,916

     

     

16,916

   

Electrical Equipment

   

     

20,298

     

     

20,298

   
Electronic Equipment,
Instruments &
Components
   

     

6,440

     

     

6,440

   

Ground Transportation

   

     

12,018

     

     

12,018

   
Information Technology
Services
   

14,277

     

     

     

14,277

   

Machinery

   

     

3,078

     

     

3,078

   

Pharmaceuticals

   

     

1,898

     

     

1,898

   

Professional Services

   

1,514

     

     

     

1,514

   
Semiconductors &
Semiconductor
Equipment
   

     

21,715

     

     

21,715

   

Specialty Retail

   

     

13,527

     

     

13,527

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Textiles, Apparel &
Luxury Goods
 

$

   

$

32,421

   

$

   

$

32,421

   
Transportation
Infrastructure
   

2,796

     

5,117

     

     

7,913

   

Total Common Stocks

   

58,274

     

213,511

     

     

271,785

   

Rights

   

14

     

     

     

14

   

Short-Term Investment

 

Investment Company

   

3,947

     

     

     

3,947

   

Total Assets

 

$

62,235

   

$

213,511

   

$

   

$

275,746

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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

4.  Redemption Fees: The Fund will assess a 2% redemption fee on Class I shares, Class A shares, Class C shares, Class R6 shares and Class IR shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

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

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

First $1
billion
  Over $1
billion
 
  0.75

%

   

0.70

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.73% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 2.15% for Class C shares, 1.00% for Class R6 shares and 1.00% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $57,000 of advisory fees were waived and approximately $188,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $157,404,000 and $159,111,000, respectively. There were no purchases and sales

of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $15,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

13,348

   

$

139,422

   

$

148,823

   

$

429

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

3,947

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during fiscal years 2023 and 2022.

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

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

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

1,501

   

$

(1,501

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $66,639,000 and $49,379,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

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

291

   

$

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 63.9%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Emerging Markets Leaders Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Emerging Markets Leaders Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


36


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMLANN
6337099 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Emerging Markets Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

8

   

Statement of Assets and Liabilities

   

10

   

Statement of Operations

   

12

   

Statements of Changes in Net Assets

   

13

   

Financial Highlights

   

15

   

Notes to Financial Statements

   

21

   

Report of Independent Registered Public Accounting Firm

   

30

   

Liquidity Risk Management Program

   

31

   

Federal Tax Notice

   

32

   

Important Notices

   

33

   

U.S. Customer Privacy Notice

   

34

   

Directors and Officers Information

   

37

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Emerging Markets Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Emerging Markets Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Emerging Markets Portfolio Class I

 

$

1,000.00

   

$

1,052.90

   

$

1,020.57

   

$

4.76

   

$

4.69

     

0.92

%

 

Emerging Markets Portfolio Class A

   

1,000.00

     

1,050.30

     

1,018.75

     

6.61

     

6.51

     

1.28

   

Emerging Markets Portfolio Class L

   

1,000.00

     

1,048.00

     

1,016.23

     

9.19

     

9.05

     

1.78

   

Emerging Markets Portfolio Class C

   

1,000.00

     

1,046.90

     

1,014.87

     

10.58

     

10.41

     

2.05

   

Emerging Markets Portfolio Class R6

   

1,000.00

     

1,052.50

     

1,020.77

     

4.55

     

4.48

     

0.88

   

Emerging Markets Portfolio Class IR

   

1,000.00

     

1,052.50

     

1,020.77

     

4.55

     

4.48

     

0.88

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Emerging Markets Portfolio

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

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 12.16%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI Emerging Markets Index (the "Index"), which returned 9.83%.

Factors Affecting Performance

•  Stock selection in and overweight allocation to India was the top contributor to the Fund's relative returns, led by allocations to a two-wheeler automotive manufacturer, a real estate developer and a private hospital operator. India outperformed the broader index by over 11% (returning almost 21% in 2023 versus 10% for the index).(i)​ As of the close of the reporting period, India was the largest country overweight in the portfolio, given its secular, endogenous-driven growth supported by a low base, supply-side investments and digitization.

•  Aggregate country allocation contributed to relative returns, led by the Fund's underweight allocation to China. The underweight allocations to an online shopping and retail platform and select e-commerce platforms and the zero allocation to a biologics developer also contributed to relative performance. Within China, the Fund continued to be positioned in quality growth companies that appear to have favorable medium-term prospects in the current macro environment.

•  Mexico was one of the best performing emerging markets (EM) countries for the year (returning nearly 41%),(i)​ and the portfolio's relative performance benefited from an overweight allocation. The allocation to one of the leading vehicle insurance companies in Mexico was a top stock contributor to relative returns. As of the end of the reporting period, we continued to like Mexico based on its strong economic fundamentals, balanced growth model and strategic position in the global supply chain.

•  The overweight to and stock selection in Brazil contributed to relative performance, led by our allocations to an investment bank, a financial services provider and a drugstore chain. Energy finished the period as the second-best performing sector in EM, returning 27%, and the Fund's allocation to an oil and gas producer added to relative returns. As of the close of the period, we were positive on the outlook for energy given significant underinvestment and supply constraints, particularly for oil, while demand has continued to rise.

•  Relative performance benefited from stock selection in Korea and Indonesia. Within Indonesia, the allocation to select banks contributed to relative performance. Information technology (+32%) was the best performing sector in EM over the 12-month period, and the overweight allocations to a memory chipmaker and a memory chipmaker and a semiconductor manufacturer in Korea contributed strongly to relative performance.

•  Poland also contributed to relative performance, led by the Fund's overweight allocations to an apparel retailer. Poland (+48%)(i)​ was among the best performing markets in the Index during the year. The broad market rallied on the back of the election outcome, with the opposition party's win and expectations for improved economic policy, an end of institutional erosion and the release of European Union fund flows — all leading to a lower country risk premium. As of the close of the period, we continued to believe the apparel retailer is a quality growth company with a strong management team and attractive prospects for further expansion in the region.

•  The positioning in and overweight allocation to South Africa detracted from relative performance, driven by the allocations to a global mining company and a platinum producer. Aggregate positioning within the materials sector also detracted from relative performance. These positions suffered from broader equity market volatility in South Africa, which was negatively impacted by a short-term surge in electrical costs and commodity price weakness for the metals

  

(i)​  Regional and country returns are represented by their respective MSCI regional/country indexes, which are broad measures of the region/country's stock market performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets Portfolio

companies. We exited the Fund's position in the platinum producer in the third quarter of 2023.

•  Though the underweight to China contributed positively to relative performance for the year, stock selection over the period detracted, particularly the allocations to consumer-related names that were negatively affected by a weaker-than-expected domestic recovery. Allocations to a dairy products manufacturer/distributor, an athletic apparel brand, a duty-free retail operator, a beer producer, a cosmetics company and an apparel manufacturer hampered relative returns. The allocations to two commercial banks and a solar power inverter company and the zero allocation to an e-commerce platform also detracted from relative performance.

Management Strategies

•  2023 was a strong year for global equity markets including emerging markets, which returned almost 8% in the fourth quarter and nearly 10% for the full year, as measured by the Index. With the return of country dispersion in EM, select countries displayed solid performance even against a challenging backdrop that included Federal Reserve rate hikes, a strong dollar and relatively weak returns from China. Notably, outperformance within the EM asset class was led by Latin American and Central and Eastern European markets, with Mexico, Brazil, Poland, Hungary and Greece each returning more than 30%.(i)

•  We continue to believe that our integrated top-down and bottom-up analysis is important to identify the most attractive macro and stock investments across EM. As dispersion in EM returns has been high, both levers continue to be important drivers of the portfolio. In what we expect to be a mixed growth environment and realigning global economy, we believe our portfolio is well positioned and diversified(ii)​ with active positioning across countries, themes and stocks.

•  As of the end of the period, the Fund remained overweight India, given secular, endogenous-driven growth supported by a low base, supply-side investments, and digitization. Key drivers for our view on the equity market include India's ability to

withstand external shocks, continued growth outlook (led largely by increased investment), a large domestic market to drive consumption and a strong institutional framework. We have remained constructive on the secular growth story for India and have been confident that forward earnings justify the current multiples of our holdings. The Fund's exposure in India, as of the close of the period, included well-managed financials, industrials and consumer names, along with select IT, health care, energy and materials companies.

•  At the close of the period, the Fund was overweight Brazil, which remains a rate-sensitive market. Brazil's central bank was among the most aggressive in EM in raising rates to fight inflation in 2021 and 2022. The central bank continued with its rate-cutting policy, lowering the Selic target rate by an additional 50 basis points(iii)​ to 11.75% at its December 2023 meeting and indicated more rate cuts of a similar pace in 2024. Even with a slowing economy, interest-rate sensitive stocks should respond to monetary policy, and we expect them to continue rebounding into the second half of 2024. The country is well into disinflation and a rate-cutting cycle that we have been expecting and believe will likely continue through 2024. Additionally, cumulative reforms undertaken since 2016 have further boosted the potential growth of the economy. As of period-end, the Brazilian real looked attractive on our currency framework, with external balances in good shape and valuations at low levels relative to its own history. The Fund's exposure in Brazil remained focused on companies with quality management and solid earnings growth, including significant exposure to stocks that we believe can benefit from declining rates.

•  The Fund remained overweight Mexico at the end of the period. We think Mexico offers a combination of growth and strong macroeconomic fundamentals, which supports medium-term economic growth. The country should continue to benefit from rising investment led by foreign direct investment (FDI) and its attractive strategic positioning in the global supply chain, particularly given the competitiveness of its economy and its nexus with the U.S. The outlook for the consumer

(i)​  Regional and country returns are represented by their respective MSCI regional/country indexes, which are broad measures of the region/country's stock market performance.

(ii)​  Diversification neither assures a profit nor guarantees against loss in a declining market.

(iii)​  One basis point = 0.01%


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets Portfolio

remains promising, with rising employment, real wage growth and strong U.S. remittances. We believe the domestic companies owned in the Fund should continue to benefit from current yield, attractive valuations and earnings growth.

•  The Fund remained underweight China as of the close of the period. While the government enacted stimulus measures in 2023, weak investor sentiment persisted as China's economic recovery has remained sluggish and the risk of political interference in the economy remains elevated, as most recently seen by the online gaming regulations imposed at the end of 2023. Consumer confidence and sentiment remain low, but there have been signs of potential stabilization/bottoming of consumers' future expectations. Within the consumer segment, select sub-verticals, including alcoholic beverages, beauty and jewelry, have outperformed recently, though overall households are continuing to pivot their income from investing to savings, further weakening consumption. While overall economic growth is likely to remain muted in the medium term, at the end of the period there were some signs of green shoots and the "green" and digital parts of the economy are likely to become the economy's growth drivers. Within China, the Fund was invested in companies with competitive advantages, strong corporate governance and solid medium-term growth prospects, despite an overall muted economic outlook.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Emerging Markets Portfolio

Performance Compared to the MSCI Emerging Markets Index(1) and the Lipper Emerging Markets Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(10)
 
Fund — Class I Shares
w/o sales charges(4)
   

12.16

%

   

3.56

%

   

1.97

%

   

6.53

%

 
Fund — Class A Shares
w/o sales charges(5)
   

11.73

     

3.22

     

1.64

     

5.45

   
Fund — Class A Shares
with maximum 5.25%
sales charges(5)
   

5.87

     

2.11

     

1.09

     

5.25

   
Fund — Class L Shares
w/o sales charges(6)
   

11.19

     

2.67

     

1.09

     

1.32

   
Fund — Class C Shares
w/o sales charges(8)
   

10.93

     

2.43

     

     

0.77

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(8)
   

9.93

     

2.43

     

     

0.77

   
Fund — Class R6 Shares
w/o sales charges(7)
   

12.18

     

3.66

     

2.06

     

2.18

   
Fund — Class IR Shares
w/o sales charges(9)
   

12.18

     

3.65

     

     

0.97

   

MSCI Emerging Markets Index

   

9.83

     

3.68

     

2.66

     

6.50

   
Lipper Emerging Market
Funds Index
   

13.10

     

4.77

     

3.06

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI Emerging Markets Index currently consists of 24 emerging market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Returns, including periods prior to January 1, 2001, are calculated using the return data of the MSCI Emerging Markets Index (gross dividends) through December 31, 2000 and the return data of the MSCI Emerging Markets Net Index (net dividends) after December 31, 2000. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Emerging Market Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Market Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Emerging Market Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on September 25, 1992.

(5)​  Commenced offering on January 2, 1996.

(6)​  Commenced offering on April 27, 2012.

(7)​  Commenced offering on September 13, 2013.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  Commenced offering on June 15, 2018.

(10)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Emerging Markets Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.3%)

 

Brazil (8.1%)

 

Banco BTG Pactual SA (Units) (a)

   

905,283

   

$

7,002

   

Itau Unibanco Holding SA (Preference)

   

995,319

     

6,925

   

Localiza Rent a Car SA

   

648,311

     

8,488

   

Petroleo Brasileiro SA (Preference)

   

1,272,251

     

9,707

   

Raia Drogasil SA

   

1,039,395

     

6,292

   

WEG SA

   

486,254

     

3,694

   
     

42,108

   

China (18.3%)

 

Alibaba Group Holding Ltd. (b)

   

771,100

     

7,428

   

Baidu, Inc. ADR (c)

   

15,508

     

1,847

   

BYD Co. Ltd., H Shares (b)

   

257,000

     

7,089

   

China Construction Bank Corp., H Shares (b)

   

15,621,120

     

9,292

   

China Mengniu Dairy Co. Ltd. (b)(c)

   

1,458,000

     

3,928

   

China Merchants Bank Co. Ltd., H Shares (b)

   

1,139,000

     

3,962

   

China Resources Beer Holdings Co. Ltd. (b)

   

602,000

     

2,641

   

China Tourism Group Duty Free Corp. Ltd. (b)(d)

   

117,600

     

1,156

   

JD.com, Inc., Class A (b)

   

102,223

     

1,476

   
Jiangsu Hengrui Pharmaceuticals Co. Ltd.,
Class A
   

491,259

     

3,135

   

KE Holdings, Inc. ADR

   

79,198

     

1,284

   

Kweichow Moutai Co. Ltd., Class A

   

20,649

     

5,026

   

Li Ning Co. Ltd. (b)

   

535,500

     

1,437

   

Meituan, Class B (b)(c)

   

185,990

     

1,953

   

NARI Technology Co. Ltd., Class A

   

958,800

     

3,017

   
Ping An Insurance Group Co. of China Ltd.,
Class H (b)
   

455,000

     

2,060

   

Postal Savings Bank of China Co. Ltd. (b)

   

8,512,000

     

4,070

   

Proya Cosmetics Co. Ltd., Class A

   

201,028

     

2,817

   

Shenzhen Inovance Technology Co. Ltd., Class A

   

138,700

     

1,235

   

Shenzhou International Group Holdings Ltd. (b)

   

660,000

     

6,771

   

Sungrow Power Supply Co. Ltd., Class A

   

241,495

     

2,982

   

Tencent Holdings Ltd. (b)

   

392,100

     

14,804

   

Trip.com Group Ltd. ADR (c)

   

73,497

     

2,647

   

Yum China Holdings, Inc.

   

54,977

     

2,333

   
     

94,390

   

India (24.2%)

 

Axis Bank Ltd.

   

302,770

     

4,007

   

Bajaj Auto Ltd.

   

87,674

     

7,159

   

Bajaj Finance Ltd.

   

60,312

     

5,307

   

Delhivery Ltd. (c)

   

595,046

     

2,782

   

HDFC Asset Management Co. Ltd.

   

103,641

     

3,990

   

HDFC Bank Ltd.

   

465,087

     

9,523

   

Hindalco Industries Ltd.

   

1,084,202

     

7,997

   

ICICI Bank Ltd.

   

1,032,108

     

12,334

   

ICICI Prudential Life Insurance Co. Ltd.

   

554,964

     

3,564

   

Infosys Ltd.

   

343,465

     

6,358

   

Infosys Ltd. ADR

   

160,272

     

2,946

   

Larsen & Toubro Ltd.

   

136,773

     

5,792

   

Macrotech Developers Ltd.

   

495,637

     

6,089

   

Mahindra & Mahindra Ltd.

   

481,658

     

10,003

   

MakeMyTrip Ltd. (c)

   

41,432

     

1,946

   
   

Shares

  Value
(000)
 

Max Healthcare Institute Ltd.

   

574,554

   

$

4,737

   

Pidilite Industries Ltd.

   

128,564

     

4,192

   

Reliance Industries Ltd.

   

397,042

     

12,323

   

Star Health & Allied Insurance Co. Ltd. (c)

   

454,780

     

2,919

   

State Bank of India

   

1,064,086

     

8,203

   

United Breweries Ltd.

   

149,856

     

3,213

   
     

125,384

   

Indonesia (4.2%)

 

Bank Central Asia Tbk. PT

   

8,953,600

     

5,468

   

Bank Mandiri Persero Tbk. PT

   

20,402,600

     

8,015

   

Bank Rakyat Indonesia Persero Tbk. PT

   

15,627,900

     

5,808

   

Cisarua Mountain Dairy Tbk. PT

   

9,340,900

     

2,433

   
     

21,724

   

Korea, Republic of (10.3%)

 

DB Insurance Co. Ltd.

   

18,076

     

1,171

   

Hyundai Marine & Fire Insurance Co. Ltd.

   

50,046

     

1,201

   

KB Financial Group, Inc.

   

83,109

     

3,467

   

Kia Corp.

   

47,093

     

3,642

   

Korea Zinc Co. Ltd.

   

8,771

     

3,376

   

Samsung Electronics Co. Ltd.

   

489,622

     

29,719

   

SK Hynix, Inc.

   

95,515

     

10,424

   
     

53,000

   

Mexico (6.3%)

 

Gruma SAB de CV , Class B

   

470,703

     

8,614

   
Grupo Aeroportuario del Sureste SAB de CV,
Class B
   

76,399

     

2,238

   

Grupo Financiero Banorte SAB de CV Series O

   

523,350

     

5,263

   

Qualitas Controladora SAB de CV

   

617,176

     

6,248

   

Wal-Mart de Mexico SAB de CV

   

2,461,815

     

10,349

   
     

32,712

   

Poland (3.0%)

 

Allegro.eu SA (c)

   

300,134

     

2,540

   

LPP SA

   

2,469

     

10,163

   

Powszechny Zaklad Ubezpieczen SA

   

214,758

     

2,580

   
     

15,283

   

Saudi Arabia (1.4%)

 

Alinma Bank

   

457,588

     

4,725

   

Bupa Arabia for Cooperative Insurance Co.

   

45,799

     

2,602

   
     

7,327

   

South Africa (5.4%)

 

Anglo American PLC

   

349,446

     

8,933

   

AVI Ltd.

   

1,547,969

     

6,922

   

Bidvest Group Ltd.

   

369,380

     

5,099

   

Capitec Bank Holdings Ltd.

   

63,162

     

7,047

   
     

28,001

   

Taiwan (14.2%)

 

Advantech Co. Ltd.

   

111,000

     

1,343

   

Airtac International Group

   

101,448

     

3,333

   

Chailease Holding Co. Ltd.

   

1,003,480

     

6,306

   

CTBC Financial Holding Co. Ltd.

   

2,671,000

     

2,465

   

Delta Electronics, Inc.

   

445,000

     

4,538

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

   

Shares

  Value
(000)
 

Taiwan (cont'd)

 

MediaTek, Inc.

   

66,000

   

$

2,179

   

Taiwan Semiconductor Manufacturing Co. Ltd.

   

1,748,205

     

33,516

   
Taiwan Semiconductor Manufacturing Co.
Ltd. ADR
   

105,537

     

10,976

   

Unimicron Technology Corp.

   

54,000

     

310

   

United Microelectronics Corp.

   

3,417,000

     

5,822

   

Voltronic Power Technology Corp.

   

43,000

     

2,391

   
     

73,179

   

Thailand (1.9%)

 

Central Retail Corp. PCL

   

1,107,900

     

1,329

   
CP ALL PCL    

691,400

     

1,132

   

Kasikornbank PCL

   

945,200

     

3,734

   

Tisco Financial Group PCL

   

1,309,300

     

3,825

   
     

10,020

   

United Kingdom (2.0%)

 

Antofagasta PLC

   

382,608

     

8,181

   

Mondi PLC (d)

   

118,439

     

2,339

   
     

10,520

   

Total Common Stocks (Cost $408,441)

   

513,648

   
    No. of
Rights
     

Rights (0.0%)‡

 

Brazil (0.0%)‡

 
Localiza Rent a Car SA, expires 02/05/24 (c)
(Cost $—)
   

2,326

     

10

   
   

Shares

     

Short-Term Investment (1.5%)

 

Investment Company (1.5%)

 
Morgan Stanley Institutional Liquidity
Funds — Government Portfolio —
Institutional Class (See Note G)
(Cost $7,878)
   

7,878,109

     

7,878

   
Total Investments (100.8%) (Cost $416,319)
Including $552 of Securities Loaned (e)(f)
   

521,536

   

Liabilities in Excess of Other Assets (–0.8%)

   

(4,308

)

 

Net Assets (100.0%)

 

$

517,228

   

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

‡  Amount is less than 0.05%.

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

(b)  Security trades on the Hong Kong exchange.

(c)  Non-income producing security.

(d)  All or a portion of this security was on loan at December 31, 2023.

(e)  The approximate fair value and percentage of net assets, $456,957,000 and 88.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(f)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $419,543,000. The aggregate gross unrealized appreciation is approximately $131,805,000 and the aggregate gross unrealized depreciation is approximately $35,348,000, resulting in net unrealized appreciation of approximately $96,457,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

50.3

%

 

Banks

   

20.7

   

Semiconductors & Semiconductor Equipment

   

12.1

   

Tech Hardware, Storage & Peripherals

   

6.0

   

Metals & Mining

   

5.5

   

Automobiles

   

5.4

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $408,441)

 

$

513,658

   

Investment in Security of Affiliated Issuer, at Value (Cost $7,878)

   

7,878

   

Total Investments in Securities, at Value (Cost $416,319)

   

521,536

   

Foreign Currency, at Value (Cost $1,110)

   

1,114

   

Receivable for Investments Sold

   

2,884

   

Dividends Receivable

   

898

   

Tax Reclaim Receivable

   

71

   

Receivable for Fund Shares Sold

   

59

   

Receivable from Affiliate

   

25

   

Receivable from Securities Lending Income

   

@

 

Other Assets

   

93

   

Total Assets

   

526,680

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

6,894

   

Payable for Advisory Fees

   

862

   

Payable for Investments Purchased

   

737

   

Payable for Fund Shares Redeemed

   

378

   

Payable to Bank

   

353

   

Payable for Custodian Fees

   

77

   

Payable for Sub Transfer Agency Fees — Class I

   

30

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Administration Fees

   

22

   

Payable for Professional Fees

   

17

   

Payable for Transfer Agency Fees

   

10

   

Payable for Transfer Agency Fees — Class I

   

2

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

68

   

Total Liabilities

   

9,452

   

Net Assets

 

$

517,228

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

434,372

   

Total Distributable Earnings

   

82,856

   

Net Assets

 

$

517,228

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

147,876

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

7,413,620

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

19.95

   

CLASS A:

 

Net Assets

 

$

5,011

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

259,053

   

Net Asset Value, Redemption Price Per Share

 

$

19.34

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.07

   

Maximum Offering Price Per Share

 

$

20.41

   

CLASS L:

 

Net Assets

 

$

170

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

9,027

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.78

   

CLASS C:

 

Net Assets

 

$

173

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

9,227

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.78

   

CLASS R6:

 

Net Assets

 

$

363,988

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

18,262,620

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

19.93

   

CLASS IR:

 

Net Assets

 

$

10

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

516

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

19.93

   
(1)​ Including:
Securities on Loan, at Value:
 

$

552

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $1,782 of Foreign Taxes Withheld)

 

$

13,397

   

Dividends from Security of Affiliated Issuer (Note G)

   

484

   

Income from Securities Loaned — Net

   

25

   

Total Investment Income

   

13,906

   

Expenses:

 

Advisory Fees (Note B)

   

3,869

   

Administration Fees (Note C)

   

396

   

Custodian Fees (Note F)

   

307

   

Professional Fees

   

165

   

Sub Transfer Agency Fees — Class I

   

143

   

Sub Transfer Agency Fees — Class A

   

5

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Registration Fees

   

90

   

Transfer Agency Fees — Class I (Note E)

   

44

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

6

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Shareholder Services Fees — Class A (Note D)

   

13

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

1

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

3

   

Shareholder Reporting Fees

   

27

   

Directors' Fees and Expenses

   

10

   

Pricing Fees

   

3

   

Other Expenses

   

63

   

Total Expenses

   

5,156

   

Waiver of Advisory Fees (Note B)

   

(229

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(173

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(100

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(6

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(15

)

 

Net Expenses

   

4,625

   

Net Investment Income

   

9,281

   

Realized Loss:

 

Investments Sold (Net of $976 of Capital Gain Country Tax)

   

(10,342

)

 

Foreign Currency Translation

   

(245

)

 

Futures Contracts

   

(26

)

 

Net Realized Loss

   

(10,613

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $3,508)

   

58,416

   

Foreign Currency Translation

   

(7

)

 

Futures Contracts

   

(3

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

58,406

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

47,793

   

Net Increase in Net Assets Resulting from Operations

 

$

57,074

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

9,281

   

$

9,575

   

Net Realized Loss

   

(10,613

)

   

(3,799

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

58,406

     

(184,763

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

57,074

     

(178,987

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(3,598

)

   

(6,848

)

 

Class A

   

(109

)

   

(201

)

 

Class L

   

(3

)

   

(6

)

 

Class C

   

(2

)

   

(12

)

 

Class R6*

   

(9,018

)

   

(14,433

)

 

Class IR

   

(—

@)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(12,730

)

   

(21,500

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

16,589

     

45,456

   

Distributions Reinvested

   

3,458

     

6,598

   

Redeemed

   

(30,405

)

   

(104,883

)

 

Class A:

 

Subscribed

   

659

     

1,280

   

Distributions Reinvested

   

108

     

200

   

Redeemed

   

(1,170

)

   

(3,295

)

 

Class L:

 

Exchanged

   

     

90

   

Distributions Reinvested

   

3

     

6

   

Redeemed

   

(17

)

   

(93

)

 

Class C:

 

Subscribed

   

23

     

176

   

Distributions Reinvested

   

2

     

12

   

Redeemed

   

(213

)

   

(265

)

 

Class R6:*

 

Subscribed

   

20,889

     

22,440

   

Distributions Reinvested

   

9,018

     

14,433

   

Redeemed

   

(24,682

)

   

(25,180

)

 

Class IR:

 

Distributions Reinvested

   

@

   

@

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(5,738

)

   

(43,025

)

 

Redemption Fees

   

@

   

@

 

Total Increase (Decrease) in Net Assets

   

38,606

     

(243,512

)

 

Net Assets:

 

Beginning of Period

   

478,622

     

722,134

   

End of Period

 

$

517,228

   

$

478,622

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

874

     

2,275

   

Shares Issued on Distributions Reinvested

   

178

     

365

   

Shares Redeemed

   

(1,600

)

   

(5,388

)

 

Net Decrease in Class I Shares Outstanding

   

(548

)

   

(2,748

)

 

Class A:

 

Shares Subscribed

   

35

     

61

   

Shares Issued on Distributions Reinvested

   

6

     

12

   

Shares Redeemed

   

(63

)

   

(165

)

 

Net Decrease in Class A Shares Outstanding

   

(22

)

   

(92

)

 

Class L:

 

Shares Exchanged

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(1

)

   

(5

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(1

)

   

@@

 

Class C:

 

Shares Subscribed

   

1

     

9

   

Shares Issued on Distributions Reinvested

   

@@

   

1

   

Shares Redeemed

   

(12

)

   

(12

)

 

Net Decrease in Class C Shares Outstanding

   

(11

)

   

(2

)

 

Class R6:*

 

Shares Subscribed

   

1,101

     

1,115

   

Shares Issued on Distributions Reinvested

   

466

     

799

   

Shares Redeemed

   

(1,296

)

   

(1,217

)

 

Net Increase in Class R6 Shares Outstanding

   

271

     

697

   

Class IR:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

18.24

   

$

25.44

   

$

26.85

   

$

23.69

   

$

22.53

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.35

     

0.34

     

0.17

     

0.13

     

0.41

   

Net Realized and Unrealized Gain (Loss)

   

1.85

     

(6.72

)

   

0.73

     

3.32

     

3.92

   

Total from Investment Operations

   

2.20

     

(6.38

)

   

0.90

     

3.45

     

4.33

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.49

)

   

(0.15

)

   

(0.46

)

   

(0.14

)

   

(0.18

)

 

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.49

)

   

(0.82

)

   

(2.31

)

   

(0.29

)

   

(3.17

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

19.95

   

$

18.24

   

$

25.44

   

$

26.85

   

$

23.69

   

Total Return(3)

   

12.16

%(4)

   

(25.06

)%

   

3.55

%

   

14.58

%

   

19.44

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

147,876

   

$

145,218

   

$

272,406

   

$

312,834

   

$

277,114

   

Ratio of Expenses Before Expense Limitation

   

1.12

%

   

1.16

%

   

1.09

%

   

1.10

%

   

1.16

%

 

Ratio of Expenses After Expense Limitation

   

0.97

%(5)(6)(7)

   

1.05

%(7)

   

1.05

%(7)

   

1.05

%(7)

   

1.05

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.05

%(7)

   

1.05

%(7)

   

1.05

%(7)

   

1.05

%(7)

 

Ratio of Net Investment Income

   

1.84

%(5)(7)

   

1.68

%(7)

   

0.61

%(7)

   

0.58

%(7)

   

1.69

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.01

%

   

1.80

%

 

(6)  Effective April 28, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.99% for Class I shares. Prior to April 28, 2023, the maximum ratio was 1.05% for Class I shares.

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

17.70

   

$

24.69

   

$

26.13

   

$

23.05

   

$

21.99

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.27

     

0.26

     

0.08

     

0.05

     

0.30

   

Net Realized and Unrealized Gain (Loss)

   

1.79

     

(6.51

)

   

0.71

     

3.22

     

3.85

   

Total from Investment Operations

   

2.06

     

(6.25

)

   

0.79

     

3.27

     

4.15

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.42

)

   

(0.07

)

   

(0.38

)

   

(0.04

)

   

(0.10

)

 

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.42

)

   

(0.74

)

   

(2.23

)

   

(0.19

)

   

(3.09

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

19.34

   

$

17.70

   

$

24.69

   

$

26.13

   

$

23.05

   

Total Return(3)

   

11.73

%(4)

   

(25.31

)%

   

3.23

%

   

14.21

%

   

19.08

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

5,011

   

$

4,978

   

$

9,222

   

$

7,907

   

$

11,195

   

Ratio of Expenses Before Expense Limitation

   

1.44

%

   

1.48

%

   

1.39

%

   

1.43

%

   

1.43

%

 

Ratio of Expenses After Expense Limitation

   

1.33

%(5)(6)(7)

   

1.38

%(7)

   

1.36

%(7)

   

1.38

%(7)

   

1.34

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.38

%(7)

   

1.36

%(7)

   

1.38

%(7)

   

1.34

%(7)

 

Ratio of Net Investment Income

   

1.48

%(5)(7)

   

1.30

%(7)

   

0.28

%(7)

   

0.24

%(7)

   

1.26

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.37

%

   

1.44

%

 

(6)  Effective April 28, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.35% for Class A shares. Prior to April 28, 2023, the maximum ratio was 1.40% for Class A shares.

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

17.20

   

$

24.05

   

$

25.51

   

$

22.59

   

$

21.64

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.18

     

0.16

     

(0.06

)

   

(0.08

)

   

0.17

   

Net Realized and Unrealized Gain (Loss)

   

1.74

     

(6.34

)

   

0.68

     

3.15

     

3.77

   

Total from Investment Operations

   

1.92

     

(6.18

)

   

0.62

     

3.07

     

3.94

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.34

)

   

     

(0.23

)

   

     

   

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.34

)

   

(0.67

)

   

(2.08

)

   

(0.15

)

   

(2.99

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

18.78

   

$

17.20

   

$

24.05

   

$

25.51

   

$

22.59

   

Total Return(3)

   

11.19

%(4)

   

(25.68

)%

   

2.64

%

   

13.65

%

   

18.37

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

170

   

$

169

   

$

233

   

$

215

   

$

210

   

Ratio of Expenses Before Expense Limitation

   

3.19

%

   

2.88

%

   

2.69

%

   

3.06

%

   

2.47

%

 

Ratio of Expenses After Expense Limitation

   

1.83

%(5)(6)(7)

   

1.90

%(7)

   

1.90

%(7)

   

1.90

%(7)

   

1.90

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.90

%(7)

   

1.90

%(7)

   

1.90

%(7)

   

1.90

%(7)

 

Ratio of Net Investment Income (Loss)

   

0.98

%(5)(7)

   

0.87

%(7)

   

(0.23

)%(7)

   

(0.40

)%(7)

   

0.73

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.87

%

   

0.94

%

 

(6)  Effective April 28, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class L shares. Prior to April 28, 2023, the maximum ratio was 1.90% for Class L shares.

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

17.12

   

$

24.01

   

$

25.29

   

$

22.45

   

$

21.57

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.13

     

0.09

     

(0.10

)

   

(0.11

)

   

0.11

   

Net Realized and Unrealized Gain (Loss)

   

1.74

     

(6.31

)

   

0.67

     

3.10

     

3.76

   

Total from Investment Operations

   

1.87

     

(6.22

)

   

0.57

     

2.99

     

3.87

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

     

     

     

   

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.21

)

   

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

18.78

   

$

17.12

   

$

24.01

   

$

25.29

   

$

22.45

   

Total Return(3)

   

10.93

%(4)

   

(25.89

)%

   

2.43

%

   

13.32

%

   

18.16

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

173

   

$

338

   

$

531

   

$

530

   

$

454

   

Ratio of Expenses Before Expense Limitation

   

3.13

%

   

2.97

%

   

2.42

%

   

2.60

%

   

2.58

%

 

Ratio of Expenses After Expense Limitation

   

2.10

%(5)(6)(7)

   

2.15

%(7)

   

2.15

%(7)

   

2.15

%(7)

   

2.15

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.15

%(7)

   

2.15

%(7)

   

2.15

%(7)

   

2.15

%(7)

 

Ratio of Net Investment Income (Loss)

   

0.71

%(5)(7)

   

0.47

%(7)

   

(0.39

)%(7)

   

(0.53

)%(7)

   

0.47

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.12

%

   

0.69

%

 

(6)  Effective April 28, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class C shares. Prior to April 28, 2023, the maximum ratio was 2.15% for Class C shares.

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

18.23

   

$

25.43

   

$

26.85

   

$

23.68

   

$

22.52

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.36

     

0.35

     

0.20

     

0.15

     

0.36

   

Net Realized and Unrealized Gain (Loss)

   

1.85

     

(6.71

)

   

0.72

     

3.33

     

4.00

   

Total from Investment Operations

   

2.21

     

(6.36

)

   

0.92

     

3.48

     

4.36

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.51

)

   

(0.17

)

   

(0.49

)

   

(0.16

)

   

(0.21

)

 

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.51

)

   

(0.84

)

   

(2.34

)

   

(0.31

)

   

(3.20

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

19.93

   

$

18.23

   

$

25.43

   

$

26.85

   

$

23.68

   

Total Return(4)

   

12.18

%(5)

   

(24.98

)%

   

3.63

%

   

14.73

%

   

19.58

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

363,988

   

$

327,910

   

$

439,730

   

$

440,346

   

$

524,416

   

Ratio of Expenses Before Expense Limitation

   

1.00

%

   

1.06

%

   

0.98

%

   

1.00

%

   

1.04

%

 

Ratio of Expenses After Expense Limitation

   

0.91

%(6)(7)

   

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

 

Ratio of Net Investment Income

   

1.90

%(6)(7)

   

1.75

%(7)

   

0.71

%(7)

   

0.67

%(7)

   

1.47

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

1.86

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Emerging Markets Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

18.23

   

$

25.43

   

$

26.85

   

$

23.68

   

$

22.54

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.36

     

0.35

     

0.20

     

0.12

     

0.40

   

Net Realized and Unrealized Gain (Loss)

   

1.85

     

(6.71

)

   

0.72

     

3.36

     

3.94

   

Total from Investment Operations

   

2.21

     

(6.36

)

   

0.92

     

3.48

     

4.34

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.51

)

   

(0.17

)

   

(0.49

)

   

(0.16

)

   

(0.21

)

 

Net Realized Gain

   

     

(0.67

)

   

(1.85

)

   

(0.15

)

   

(2.99

)

 

Total Distributions

   

(0.51

)

   

(0.84

)

   

(2.34

)

   

(0.31

)

   

(3.20

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

19.93

   

$

18.23

   

$

25.43

   

$

26.85

   

$

23.68

   

Total Return(3)

   

12.18

%(4)

   

(24.98

)%

   

3.63

%

   

14.73

%

   

19.53

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

10

   

$

9

   

$

12

   

$

12

   

$

10

   

Ratio of Expenses Before Expense Limitation

   

22.94

%

   

22.06

%

   

16.98

%

   

21.21

%

   

21.52

%

 

Ratio of Expenses After Expense Limitation

   

0.91

%(5)(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Net Investment Income

   

1.89

%(5)(6)

   

1.75

%(6)

   

0.71

%(6)

   

0.55

%(6)

   

1.62

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

34

%

   

38

%

   

39

%

   

57

%

   

58

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

1.85

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

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

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded

on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs; and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability

developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Air Freight & Logistics

 

$

   

$

2,782

   

$

   

$

2,782

   

Automobiles

   

     

27,893

     

     

27,893

   

Banks

   

5,263

     

102,870

     

     

108,133

   

Beverages

   

     

10,880

     

     

10,880

   

Broadline Retail

   

     

12,773

     

     

12,773

   

Capital Markets

   

     

10,992

     

     

10,992

   

Chemicals

   

     

4,192

     

     

4,192

   
Construction &
Engineering
   

     

5,792

     

     

5,792

   

Consumer Finance

   

     

5,307

     

     

5,307

   


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Consumer Staples
Distribution & Retail
 

$

10,349

   

$

7,424

   

$

   

$

17,773

   

Electrical Equipment

   

     

12,084

     

     

12,084

   
Electronic Equipment,
Instruments &
Components
   

     

4,848

     

     

4,848

   

Financial Services

   

     

6,306

     

     

6,306

   

Food Products

   

8,614

     

13,283

     

     

21,897

   

Ground Transportation

   

     

8,488

     

     

8,488

   
Health Care Providers &
Services
   

     

4,737

     

     

4,737

   
Hotels, Restaurants &
Leisure
   

6,926

     

1,953

     

     

8,879

   

Industrial Conglomerates

   

     

5,099

     

     

5,099

   
Information Technology
Services
   

2,946

     

6,358

     

     

9,304

   

Insurance

   

6,248

     

16,097

     

     

22,345

   
Interactive Media &
Services
   

1,847

     

14,804

     

     

16,651

   

Machinery

   

     

4,568

     

     

4,568

   

Metals & Mining

   

     

28,487

     

     

28,487

   
Oil, Gas & Consumable
Fuels
   

     

22,030

     

     

22,030

   

Paper & Forest Products

   

     

2,339

     

     

2,339

   

Personal Care Products

   

     

2,817

     

     

2,817

   

Pharmaceuticals

   

     

3,135

     

     

3,135

   
Real Estate Management &
Development
   

1,284

     

6,089

     

     

7,373

   
Semiconductors &
Semiconductor
Equipment
   

10,976

     

51,941

     

     

62,917

   

Specialty Retail

   

     

1,156

     

     

1,156

   
Tech Hardware,
Storage & Peripherals
   

     

31,062

     

     

31,062

   
Textiles, Apparel &
Luxury Goods
   

     

18,371

     

     

18,371

   
Transportation
Infrastructure
   

2,238

     

     

     

2,238

   

Total Common Stocks

   

56,691

     

456,957

     

     

513,648

   

Rights

   

10

     

     

     

10

   

Short-Term Investment

 

Investment Company

   

7,878

     

     

     

7,878

   

Total Assets

 

$

64,579

   

$

456,957

   

$

   

$

521,536

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

Governmental approval for foreign investments may be required in advance of making an investment under


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more

volatile than if the Fund had not been leveraged. Although the Adviser and/or Sub-Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

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

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

As of December 31, 2023, the Fund did not have any open futures contracts.

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Equity Risk

 

Futures Contracts

 

$

(26

)

 

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Equity Risk

 

Futures Contracts

 

$

(3

)

 

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Futures Contracts:

 

Average monthly notional value

 

$

10,926,000

   

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

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

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amount
Presented in the
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

552

(a)

 

$

   

$

(552

)(b)(c)

 

$

0

   

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

(b) The Fund received non-cash collateral of approximately $585,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

6.  Redemption Fees: The Fund will assess a 2% redemption fee, on Class I shares, Class A shares, Class L shares, Class C shares, Class R6 shares and Class IR shares which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

7.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

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


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

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

First $500
million
  Next $500
million
  Next $1.5
billion
  Over $2.5
billion
 
  0.85

%

   

0.75

%

   

0.70

%

   

0.65

%

 

Effective April 28, 2023, the Adviser provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Next $1.5
billion
  Over $2.5
billion
 
  0.75

%

   

0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.73% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 1.90% for Class L shares, 2.15% for Class C shares, 0.95% for Class R6 shares and 0.95% for Class IR shares. Effective April 28, 2023, the Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses will not exceed 0.99% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares and 2.10% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to

discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $229,000 of advisory fees were waived and approximately $114,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $5,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $163,621,000 and $182,535,000, respectively. There were no purchases and sales of long-term

U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $15,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

   

$

106,947

   

$

99,069

   

$

484

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

7,878

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

12,730

   

$

   

$

4,250

   

$

17,250

   

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

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

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

826

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $5,883,000 and $8,498,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 78.8%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Emerging Markets Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Emerging Markets Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $9,171,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $2,757,000 and has derived net income from sources within foreign countries amounting to approximately $15,172,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


41


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


42


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMANN
6337064 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Concentrated Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

8

   

Statements of Changes in Net Assets

   

9

   

Financial Highlights

   

10

   

Notes to Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

21

   

Liquidity Risk Management Program

   

22

   

Federal Tax Notice

   

23

   

Important Notices

   

24

   

U.S. Customer Privacy Notice

   

25

   

Directors and Officers Information

   

28

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Concentrated Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Concentrated Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Concentrated Portfolio Class I

 

$

1,000.00

   

$

1,044.60

   

$

1,020.27

   

$

5.05

   

$

4.99

     

0.98

%

 

Global Concentrated Portfolio Class A

   

1,000.00

     

1,043.10

     

1,018.90

     

6.44

     

6.36

     

1.25

   

Global Concentrated Portfolio Class C

   

1,000.00

     

1,039.60

     

1,015.07

     

10.33

     

10.21

     

2.01

   

Global Concentrated Portfolio Class R6

   

1,000.00

     

1,045.60

     

1,020.62

     

4.69

     

4.63

     

0.91

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Concentrated Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 18.42%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI World Net Index (the "Index"), which returned 23.79%.

Factors Affecting Performance

•  Despite strong absolute results, active managers generally experienced a challenging year in 2023, as the uber-growth mega-cap technology stocks drove much of the strong performance of the benchmark for the year through October 2023.

•  Stocks within the portfolio are chosen to pursue high active share (20 names), while maintaining low correlation, thus limiting the exposure of a single theme within the portfolio.

•  Market breadth widening benefited the portfolio and its stock picking, positively impacting portfolio performance relative to the Index for the fourth quarter of 2023.

•  The strong rally into year-end 2023 broadened beyond that small group of mega-cap technology stocks, an indicator that historically has meant better times ahead for active stock pickers.

•  For the duration of the reporting period, the Fund held primarily value and growth stocks, with some exposure to more defensive stocks to help mitigate market volatility.

•  Value stocks were, and continue to be, historically inexpensive with strong balance sheets.

•  Throughout the reporting period, the portfolio was balanced with exposure to quality growth, with only some exposure to uber-growth stocks to manage how much risk was added to the portfolio.

•  From a geographic standpoint, regional positioning had a largely neutral contribution to relative performance for the period.

•  As of the close of the period, the portfolio continued to hold both growth (technology and

consumer discretionary) and value (financials and industrials) stocks. The portfolio remained underweight in the defensive sectors (health care and consumer staples) at period-end. Growth and value stocks are currently priced at reasonable levels in terms of valuations, while defensive stocks are expensive, the result of investors clamoring for perceived relative safety. Managing the overall risk of the portfolio continues to be a priority. Despite an overall positive thesis for the market in 2024, the expectation is that the market will be more volatile in contrast to the previous year.

•  Within stock selection, the single largest detractor from relative performance for the period was a position in an investment grade rated regional bank with a strong investment portfolio. The bank suffered from a concentration of risk in its deposit base and was impacted by a classic "run on the bank," almost completely wiping out the stock overnight. The demise of this stock more than fully accounted for the relative underperformance of the Fund for the period. Additionally, not owning the full suite of uber-growth mega-cap technology stocks in the Index negatively impacted relative performance, as did the portfolio overweight to China.

•  The Fund's relative performance benefited from its allocation to a subset of uber-growth mega-cap technology stocks. Additionally, the portfolio underweight to health care and overweight to consumer discretionary stocks benefited relative performance. Likewise, the portfolio overweight to Taiwan positively contributed to relative performance for the period. Stock selection within the European region had a particularly strong positive contribution to relative performance for the period.

Management Strategies

•  There have been no changes to the investment process during the period. Applied Equity Advisors' investment process is comprised of two parts: a Style Positioning Engine and a Stock Selection Engine. The first step, the Style Positioning Engine, takes into account not only what market styles (growth, value, defensive) or areas of the market are in leadership, but also how much momentum a particular style has, whether that style is cheap or expensive, and whether the timing is right to be


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Concentrated Portfolio

tilted toward that style. The timing decision comes down to the team's judgment and our combined decades of experience in factor investing. The team considers Style Positioning for each of four regions: U.S., Europe, Japan and Asia ex-Japan. With regard to the Style Positioning Engine, investing in a particular area of the market that shows cheap historical valuation levels may not appear to be advantageous at first, but if chosen correctly, sticking with that investment often proves to be successful over the longer term. The Stock Selection Engine begins its work once the desired style positioning is understood. There are three steps to the Stock Selection Engine: 1. determining which stocks are most correlated to the desired style and least correlated to other portfolio positions, 2. evaluation of the company fundamentals, and 3. Sustainability Analysis. The result is a highly active portfolio of fundamentally attractive stocks that the team believes could benefit from what we have identified to be investment styles likely to outperform in each region.

*  Minimum Investment for Class I shares

**  Commenced Operations on May 27, 2016.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI World Net Index(1) and the Lipper Global Large-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

18.42

%

   

12.26

%

   

     

8.88

%

 
Fund — Class A Shares
w/o sales charges(4)
   

18.05

     

11.91

     

     

8.53

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

11.88

     

10.72

     

     

7.76

   
Fund — Class C Shares
w/o sales charges(4)
   

17.21

     

11.09

     

     

7.73

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(4)
   

16.21

     

11.09

     

     

7.73

   
Fund — Class R6 Shares
w/o sales charges(4)
   

18.51

     

12.33

     

     

8.94

   

MSCI World Net Index

   

23.79

     

12.80

     

     

10.63

   
Lipper Global Large-Cap
Growth Funds Index
   

26.51

     

11.79

     

     

10.67

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI World Index currently consists of 23 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Large-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on May 27, 2016.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Concentrated Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.2%)

 

China (8.3%)

 

NetEase, Inc. ADR

   

66,765

   

$

6,220

   

Tencent Holdings Ltd. ADR

   

72,876

     

2,754

   
     

8,974

   

France (3.9%)

 

LVMH Moet Hennessy Louis Vuitton SE ADR

   

26,344

     

4,279

   

India (2.2%)

 

HDFC Bank Ltd. ADR

   

35,756

     

2,400

   

Ireland (7.7%)

 

CRH PLC ADR

   

120,722

     

8,349

   

Italy (6.6%)

 

Ferrari NV

   

21,283

     

7,203

   

Japan (5.1%)

 

Mitsui & Co. Ltd. ADR

   

7,370

     

5,512

   

Taiwan (5.0%)

 

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

51,804

     

5,388

   

United States (60.4%)

 

Ameriprise Financial, Inc.

   

15,109

     

5,739

   

Costco Wholesale Corp.

   

9,871

     

6,516

   

Danaher Corp.

   

5,002

     

1,157

   

JPMorgan Chase & Co.

   

34,549

     

5,877

   

Mastercard, Inc., Class A

   

14,017

     

5,978

   

Microsoft Corp.

   

30,631

     

11,519

   

Netflix, Inc. (a)

   

7,761

     

3,779

   

NextEra Energy, Inc.

   

4,547

     

276

   

NVIDIA Corp.

   

17,116

     

8,476

   

Progressive Corp.

   

37,078

     

5,906

   

United Rentals, Inc.

   

10,858

     

6,226

   

Waste Management, Inc.

   

23,403

     

4,191

   
     

65,640

   

Total Common Stocks (Cost $86,174)

   

107,745

   

Short-Term Investment (0.6%)

 

Investment Company (0.6%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $655)
   

654,896

     

655

   

Total Investments (99.8%) (Cost $86,829) (b)

   

108,400

   

Other Assets in Excess of Liabilities (0.2%)

   

268

   

Net Assets (100.0%)

 

$

108,668

   

 
 

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

(a)  Non-income producing security.

(b)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $87,994,000. The aggregate gross unrealized appreciation is approximately $22,316,000 and the aggregate gross unrealized depreciation is approximately $1,911,000, resulting in net unrealized appreciation of approximately $20,405,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Semiconductors & Semiconductor Equipment

   

12.8

%

 

Other*

   

12.4

   

Trading Companies & Distributors

   

10.8

   

Software

   

10.6

   

Entertainment

   

9.2

   

Construction Materials

   

7.7

   

Banks

   

7.6

   

Automobiles

   

6.6

   

Consumer Staples Distribution & Retail

   

6.0

   

Financial Services

   

5.5

   

Insurance

   

5.5

   

Capital Markets

   

5.3

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Concentrated Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $86,174)

 

$

107,745

   

Investment in Security of Affiliated Issuer, at Value (Cost $655)

   

655

   

Total Investments in Securities, at Value (Cost $86,829)

   

108,400

   

Dividends Receivable

   

299

   

Receivable for Fund Shares Sold

   

190

   

Tax Reclaim Receivable

   

5

   

Receivable from Affiliate

   

3

   

Other Assets

   

30

   

Total Assets

   

108,927

   

Liabilities:

 

Payable for Advisory Fees

   

166

   

Payable for Fund Shares Redeemed

   

43

   

Payable for Professional Fees

   

23

   

Payable for Administration Fees

   

7

   

Payable for Shareholder Services Fees — Class A

   

2

   

Payable for Distribution and Shareholder Services Fees — Class C

   

4

   

Payable for Custodian Fees

   

2

   

Payable for Sub Transfer Agency Fees — Class I

   

1

   

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

11

   

Total Liabilities

   

259

   

Net Assets

 

$

108,668

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

100,318

   

Total Distributable Earnings

   

8,350

   

Net Assets

 

$

108,668

   

CLASS I:

 

Net Assets

 

$

95,405

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,399,134

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.67

   

CLASS A:

 

Net Assets

 

$

8,088

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

462,897

   

Net Asset Value, Redemption Price Per Share

 

$

17.47

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.97

   

Maximum Offering Price Per Share

 

$

18.44

   

CLASS C:

 

Net Assets

 

$

5,164

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

307,087

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

16.82

   

CLASS R6:

 

Net Assets

 

$

11

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

631

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.70

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Concentrated Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $66 of Foreign Taxes Withheld)

 

$

1,752

   

Dividends from Security of Affiliated Issuer (Note G)

   

42

   

Total Investment Income

   

1,794

   

Expenses:

 

Advisory Fees (Note B)

   

762

   

Professional Fees

   

150

   

Administration Fees (Note C)

   

81

   

Shareholder Services Fees — Class A (Note D)

   

18

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

51

   

Registration Fees

   

61

   

Sub Transfer Agency Fees — Class I

   

41

   

Sub Transfer Agency Fees — Class A

   

3

   

Sub Transfer Agency Fees — Class C

   

2

   

Transfer Agency Fees — Class I (Note E)

   

4

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Custodian Fees (Note F)

   

8

   

Directors' Fees and Expenses

   

7

   

Shareholder Reporting Fees

   

5

   

Pricing Fees

   

1

   

Other Expenses

   

14

   

Total Expenses

   

1,216

   

Waiver of Advisory Fees (Note B)

   

(124

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(12

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Net Expenses

   

1,076

   

Net Investment Income

   

718

   

Realized Loss:

 

Investments Sold

   

(6,666

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

21,060

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

14,394

   

Net Increase in Net Assets Resulting from Operations

 

$

15,112

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Concentrated Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

718

   

$

100

   

Net Realized Loss

   

(6,666

)

   

(5,133

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

21,060

     

(20,991

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

15,112

     

(26,024

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(748

)

   

(162

)

 

Class A

   

(44

)

   

(1

)

 

Class C

   

     

(1

)

 

Class R6*

   

(—

@)

   

(—

@)

 

Paid-in-Capital:

 

Class I

   

     

(52

)

 

Class A

   

     

   

Class C

   

     

   

Class R6*

   

     

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(792

)

   

(216

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

41,049

     

23,023

   

Distributions Reinvested

   

748

     

214

   

Redeemed

   

(29,464

)

   

(28,709

)

 

Class A:

 

Subscribed

   

1,554

     

4,983

   

Distributions Reinvested

   

44

     

1

   

Redeemed

   

(1,301

)

   

(4,562

)

 

Class C:

 

Subscribed

   

515

     

1,582

   

Distributions Reinvested

   

     

1

   

Redeemed

   

(1,207

)

   

(2,640

)

 

Class R6:*

 

Distributions Reinvested

   

@

   

@

 

Redeemed

   

(7

)

   

(45

)

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

11,931

     

(6,152

)

 

Total Increase (Decrease) in Net Assets

   

26,251

     

(32,392

)

 

Net Assets:

 

Beginning of Period

   

82,417

     

114,809

   

End of Period

 

$

108,668

   

$

82,417

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

2,449

     

1,436

   

Shares Issued on Distributions Reinvested

   

43

     

14

   

Shares Redeemed

   

(1,796

)

   

(1,823

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

696

     

(373

)

 

Class A:

 

Shares Subscribed

   

96

     

321

   

Shares Issued on Distributions Reinvested

   

3

     

@@

 

Shares Redeemed

   

(82

)

   

(305

)

 

Net Increase in Class A Shares Outstanding

   

17

     

16

   

Class C:

 

Shares Subscribed

   

33

     

101

   

Shares Issued on Distributions Reinvested

   

     

@@

 

Shares Redeemed

   

(77

)

   

(177

)

 

Net Decrease in Class C Shares Outstanding

   

(44

)

   

(76

)

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(—

@@)

   

(3

)

 

Net Decrease in Class R6 Shares Outstanding

   

(—

@@)

   

(3

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Concentrated Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

15.04

   

$

19.41

   

$

17.12

   

$

13.86

   

$

10.53

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.13

     

0.03

     

0.01

     

0.03

     

0.08

   

Net Realized and Unrealized Gain (Loss)

   

2.64

     

(4.36

)

   

3.02

     

3.23

     

3.40

   

Total from Investment Operations

   

2.77

     

(4.33

)

   

3.03

     

3.26

     

3.48

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

(0.03

)

   

     

(0.00

)(2)

   

(0.15

)

 

Net Realized Gain

   

     

(0.00

)(2)

   

(0.74

)

   

     

   

Paid-in-Capital

   

     

(0.01

)

   

     

     

   

Total Distributions

   

(0.14

)

   

(0.04

)

   

(0.74

)

   

(0.00

)(2)

   

(0.15

)

 

Net Asset Value, End of Period

 

$

17.67

   

$

15.04

   

$

19.41

   

$

17.12

   

$

13.86

   

Total Return(3)

   

18.42

%(4)

   

(22.28

)%

   

17.83

%

   

23.52

%

   

33.10

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

95,405

   

$

70,730

   

$

98,522

   

$

45,946

   

$

14,885

   

Ratio of Expenses Before Expense Limitation

   

1.12

%

   

1.20

%

   

1.17

%

   

1.81

%

   

1.96

%

 

Ratio of Expenses After Expense Limitation

   

0.99

%(5)(6)

   

1.00

%(6)

   

1.00

%(6)

   

0.99

%(6)

   

1.00

%(6)

 

Ratio of Net Investment Income

   

0.78

%(5)(6)

   

0.20

%(6)

   

0.04

%(6)

   

0.21

%(6)

   

0.64

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

51

%

   

34

%

   

33

%

   

54

%

   

123

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.00

%

   

0.77

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Concentrated Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.88

   

$

19.20

   

$

17.00

   

$

13.80

   

$

10.49

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.08

     

(0.01

)

   

(0.05

)

   

(0.02

)

   

0.04

   

Net Realized and Unrealized Gain (Loss)

   

2.60

     

(4.31

)

   

2.99

     

3.22

     

3.38

   

Total from Investment Operations

   

2.68

     

(4.32

)

   

2.94

     

3.20

     

3.42

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.09

)

   

     

     

(0.00

)(2)

   

(0.11

)

 

Net Realized Gain

   

     

(0.00

)(2)

   

(0.74

)

   

     

   

Total Distributions

   

(0.09

)

   

(0.00

)(2)

   

(0.74

)

   

(0.00

)(2)

   

(0.11

)

 

Net Asset Value, End of Period

 

$

17.47

   

$

14.88

   

$

19.20

   

$

17.00

   

$

13.80

   

Total Return(3)

   

18.05

%(4)

   

(22.49

)%

   

17.42

%

   

23.19

%

   

32.64

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8,088

   

$

6,631

   

$

8,245

   

$

6,091

   

$

4,009

   

Ratio of Expenses Before Expense Limitation

   

1.41

%

   

1.49

%

   

1.45

%

   

2.13

%

   

2.29

%

 

Ratio of Expenses After Expense Limitation

   

1.27

%(5)(6)

   

1.30

%(6)

   

1.30

%(6)

   

1.31

%(6)

   

1.34

%(6)

 

Ratio of Net Investment Income (Loss)

   

0.49

%(5)(6)

   

(0.08

)%(6)

   

(0.29

)%(6)

   

(0.14

)%(6)

   

0.32

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

51

%

   

34

%

   

33

%

   

54

%

   

123

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.29

%

   

0.47

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Concentrated Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.35

   

$

18.66

   

$

16.66

   

$

13.63

   

$

10.36

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.04

)

   

(0.13

)

   

(0.18

)

   

(0.12

)

   

(0.06

)

 

Net Realized and Unrealized Gain (Loss)

   

2.51

     

(4.18

)

   

2.92

     

3.15

     

3.34

   

Total from Investment Operations

   

2.47

     

(4.31

)

   

2.74

     

3.03

     

3.28

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

     

(0.00

)(2)

   

(0.01

)

 

Net Realized Gain

   

     

(0.00

)(2)

   

(0.74

)

   

     

   

Total Distributions

   

     

(0.00

)(2)

   

(0.74

)

   

(0.00

)(2)

   

(0.01

)

 

Net Asset Value, End of Period

 

$

16.82

   

$

14.35

   

$

18.66

   

$

16.66

   

$

13.63

   

Total Return(3)

   

17.21

%(4)

   

(23.09

)%

   

16.58

%

   

22.23

%

   

31.69

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

5,164

   

$

5,040

   

$

7,969

   

$

3,568

   

$

2,704

   

Ratio of Expenses Before Expense Limitation

   

2.17

%

   

2.24

%

   

2.21

%

   

2.91

%

   

3.06

%

 

Ratio of Expenses After Expense Limitation

   

2.04

%(5)(6)

   

2.05

%(6)

   

2.06

%(6)

   

2.09

%(6)

   

2.10

%(6)

 

Ratio of Net Investment Loss

   

(0.27

)%(5)(6)

   

(0.83

)%(6)

   

(1.00

)%(6)

   

(0.91

)%(6)

   

(0.46

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

51

%

   

34

%

   

33

%

   

54

%

   

123

%

 

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

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.05

%

   

(0.28

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Concentrated Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

15.06

   

$

19.44

   

$

17.14

   

$

13.86

   

$

10.53

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.14

     

0.03

     

0.04

     

0.03

     

0.09

   

Net Realized and Unrealized Gain (Loss)

   

2.65

     

(4.36

)

   

3.00

     

3.25

     

3.40

   

Total from Investment Operations

   

2.79

     

(4.33

)

   

3.04

     

3.28

     

3.49

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.15

)

   

(0.04

)

   

     

(0.00

)(3)

   

(0.16

)

 

Net Realized Gain

   

     

(0.00

)(3)

   

(0.74

)

   

     

   

Paid-in-Capital

   

     

(0.01

)

   

     

     

   

Total Distributions

   

(0.15

)

   

(0.05

)

   

(0.74

)

   

(0.00

)(3)

   

(0.16

)

 

Net Asset Value, End of Period

 

$

17.70

   

$

15.06

   

$

19.44

   

$

17.14

   

$

13.86

   

Total Return(4)

   

18.51

%(5)

   

(22.25

)%

   

17.86

%

   

23.67

%

   

33.16

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

11

   

$

16

   

$

73

   

$

43

   

$

14

   

Ratio of Expenses Before Expense Limitation

   

19.78

%

   

9.89

%

   

7.26

%

   

9.20

%

   

17.68

%

 

Ratio of Expenses After Expense Limitation

   

0.93

%(6)(7)

   

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

   

0.95

%(7)

 

Ratio of Net Investment Income

   

0.84

%(6)(7)

   

0.17

%(7)

   

0.21

%(7)

   

0.22

%(7)

   

0.68

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

51

%

   

34

%

   

33

%

   

54

%

   

123

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

0.82

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Concentrated Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the

market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

7,203

   

$

   

$

   

$

7,203

   

Banks

   

8,277

     

     

     

8,277

   

Capital Markets

   

5,739

     

     

     

5,739

   
Commercial Services &
Supplies
   

4,191

     

     

     

4,191

   

Construction Materials

   

8,349

     

     

     

8,349

   
Consumer Staples
Distribution & Retail
   

6,516

     

     

     

6,516

   

Electric Utilities

   

276

     

     

     

276

   

Entertainment

   

9,999

     

     

     

9,999

   

Financial Services

   

5,978

     

     

     

5,978

   

Insurance

   

5,906

     

     

     

5,906

   
Interactive Media &
Services
   

2,754

     

     

     

2,754

   
Life Sciences Tools &
Services
   

1,157

     

     

     

1,157

   
Semiconductors &
Semiconductor
Equipment
   

13,864

     

     

     

13,864

   

Software

   

11,519

     

     

     

11,519

   
Textiles, Apparel &
Luxury Goods
   

4,279

     

     

     

4,279

   
Trading Companies &
Distributors
   

11,738

     

     

     

11,738

   

Total Common Stocks

   

107,745

     

     

     

107,745

   

Short-Term Investment

 

Investment Company

   

655

     

     

     

655

   

Total Assets

 

$

108,400

   

$

   

$

   

$

108,400

   


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

6.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

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

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.75

%

   

0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.63% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $124,000 of advisory fees were waived and approximately $2,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $61,028,000 and $50,531,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $2,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

290

   

$

43,574

   

$

43,209

   

$

42

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

655

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is

executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:

 

2022
Distributions
Paid From:

 

Ordinary
Income
(000)

 

Ordinary
Income
(000)

 

Long-Term
Capital Gain
(000)

 

Paid-in-
Capital
(000)

 

$

792

   

$

155

   

$

9

   

$

52

   

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

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

Permanent differences, due to a prior year tax return adjustment, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

(52

)

 

$

52

   

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

153

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $5,342,000 and $6,837,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be

based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 94.3%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

(and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Concentrated Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Concentrated Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 94.81% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $792,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August
1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


33


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCNPANN
6337127 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Core Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

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

   

Liquidity Risk Management Program

   

23

   

Federal Tax Notice

   

24

   

Important Notices

   

25

   

U.S. Customer Privacy Notice

   

26

   

Directors and Officers Information

   

29

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Core Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Core Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Core Portfolio Class I

 

$

1,000.00

   

$

1,043.40

   

$

1,020.47

   

$

4.84

   

$

4.79

     

0.94

%

 

Global Core Portfolio Class A

   

1,000.00

     

1,042.30

     

1,018.85

     

6.49

     

6.41

     

1.26

   

Global Core Portfolio Class C

   

1,000.00

     

1,038.10

     

1,014.92

     

10.48

     

10.36

     

2.04

   

Global Core Portfolio Class R6

   

1,000.00

     

1,043.80

     

1,020.62

     

4.69

     

4.63

     

0.91

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Core Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 17.96%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI World Net Index (the "Index"), which returned 23.79%.

Factors Affecting Performance

•  Despite strong absolute results, active managers generally experienced a challenging year in 2023, as the uber-growth mega-cap technology stocks drove much of the strong performance of the benchmark for the year through October 2023.

•  Maintaining an appropriate amount of portfolio risk prevented full ownership of the full suite of these stocks, thus negatively impacting portfolio performance relative to the Index.

•  The strong rally into year-end 2023 broadened beyond that small group of mega-cap technology stocks, an indicator that historically has meant better times ahead for active stock pickers.

•  Market breadth widening benefited the portfolio and its stock picking, positively impacting portfolio performance relative to the Index for the fourth quarter of 2023.

•  For the duration of the reporting period, the Fund held both value and growth stocks, with exposure to more defensive stocks in terms of utilities and real estate investment trusts (REITs) to help mitigate market volatility.

•  Value stocks were, and continue to be, historically inexpensive with strong balance sheets.

•  Throughout the reporting period, the portfolio was balanced with exposure to quality growth, with only some exposure to uber-growth stocks to manage how much risk was added to the portfolio.

•  From a geographic standpoint, regional positioning had a largely neutral contribution to relative performance for the period.

•  At the close of the period, the portfolio continued to hold both growth (technology and consumer discretionary) and value (financials and industrials)

stocks. Growth and value stocks are currently priced at reasonable levels in terms of valuations.

•  The portfolio remained underweight in the defensive sectors (health care and consumer staples) at period-end. Defensive stocks are currently expensive, the result of investors clamoring for perceived relative safety.

•  From a regional standpoint, the portfolio has shifted more toward the U.S. at the expense of the allocation to China.

•  Managing the overall risk of the portfolio continues to be a priority. Despite an overall positive thesis for the market in 2024, the expectation is that the market will be more volatile in contrast to the previous year.

•  Within stock selection, the single largest detractors from relative performance for the period were two positions in investment grade rated regional banks with strong investment portfolios. One suffered from a concentration of risk in its deposit base and was impacted by a classic "run on the bank," almost completely wiping out the stock overnight. The second was a related casualty of the same nature. The demise of these two stocks substantially accounted for the relative underperformance of the Fund for the period. Additionally, not owning the full suite of uber-growth mega-cap technology stocks in the Index negatively impacted relative performance, as did the portfolio overweight to China.

•  The Fund's relative performance benefited from its allocation to a subset of uber-growth mega-cap technology stocks. Additionally, the portfolio underweight to health care and overweight to consumer discretionary stocks benefited relative performance. Likewise, the portfolio overweight to Taiwan positively contributed to relative performance for the period. Stock selection within the European region had a positive contribution to relative performance for the period.

Management Strategies

•  There have been no changes to the investment process during the period. Applied Equity Advisors' investment process is comprised of two parts: a Style Positioning Engine and a Stock Selection Engine. The first step, the Style Positioning Engine,


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Core Portfolio

considers not only what market styles (growth, value, defensive) or areas of the market are in leadership, but also how much momentum a particular style has, whether that style is cheap or expensive, and whether the timing is right to be tilted toward that style. The timing decision comes down to the team's judgment and our combined decades of experience in factor investing. The team considers Style Positioning for each of four regions: U.S., Europe, Japan and Asia ex-Japan. Regarding the Style Positioning Engine, investing in a particular area of the market that shows cheap historical valuation levels may not appear to be advantageous at first, but if chosen correctly, sticking with that investment often proves to be successful over the longer term. The Stock Selection Engine begins its work once the desired style positioning is understood. There are three steps to the Stock Selection Engine: 1. determining which stocks are most correlated to the desired style and least correlated to other portfolio positions, 2. evaluation of the company fundamentals, and 3. Sustainability Analysis. The result is a highly active portfolio of fundamentally attractive stocks that the team believes could benefit from what we have identified to be investment styles likely to outperform in each region.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Core Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on May 27, 2016.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI World Net Index(1)​ and the Lipper Global Large-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

17.96

%

   

12.18

%

   

     

8.36

%

 
Fund — Class A Shares
w/o sales charges(4)
   

17.62

     

11.77

     

     

7.97

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

11.47

     

10.58

     

     

7.22

   
Fund — Class C Shares
w/o sales charges(4)
   

16.68

     

10.93

     

     

7.17

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

15.68

     

10.93

     

     

7.17

   
Fund — Class R6 Shares
w/o sales charges(4)
   

18.00

     

12.22

     

     

8.40

   

MSCI World Net Index

   

23.79

     

12.80

     

     

10.63

   
Lipper Global Large-Cap
Growth Funds Index
   

26.51

     

11.79

     

     

10.67

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI World Net Index currently consists of 23 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Large-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on May 27, 2016.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Core Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.1%)

 

China (5.5%)

 

NetEase, Inc. ADR

   

7,672

   

$

715

   

Tencent Holdings Ltd. ADR

   

15,902

     

601

   
     

1,316

   

France (3.5%)

 

LVMH Moet Hennessy Louis Vuitton SE

   

1,018

     

827

   

India (2.0%)

 

HDFC Bank Ltd. ADR

   

7,215

     

484

   

Ireland (8.2%)

 

CRH PLC ADR

   

23,358

     

1,615

   

Ryanair Holdings PLC ADR (a)

   

2,571

     

343

   
     

1,958

   

Italy (5.8%)

 

Ferrari NV

   

4,080

     

1,381

   

Japan (4.1%)

 

Mitsui & Co. Ltd. ADR

   

856

     

641

   

Nippon Telegraph & Telephone Corp. ADR

   

11,594

     

353

   
     

994

   

Taiwan (3.8%)

 

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

8,864

     

922

   

United Kingdom (0.5%)

 

Experian PLC ADR

   

2,770

     

113

   

United States (65.7%)

 

Alphabet, Inc., Class A (a)

   

5,315

     

742

   

Amazon.com, Inc. (a)

   

4,606

     

700

   

Ameriprise Financial, Inc.

   

2,692

     

1,023

   

Apple, Inc.

   

7,728

     

1,488

   

Applied Materials, Inc.

   

1,111

     

180

   

Brown & Brown, Inc.

   

5,850

     

416

   

Chevron Corp.

   

5,657

     

844

   

Danaher Corp.

   

2,522

     

583

   

Fortune Brands Innovations, Inc.

   

3,600

     

274

   

JPMorgan Chase & Co.

   

6,057

     

1,030

   

Lennar Corp., Class A

   

1,153

     

172

   

Linde PLC

   

1,122

     

461

   

Lululemon Athletica, Inc. (a)

   

1,344

     

687

   

Masterbrand, Inc. (a)

   

3,481

     

52

   

Mastercard, Inc., Class A

   

1,497

     

638

   

McDonald's Corp.

   

2,253

     

668

   

MGM Resorts International (a)

   

8,790

     

393

   

Microsoft Corp.

   

5,261

     

1,978

   

Netflix, Inc. (a)

   

524

     

255

   

NextEra Energy, Inc.

   

4,520

     

275

   

Nucor Corp.

   

782

     

136

   

NVIDIA Corp.

   

1,365

     

676

   

Progressive Corp.

   

3,296

     

525

   

Target Corp.

   

1,213

     

173

   

TJX Cos., Inc.

   

4,545

     

426

   

United Rentals, Inc.

   

1,209

     

693

   

Valero Energy Corp.

   

843

     

110

   
   

Shares

  Value
(000)
 

Veeva Systems, Inc., Class A (a)

   

449

   

$

86

   

Waste Management, Inc.

   

361

     

65

   
     

15,749

   

Total Common Stocks (Cost $16,066)

   

23,744

   

Short-Term Investment (0.5%)

 

Investment Company (0.5%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $125)
   

125,418

     

125

   

Total Investments (99.6%) (Cost $16,191) (b)(c)

   

23,869

   

Other Assets in Excess of Liabilities (0.4%)

   

96

   

Net Assets (100.0%)

 

$

23,965

   

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

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $827,000 and 3.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(c)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $16,306,000. The aggregate gross unrealized appreciation is approximately $7,682,000 and the aggregate gross unrealized depreciation is approximately $118,000, resulting in net unrealized appreciation of approximately $7,564,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

41.6

%

 

Software

   

8.3

   

Semiconductors & Semiconductor Equipment

   

7.4

   

Construction Materials

   

6.8

   

Textiles, Apparel & Luxury Goods

   

6.4

   

Banks

   

6.3

   

Tech Hardware, Storage & Peripherals

   

6.2

   

Automobiles

   

5.8

   

Interactive Media & Services

   

5.6

   

Trading Companies & Distributors

   

5.6

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Core Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $16,066)

 

$

23,744

   

Investment in Security of Affiliated Issuer, at Value (Cost $125)

   

125

   

Total Investments in Securities, at Value (Cost $16,191)

   

23,869

   

Foreign Currency, at Value (Cost $—@)

   

@

 

Receivable for Fund Shares Sold

   

61

   

Dividends Receivable

   

30

   

Due from Adviser

   

23

   

Tax Reclaim Receivable

   

1

   

Receivable from Affiliate

   

1

   

Other Assets

   

28

   

Total Assets

   

24,013

   

Liabilities:

 

Payable for Professional Fees

   

22

   

Payable for Fund Shares Redeemed

   

11

   

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class C

   

2

   

Payable for Administration Fees

   

2

   

Payable for Sub Transfer Agency Fees — Class I

   

1

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Custodian Fees

   

1

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

7

   

Total Liabilities

   

48

   

Net Assets

 

$

23,965

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

18,386

   

Total Distributable Earnings

   

5,579

   

Net Assets

 

$

23,965

   

CLASS I:

 

Net Assets

 

$

16,116

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

950,548

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

16.95

   

CLASS A:

 

Net Assets

 

$

5,221

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

311,166

   

Net Asset Value, Redemption Price Per Share

 

$

16.78

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.93

   

Maximum Offering Price Per Share

 

$

17.71

   

CLASS C:

 

Net Assets

 

$

2,618

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

162,702

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

16.09

   

CLASS R6:

 

Net Assets

 

$

10

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

611

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

16.96

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Core Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $11 of Foreign Taxes Withheld)

 

$

357

   

Dividends from Security of Affiliated Issuer (Note G)

   

17

   

Total Investment Income

   

374

   

Expenses:

 

Advisory Fees (Note B)

   

170

   

Professional Fees

   

158

   

Registration Fees

   

59

   

Administration Fees (Note C)

   

18

   

Shareholder Services Fees — Class A (Note D)

   

11

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

24

   

Transfer Agency Fees — Class I (Note E)

   

3

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Shareholder Reporting Fees

   

10

   

Sub Transfer Agency Fees — Class I

   

5

   

Sub Transfer Agency Fees — Class A

   

3

   

Sub Transfer Agency Fees — Class C

   

2

   

Directors' Fees and Expenses

   

6

   

Custodian Fees (Note F)

   

4

   

Pricing Fees

   

3

   

Other Expenses

   

11

   

Total Expenses

   

495

   

Waiver of Advisory Fees (Note B)

   

(170

)

 

Expenses Reimbursed by Adviser (Note B)

   

(54

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(7

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(1

)

 

Net Expenses

   

260

   

Net Investment Income

   

114

   

Realized Loss:

 

Investments Sold

   

(1,686

)

 

Foreign Currency Translation

   

(—

@)

 

Net Realized Loss

   

(1,686

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

5,252

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

5,252

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

3,566

   

Net Increase in Net Assets Resulting from Operations

 

$

3,680

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Core Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

114

   

$

55

   

Net Realized Loss

   

(1,686

)

   

(254

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

5,252

     

(4,498

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

3,680

     

(4,697

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(110

)

   

(49

)

 

Class A

   

(24

)

   

(4

)

 

Class R6*

   

(—

@)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(134

)

   

(53

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

9,652

     

4,339

   

Distributions Reinvested

   

110

     

49

   

Redeemed

   

(10,426

)

   

(4,526

)

 

Class A:

 

Subscribed

   

1,173

     

2,214

   

Distributions Reinvested

   

24

     

4

   

Redeemed

   

(688

)

   

(339

)

 

Class C:

 

Subscribed

   

672

     

982

   

Redeemed

   

(594

)

   

(1,102

)

 

Class R6:*

 

Distributions Reinvested

   

@

   

@

 

Redeemed

   

(7

)

   

(9

)

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(84

)

   

1,612

   

Total Increase (Decrease) in Net Assets

   

3,462

     

(3,138

)

 

Net Assets:

 

Beginning of Period

   

20,503

     

23,641

   

End of Period

 

$

23,965

   

$

20,503

   

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

632

     

277

   

Shares Issued on Distributions Reinvested

   

7

     

3

   

Shares Redeemed

   

(678

)

   

(292

)

 

Net Decrease in Class I Shares Outstanding

   

(39

)

   

(12

)

 

Class A:

 

Shares Subscribed

   

76

     

151

   

Shares Issued on Distributions Reinvested

   

1

     

@@

 

Shares Redeemed

   

(43

)

   

(23

)

 

Net Increase in Class A Shares Outstanding

   

34

     

128

   

Class C:

 

Shares Subscribed

   

44

     

68

   

Shares Redeemed

   

(40

)

   

(77

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

4

     

(9

)

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(—

@@)

   

(1

)

 

Net Decrease in Class R6 Shares Outstanding

   

(—

@@)

   

(1

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Core Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.47

   

$

18.01

   

$

15.99

   

$

13.19

   

$

10.15

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.11

     

0.07

     

0.01

     

0.02

     

0.07

   

Net Realized and Unrealized Gain (Loss)

   

2.49

     

(3.56

)

   

2.78

     

2.78

     

3.07

   

Total from Investment Operations

   

2.60

     

(3.49

)

   

2.79

     

2.80

     

3.14

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.12

)

   

(0.05

)

   

     

     

(0.09

)

 

Net Realized Gain

   

     

     

(0.77

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.01

)

 

Total Distributions

   

(0.12

)

   

(0.05

)

   

(0.77

)

   

     

(0.10

)

 

Net Asset Value, End of Period

 

$

16.95

   

$

14.47

   

$

18.01

   

$

15.99

   

$

13.19

   

Total Return(2)

   

17.96

%(3)

   

(19.37

)%

   

17.63

%

   

21.23

%

   

30.96

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

16,116

   

$

14,324

   

$

18,041

   

$

9,849

   

$

8,157

   

Ratio of Expenses Before Expense Limitation

   

1.99

%

   

2.25

%

   

2.13

%

   

2.93

%

   

2.73

%

 

Ratio of Expenses After Expense Limitation

   

0.96

%(4)(5)

   

0.99

%(5)

   

0.99

%(5)

   

0.99

%(5)

   

0.98

%(5)

 

Ratio of Net Investment Income

   

0.70

%(4)(5)

   

0.48

%(5)

   

0.06

%(5)

   

0.18

%(5)

   

0.61

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

18

%

   

17

%

   

23

%

   

30

%

   

61

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.00

%

   

0.66

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Core Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.33

   

$

17.85

   

$

15.92

   

$

13.17

   

$

10.15

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.06

     

0.01

     

(0.05

)

   

(0.02

)

   

0.03

   

Net Realized and Unrealized Gain (Loss)

   

2.46

     

(3.52

)

   

2.75

     

2.77

     

3.05

   

Total from Investment Operations

   

2.52

     

(3.51

)

   

2.70

     

2.75

     

3.08

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.07

)

   

(0.01

)

   

     

     

(0.05

)

 

Net Realized Gain

   

     

     

(0.77

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.01

)

 

Total Distributions

   

(0.07

)

   

(0.01

)

   

(0.77

)

   

     

(0.06

)

 

Net Asset Value, End of Period

 

$

16.78

   

$

14.33

   

$

17.85

   

$

15.92

   

$

13.17

   

Total Return(2)

   

17.62

%(3)

   

(19.64

)%

   

17.14

%

   

20.88

%

   

30.36

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

5,221

   

$

3,978

   

$

2,678

   

$

1,869

   

$

2,186

   

Ratio of Expenses Before Expense Limitation

   

2.32

%

   

2.60

%

   

2.51

%

   

3.32

%

   

3.12

%

 

Ratio of Expenses After Expense Limitation

   

1.29

%(4)(5)

   

1.35

%(5)

   

1.35

%(5)

   

1.35

%(5)

   

1.35

%(5)

 

Ratio of Net Investment Income (Loss)

   

0.36

%(4)(5)

   

0.09

%(5)

   

(0.31

)%(5)

   

(0.18

)%(5)

   

0.26

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

18

%

   

17

%

   

23

%

   

30

%

   

61

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.32

%

   

0.33

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Core Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.79

   

$

17.29

   

$

15.55

   

$

12.97

   

$

10.02

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.06

)

   

(0.09

)

   

(0.18

)

   

(0.12

)

   

(0.05

)

 

Net Realized and Unrealized Gain (Loss)

   

2.36

     

(3.41

)

   

2.69

     

2.70

     

3.00

   

Total from Investment Operations

   

2.30

     

(3.50

)

   

2.51

     

2.58

     

2.95

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

     

(0.77

)

   

     

   

Net Asset Value, End of Period

 

$

16.09

   

$

13.79

   

$

17.29

   

$

15.55

   

$

12.97

   

Total Return(2)

   

16.68

%(3)

   

(20.24

)%

   

16.32

%

   

19.89

%

   

29.44

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

2,618

   

$

2,186

   

$

2,893

   

$

1,998

   

$

1,448

   

Ratio of Expenses Before Expense Limitation

   

3.12

%

   

3.38

%

   

3.25

%

   

4.11

%

   

3.92

%

 

Ratio of Expenses After Expense Limitation

   

2.07

%(4)(5)

   

2.10

%(5)

   

2.10

%(5)

   

2.10

%(5)

   

2.10

%(5)

 

Ratio of Net Investment Loss

   

(0.41

)%(4)(5)

   

(0.65

)%(5)

   

(1.06

)%(5)

   

(0.94

)%(5)

   

(0.45

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

18

%

   

17

%

   

23

%

   

30

%

   

61

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.10

%

   

(0.44

)%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Core Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.48

   

$

18.01

   

$

15.99

   

$

13.18

   

$

10.15

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.11

     

0.08

     

0.02

     

0.03

     

0.07

   

Net Realized and Unrealized Gain (Loss)

   

2.50

     

(3.55

)

   

2.77

     

2.78

     

3.06

   

Total from Investment Operations

   

2.61

     

(3.47

)

   

2.79

     

2.81

     

3.13

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.13

)

   

(0.06

)

   

     

     

(0.09

)

 

Net Realized Gain

   

     

     

(0.77

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.01

)

 

Total Distributions

   

(0.13

)

   

(0.06

)

   

(0.77

)

   

     

(0.10

)

 

Net Asset Value, End of Period

 

$

16.96

   

$

14.48

   

$

18.01

   

$

15.99

   

$

13.18

   

Total Return(3)

   

18.00

%(4)

   

(19.28

)%

   

17.55

%

   

21.40

%

   

30.90

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

10

   

$

15

   

$

29

   

$

16

   

$

13

   

Ratio of Expenses Before Expense Limitation

   

16.70

%

   

15.01

%

   

13.09

%

   

18.19

%

   

18.98

%

 

Ratio of Expenses After Expense Limitation

   

0.93

%(5)(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Net Investment Income

   

0.72

%(5)(6)

   

0.49

%(6)

   

0.10

%(6)

   

0.22

%(6)

   

0.63

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

18

%

   

17

%

   

23

%

   

30

%

   

61

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

0.70

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Core Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an

official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

1,381

   

$

   

$

   

$

1,381

   

Banks

   

1,514

     

     

     

1,514

   

Broadline Retail

   

700

     

     

     

700

   

Building Products

   

326

     

     

     

326

   

Capital Markets

   

1,023

     

     

     

1,023

   

Chemicals

   

461

     

     

     

461

   
Commercial Services &
Supplies
   

65

     

     

     

65

   

Construction Materials

   

1,615

     

     

     

1,615

   
Consumer Staples
Distribution & Retail
   

173

     

     

     

173

   
Diversified
Telecommunication
Services
   

353

     

     

     

353

   

Electric Utilities

   

275

     

     

     

275

   

Entertainment

   

970

     

     

     

970

   

Financial Services

   

638

     

     

     

638

   

Health Care Technology

   

86

     

     

     

86

   
Hotels, Restaurants &
Leisure
   

1,061

     

     

     

1,061

   

Household Durables

   

172

     

     

     

172

   

Insurance

   

941

     

     

     

941

   
Interactive Media &
Services
   

1,343

     

     

     

1,343

   
Life Sciences Tools &
Services
   

583

     

     

     

583

   

Metals & Mining

   

136

     

     

     

136

   
Oil, Gas & Consumable
Fuels
   

954

     

     

     

954

   


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Passenger Airlines

 

$

343

   

$

   

$

   

$

343

   

Professional Services

   

113

     

     

     

113

   
Semiconductors &
Semiconductor
Equipment
   

1,778

     

     

     

1,778

   

Software

   

1,978

     

     

     

1,978

   

Specialty Retail

   

426

     

     

     

426

   
Tech Hardware, Storage &
Peripherals
   

1,488

     

     

     

1,488

   
Textiles, Apparel & Luxury
Goods
   

687

     

827

     

     

1,514

   
Trading Companies &
Distributors
   

1,334

     

     

     

1,334

   

Total Common Stocks

   

22,917

     

827

     

     

23,744

   

Short-Term Investment

 

Investment Company

   

125

     

     

     

125

   

Total Assets

 

$

23,042

   

$

827

   

$

   

$

23,869

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

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

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.75

%

   

0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares,

2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $170,000 of advisory fees were waived and approximately $57,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $4,506,000 and $4,002,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

726

   

$

11,142

   

$

11,743

   

$

17

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

125

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Ordinary
Income
(000)
  Paid-in-
Capital
(000)
 

$

134

   

$

51

   

$

2

   

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

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

Permanent differences, due to a prior year tax return adjustment, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

(2

)

 

$

2

   

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

25

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $361,000 and $1,625,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 98.1%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Core Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Core Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 97.37% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $131,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August 1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


34


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCPANN
6337189 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Endurance Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

9

   

Statements of Changes in Net Assets

   

10

   

Financial Highlights

   

11

   

Notes to Financial Statements

   

15

   

Report of Independent Registered Public Accounting Firm

   

22

   

Liquidity Risk Management Program

   

23

   

Federal Tax Notice

   

24

   

Important Notices

   

25

   

U.S. Customer Privacy Notice

   

26

   

Directors and Officers Information

   

29

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Endurance Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Endurance Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Endurance Portfolio Class I

 

$

1,000.00

   

$

1,068.60

   

$

1,021.27

   

$

4.07

   

$

3.97

     

0.78

%

 

Global Endurance Portfolio Class A

   

1,000.00

     

1,067.10

     

1,019.26

     

6.15

     

6.01

     

1.18

   

Global Endurance Portfolio Class C

   

1,000.00

     

1,063.10

     

1,015.88

     

9.62

     

9.40

     

1.85

   

Global Endurance Portfolio Class R6

   

1,000.00

     

1,069.00

     

1,021.78

     

3.55

     

3.47

     

0.68

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Endurance Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 72.56%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World Net Index (the "Index"), which returned 22.20%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Global equities performed well in 2023, as economies did a better-than-expected job of withstanding the rapid increases in interest rates needed to cool inflation from post-pandemic highs and excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform. While tightening conditions had become a headwind to the eurozone and U.K. economies toward the end of 2023, the widely predicted recessions did not materialize and the U.S. economy remained particularly resilient. Over the year, softening inflation data and relatively tight labor markets allowed central banks to slow and eventually pause interest rate increases, bolstering sentiment that rate hiking cycles were ending and rate cuts would follow. Meanwhile, markets also faced a U.S. regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, a disappointing economic recovery in China and multiple geopolitical flashpoints.

•  Global equities, as measured by the Index, advanced in the 12-month period. All sectors had positive performance, led by information technology, communication services and consumer discretionary. Utilities, consumer staples and health care were the weakest performing sectors in the Index over this period.

•  Counterpoint Global manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the

quality of the company and our conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period primarily due to favorable stock selection with sector allocations also contributing.

•  Consumer discretionary was by far the greatest contributor to relative performance, driven by strong stock selection. An average overweight in the sector also added to relative performance. Stocks selection in information technology and communication services added to relative gains, as did an average overweight in information technology. Smaller positive contributions to relative performance came from financials, real estate, industrials, utilities, materials and energy. Given the magnitude of the Fund's outperformance over the Index, there were few sector-level detractors from relative performance. Stock selection in consumer staples and health care had a small negative impact on relative performance, but it was more than offset by the positive contributions of the other sectors in the portfolio.

Management Strategies

•  Our investments are based upon company-specific fundamentals and our expectations of the businesses' long-term growth potential, not upon quarterly earnings, market volatility or non-fundamental, macro factors.

•  We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Sector and geographic weights are a result of the stock selection process and change over time based on our assessment of the opportunity set. Given our philosophy and bottom-up approach, performance is primarily driven by stock selection.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Endurance Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on December 31, 2018.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country World Net Index(1)​ and the Lipper Global Small-/Mid-Cap Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

72.56

%

   

11.81

%

   

     

11.81

%

 
Fund — Class A Shares
w/o sales charges(4)
   

72.03

     

11.40

     

     

11.40

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

63.02

     

10.21

     

     

10.21

   
Fund — Class C Shares
w/o sales charges(4)
   

70.62

     

10.59

     

     

10.59

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

69.62

     

10.59

     

     

10.59

   
Fund — Class R6 Shares
w/o sales charges(4)
   

72.66

     

11.85

     

     

11.85

   

MSCI All Country World Net Index

   

22.20

     

11.72

     

     

11.72

   
Lipper Global Small-/Mid-Cap
Funds Index
   

15.60

     

9.87

     

     

9.87

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Small-/Mid-Cap Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Small-/Mid-Cap Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Small-/Mid-Cap Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on December 31, 2018.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Endurance Portfolio

   

Shares

  Value
(000)
 

Common Stocks (91.7%)

 

France (5.4%)

 

Eurofins Scientific SE

   

36,858

   

$

2,404

   

Israel (5.5%)

 

Global-e Online Ltd. (a)

   

39,120

     

1,550

   

Wix.com Ltd. (a)

   

7,438

     

915

   
     

2,465

   

Netherlands (6.1%)

 

Adyen NV (a)

   

1,402

     

1,810

   

Basic-Fit NV (a)(b)

   

29,773

     

927

   
     

2,737

   

United Kingdom (11.9%)

 

Babcock International Group PLC

   

412,616

     

2,074

   

Victoria PLC (a)(b)

   

837,028

     

3,218

   
     

5,292

   

United States (62.8%)

 

Appian Corp., Class A (a)

   

57,725

     

2,174

   

Arbutus Biopharma Corp. (a)

   

141,764

     

355

   

Bill Holdings, Inc. (a)

   

15,958

     

1,302

   

Carvana Co. (a)

   

35,667

     

1,888

   

Cricut, Inc., Class A

   

388,276

     

2,559

   

Dollar General Corp.

   

16,532

     

2,248

   

Fastly, Inc., Class A (a)

   

120,661

     

2,148

   

Floor & Decor Holdings, Inc., Class A (a)

   

23,379

     

2,608

   

Hilton Worldwide Holdings, Inc.

   

5,436

     

990

   

HubSpot, Inc. (a)

   

2,771

     

1,609

   

Installed Building Products, Inc.

   

1,361

     

249

   

Interactive Brokers Group, Inc., Class A

   

8,240

     

683

   

Lithia Motors, Inc., Class A

   

6,324

     

2,082

   

ProKidney Corp. (a)

   

142,653

     

254

   

ROBLOX Corp., Class A (a)

   

40,186

     

1,837

   

Roivant Sciences Ltd. (a)

   

52,218

     

586

   

Royalty Pharma PLC, Class A

   

54,551

     

1,532

   

SilverSun Technologies, Inc.

   

29,381

     

503

   

Toast, Inc., Class A (a)

   

86,325

     

1,576

   

ZoomInfo Technologies, Inc., Class A (a)

   

42,792

     

792

   
     

27,975

   

Total Common Stocks (Cost $44,429)

   

40,873

   

Short-Term Investments (9.3%)

 

Investment Company (8.5%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $3,762)
   

3,762,464

     

3,762

   

Securities held as Collateral on Loaned Securities (0.8%)

 

Investment Company (0.7%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

305,986

     

306

   
    Face
Amount
(000)
  Value
(000)
 

Repurchase Agreements (0.1%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $23;
fully collateralized by U.S. Government
obligations; 0.25% - 3.00% due 5/15/24 -
11/15/49; valued at $23)
 

$

22

   

$

22

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24;
proceeds $23; fully collateralized by
a U.S. Government obligation; 0.00%
due 8/15/27; valued at $23)
   

22

     

22

   
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24; proceeds $23;
fully collateralized by a U.S. Government
obligation; 4.75% due 11/15/53;
valued at $23)
   

23

     

23

   
     

67

   
Total Securities held as Collateral on Loaned
Securities (Cost $373)
   

373

   

Total Short-Term Investments (Cost $4,135)

   

4,135

   
Total Investments (101.0%) (Cost $48,564)
Including $1,853 of Securities Loaned (c)(d)
   

45,008

   

Liabilities in Excess of Other Assets (–1.0%)

   

(456

)

 

Net Assets (100.0%)

 

$

44,552

   

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

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  The approximate fair value and percentage of net assets, $10,433,000 and 23.4%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $53,068,000. The aggregate gross unrealized appreciation is approximately $6,535,000 and the aggregate gross unrealized depreciation is approximately $14,595,000, resulting in net unrealized depreciation of approximately $8,060,000.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Other**

   

26.0

%

 

Specialty Retail

   

14.7

   

Household Durables

   

13.5

   

Software

   

12.5

   

Short-Term Investments

   

8.4

   

Financial Services

   

7.6

   

Information Technology Services

   

6.9

   

Life Sciences Tools & Services

   

5.4

   

Consumer Staples Distribution & Retail

   

5.0

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Endurance Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $44,496)

 

$

40,940

   

Investment in Security of Affiliated Issuer, at Value (Cost $4,068)

   

4,068

   

Total Investments in Securities, at Value (Cost $48,564)

   

45,008

   

Foreign Currency, at Value (Cost $—@)

   

@

 

Receivable from Securities Lending Income

   

18

   

Receivable for Fund Shares Sold

   

18

   

Dividends Receivable

   

9

   

Receivable from Affiliate

   

8

   

Other Assets

   

50

   

Total Assets

   

45,111

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

373

   

Payable for Investments Purchased

   

89

   

Payable for Fund Shares Redeemed

   

38

   

Payable for Professional Fees

   

19

   

Payable for Advisory Fees

   

16

   

Payable for Sub Transfer Agency Fees — Class I

   

3

   

Payable for Sub Transfer Agency Fees — Class A

   

2

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Administration Fees

   

3

   

Payable for Custodian Fees

   

3

   

Payable for Shareholder Services Fees — Class A

   

2

   

Payable for Distribution and Shareholder Services Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

9

   

Total Liabilities

   

559

   

Net Assets

 

$

44,552

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

91,776

   

Total Accumulated Loss

   

(47,224

)

 

Net Assets

 

$

44,552

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Endurance Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

36,150

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,278,120

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.87

   

CLASS A:

 

Net Assets

 

$

7,463

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

477,555

   

Net Asset Value, Redemption Price Per Share

 

$

15.63

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.87

   

Maximum Offering Price Per Share

 

$

16.50

   

CLASS C:

 

Net Assets

 

$

913

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

60,373

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.12

   

CLASS R6:

 

Net Assets

 

$

26

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,623

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.89

   
(1)​ Including:
Securities on Loan, at Value:
 

$

1,853

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Endurance Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Income from Securities Loaned — Net

 

$

555

   

Dividends from Securities of Unaffiliated Issuers (Net of $10 of Foreign Taxes Withheld)

   

550

   

Dividends from Security of Affiliated Issuer (Note G)

   

73

   

Total Investment Income

   

1,178

   

Expenses:

 

Advisory Fees (Note B)

   

304

   

Professional Fees

   

138

   

Registration Fees

   

58

   

Administration Fees (Note C)

   

30

   

Sub Transfer Agency Fees — Class I

   

15

   

Sub Transfer Agency Fees — Class A

   

8

   

Sub Transfer Agency Fees — Class C

   

@

 

Shareholder Services Fees — Class A (Note D)

   

16

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

7

   

Transfer Agency Fees — Class I (Note E)

   

12

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Shareholder Reporting Fees

   

13

   

Custodian Fees (Note F)

   

11

   

Directors' Fees and Expenses

   

6

   

Pricing Fees

   

1

   

Other Expenses

   

20

   

Total Expenses

   

649

   

Waiver of Advisory Fees (Note B)

   

(220

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(46

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(12

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(3

)

 

Net Expenses

   

361

   

Net Investment Income

   

817

   

Realized Gain (Loss):

 

Investments Sold

   

(205

)

 

Foreign Currency Translation

   

5

   

Net Realized Loss

   

(200

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

15,798

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

15,798

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

15,598

   

Net Increase in Net Assets Resulting from Operations

 

$

16,415

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Endurance Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

817

   

$

(380

)

 

Net Realized Loss

   

(200

)

   

(40,278

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

15,798

     

(12,509

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

16,415

     

(53,167

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(649

)

   

   

Class A

   

(114

)

   

   

Class C

   

(10

)

   

   

Class R6*

   

(—

@)

   

   

Total Dividends and Distributions to Shareholders

   

(773

)

   

   

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

10,916

     

15,697

   

Distributions Reinvested

   

649

     

   

Redeemed

   

(6,181

)

   

(21,483

)

 

Class A:

 

Subscribed

   

11,155

     

4,361

   

Distributions Reinvested

   

114

     

   

Redeemed

   

(8,393

)

   

(2,038

)

 

Class C:

 

Subscribed

   

267

     

331

   

Distributions Reinvested

   

10

     

   

Redeemed

   

(215

)

   

(417

)

 

Class R6:*

 

Subscribed

   

15

     

2

   

Distributions Reinvested

   

@

   

   

Redeemed

   

(8

)

   

   

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

8,329

     

(3,547

)

 

Total Increase (Decrease) in Net Assets

   

23,971

     

(56,714

)

 

Net Assets:

 

Beginning of Period

   

20,581

     

77,295

   

End of Period

 

$

44,552

   

$

20,581

   

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

835

     

899

   

Shares Issued on Distributions Reinvested

   

42

     

   

Shares Redeemed

   

(430

)

   

(1,608

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

447

     

(709

)

 

Class A:

 

Shares Subscribed

   

739

     

237

   

Shares Issued on Distributions Reinvested

   

8

     

   

Shares Redeemed

   

(583

)

   

(114

)

 

Net Increase in Class A Shares Outstanding

   

164

     

123

   

Class C:

 

Shares Subscribed

   

19

     

25

   

Shares Issued on Distributions Reinvested

   

1

     

   

Shares Redeemed

   

(18

)

   

(25

)

 

Net Increase in Class C Shares Outstanding

   

2

     

@@

 

Class R6:*

 

Shares Subscribed

   

1

     

@@

 

Shares Issued on Distributions Reinvested

   

@@

   

   

Shares Redeemed

   

(1

)

   

   

Net Increase in Class R6 Shares Outstanding

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Endurance Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

9.37

   

$

27.75

   

$

26.51

   

$

13.03

   

$

9.98

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.31

     

(0.13

)

   

(0.28

)

   

(0.09

)

   

(0.05

)

 

Net Realized and Unrealized Gain (Loss)

   

6.48

     

(18.25

)

   

2.82

     

14.41

     

3.10

   

Total from Investment Operations

   

6.79

     

(18.38

)

   

2.54

     

14.32

     

3.05

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.29

)

   

     

(0.02

)

   

(0.03

)

   

   

Net Realized Gain

   

     

     

(1.28

)

   

(0.81

)

   

   

Total Distributions

   

(0.29

)

   

     

(1.30

)

   

(0.84

)

   

   

Net Asset Value, End of Period

 

$

15.87

   

$

9.37

   

$

27.75

   

$

26.51

   

$

13.03

   

Total Return(2)

   

72.56

%(3)

   

(66.23

)%

   

9.59

%

   

110.03

%

   

30.30

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

36,150

   

$

17,152

   

$

70,478

   

$

7,854

   

$

2,757

   

Ratio of Expenses Before Expense Limitation

   

1.62

%

   

1.67

%

   

1.34

%

   

5.12

%

   

14.17

%

 

Ratio of Expenses After Expense Limitation

   

0.87

%(4)(5)

   

1.00

%(5)

   

0.99

%(5)

   

1.00

%(5)

   

1.00

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(5)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Income (Loss)

   

2.23

%(4)(5)

   

(0.87

)%(5)

   

(0.85

)%(5)

   

(0.52

)%(5)

   

(0.42

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

130

%

   

67

%

   

75

%

   

46

%

   

74

%

 

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

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

(3)  Performance was positively impacted by approximately 0.22% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 72.34%. Refer to Note B in the Notes to Financial Statements.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.99

%

   

2.11

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Endurance Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

9.23

   

$

27.45

   

$

26.33

   

$

12.99

   

$

9.98

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.26

     

(0.17

)

   

(0.38

)

   

(0.19

)

   

(0.09

)

 

Net Realized and Unrealized Gain (Loss)

   

6.38

     

(18.05

)

   

2.80

     

14.34

     

3.10

   

Total from Investment Operations

   

6.64

     

(18.22

)

   

2.42

     

14.15

     

3.01

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.24

)

   

     

(0.02

)

   

(0.00

)(2)

   

   

Net Realized Gain

   

     

     

(1.28

)

   

(0.81

)

   

   

Total Distributions

   

(0.24

)

   

     

(1.30

)

   

(0.81

)

   

   

Net Asset Value, End of Period

 

$

15.63

   

$

9.23

   

$

27.45

   

$

26.33

   

$

12.99

   

Total Return(3)

   

72.03

%(4)

   

(66.38

)%

   

9.20

%

   

109.10

%

   

29.90

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

7,463

   

$

2,898

   

$

5,239

   

$

2,462

   

$

13

   

Ratio of Expenses Before Expense Limitation

   

1.95

%

   

1.99

%

   

1.70

%

   

5.67

%

   

29.52

%

 

Ratio of Expenses After Expense Limitation

   

1.23

%(5)(6)

   

1.35

%(6)

   

1.35

%(6)

   

1.35

%(6)

   

1.35

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.35

%(6)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Income (Loss)

   

1.87

%(5)(6)

   

(1.22

)%(6)

   

(1.16

)%(6)

   

(0.86

)%(6)

   

(0.77

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

130

%

   

67

%

   

75

%

   

46

%

   

74

%

 

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

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

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

(4)  Performance was positively impacted by approximately 0.22% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 71.81%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.34

%

   

1.76

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Endurance Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

8.96

   

$

26.81

   

$

25.93

   

$

12.89

   

$

9.98

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.15

     

(0.28

)

   

(0.62

)

   

(0.33

)

   

(0.18

)

 

Net Realized and Unrealized Gain (Loss)

   

6.17

     

(17.57

)

   

2.80

     

14.18

     

3.09

   

Total from Investment Operations

   

6.32

     

(17.85

)

   

2.18

     

13.85

     

2.91

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.16

)

   

     

(0.02

)

   

     

   

Net Realized Gain

   

     

     

(1.28

)

   

(0.81

)

   

   

Total Distributions

   

(0.16

)

   

     

(1.30

)

   

(0.81

)

   

   

Net Asset Value, End of Period

 

$

15.12

   

$

8.96

   

$

26.81

   

$

25.93

   

$

12.89

   

Total Return(2)

   

70.62

%(3)

   

(66.58

)%

   

8.41

%

   

107.59

%

   

28.90

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

913

   

$

519

   

$

1,547

   

$

439

   

$

13

   

Ratio of Expenses Before Expense Limitation

   

3.03

%

   

3.05

%

   

2.53

%

   

7.61

%

   

30.23

%

 

Ratio of Expenses After Expense Limitation

   

1.96

%(4)(5)

   

2.10

%(5)

   

2.10

%(5)

   

2.10

%(5)

   

2.10

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.10

%(5)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Income (Loss)

   

1.14

%(4)(5)

   

(1.97

)%(5)

   

(1.92

)%(5)

   

(1.62

)%(5)

   

(1.52

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

130

%

   

67

%

   

75

%

   

46

%

   

74

%

 

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

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

(3)  Performance was positively impacted by approximately 0.22% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 70.40%. Refer to Note B in the Notes to Financial Statements.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.09

%

   

1.01

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Endurance Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

9.38

   

$

27.78

   

$

26.53

   

$

13.04

   

$

9.98

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.31

     

(0.12

)

   

(0.24

)

   

(0.08

)

   

(0.04

)

 

Net Realized and Unrealized Gain (Loss)

   

6.50

     

(18.28

)

   

2.79

     

14.41

     

3.10

   

Total from Investment Operations

   

6.81

     

(18.40

)

   

2.55

     

14.33

     

3.06

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.30

)

   

     

(0.02

)

   

(0.03

)

   

   

Net Realized Gain

   

     

     

(1.28

)

   

(0.81

)

   

   

Total Distributions

   

(0.30

)

   

     

(1.30

)

   

(0.84

)

   

   

Net Asset Value, End of Period

 

$

15.89

   

$

9.38

   

$

27.78

   

$

26.53

   

$

13.04

   

Total Return(3)

   

72.66

%(4)

   

(66.23

)%

   

9.62

%

   

110.08

%

   

30.40

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

26

   

$

12

   

$

31

   

$

28

   

$

13

   

Ratio of Expenses Before Expense Limitation

   

17.07

%

   

15.13

%

   

7.59

%

   

16.93

%

   

29.13

%

 

Ratio of Expenses After Expense Limitation

   

0.79

%(5)(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.95

%(6)

   

N/A

     

N/A

     

N/A

   

Ratio of Net Investment Income (Loss)

   

2.31

%(5)(6)

   

(0.82

)%(6)

   

(0.71

)%(6)

   

(0.47

)%(6)

   

(0.37

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

130

%

   

67

%

   

75

%

   

46

%

   

74

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

(4)  Performance was positively impacted by approximately 0.21% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 72.45%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.94

%

   

2.16

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Endurance Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the

market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

   

$

2,074

   

$

   

$

2,074

   

Biotechnology

   

1,195

     

     

     

1,195

   

Broadline Retail

   

1,550

     

     

     

1,550

   

Capital Markets

   

683

     

     

     

683

   
Consumer Staples
Distribution & Retail
   

2,248

     

     

     

2,248

   

Entertainment

   

1,837

     

     

     

1,837

   

Financial Services

   

1,576

     

1,810

     

     

3,386

   
Hotels, Restaurants &
Leisure
   

990

     

927

     

     

1,917

   

Household Durables

   

2,808

     

3,218

     

     

6,026

   
Information Technology
Services
   

3,063

     

     

     

3,063

   
Interactive Media &
Services
   

792

     

     

     

792

   
Life Sciences Tools &
Services
   

     

2,404

     

     

2,404

   

Pharmaceuticals

   

1,532

     

     

     

1,532

   

Software

   

5,588

     

     

     

5,588

   

Specialty Retail

   

6,578

     

     

     

6,578

   

Total Common Stocks

   

30,440

     

10,433

     

     

40,873

   

Short-Term Investments

 

Investment Company

   

4,068

     

     

     

4,068

   

Repurchase Agreements

   

     

67

     

     

67

   
Total Short-Term
Investments
   

4,068

     

67

     

     

4,135

   

Total Assets

 

$

34,508

   

$

10,500

   

$

   

$

45,008

   


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the

fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in
the Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

1,853

(a)

 

$

   

$

(1,853

)(b)(c)

 

$

0

   

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

(b) The Fund received cash collateral of approximately $373,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $1,647,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

373

   

$

   

$

   

$

   

$

373

   

Total Borrowings

 

$

373

   

$

   

$

   

$

   

$

373

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

373

   

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

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

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.22% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $220,000 of advisory fees were waived and approximately $19,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain

administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act.


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $51,458,000 and $46,754,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $3,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

14

   

$

37,572

   

$

33,518

   

$

73

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

4,068

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

773

   

$

   

$

   

$

   


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

80

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $15,104,000 and $24,126,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 40.9%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Endurance Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Endurance Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 52.29% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $478,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August 1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


34


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(This page has been left blank intentionally.)


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGENDANN
6337268 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Focus Real Estate Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

8

   

Statement of Assets and Liabilities

   

10

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

17

   

Report of Independent Registered Public Accounting Firm

   

24

   

Liquidity Risk Management Program

   

25

   

Federal Tax Notice

   

26

   

Important Notices

   

27

   

U.S. Customer Privacy Notice

   

28

   

Directors and Officers Information

   

31

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Focus Real Estate Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Focus Real Estate Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Focus Real Estate Portfolio Class I

 

$

1,000.00

   

$

1,097.30

   

$

1,020.87

   

$

4.55

   

$

4.38

     

0.86

%

 

Global Focus Real Estate Portfolio Class A

   

1,000.00

     

1,095.60

     

1,019.11

     

6.39

     

6.16

     

1.21

   

Global Focus Real Estate Portfolio Class C

   

1,000.00

     

1,091.10

     

1,015.32

     

10.33

     

9.96

     

1.96

   

Global Focus Real Estate Portfolio Class R6

   

1,000.00

     

1,097.70

     

1,021.17

     

4.23

     

4.08

     

0.80

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Focus Real Estate Portfolio

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

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 12.15%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the FTSE EPRA Nareit Developed Extended Net Total Return Index (the "Index"), which returned 8.72%.

Factors Affecting Performance

•  Global real estate securities gained 8.72% during the 12-month period ending December 31, 2023, as measured by the Index. 2023 was a year marred by concerns of a recession that never came as economic data remained surprisingly resilient even while inflation hovered stubbornly above central banks' targets for much of the year. While real estate securities lagged equities for the full year, real estate displayed outsized strength in the fourth quarter of 2023. More specifically, the real estate market rallied in November and December 2023, propelled by strong indications that the Federal Reserve (Fed) and other big central banks are winning the battle against inflation, interest rate cuts in 2024 are likely, and a "soft landing" in their economies may be achievable.

•  North American property stocks rose 9.83% for the year as measured by the FTSE EPRA Nareit North America Extended Net Total Return Index,(i)​ outperforming the broader real estate market.

o  After four 25-basis point(ii)​ interest rate hikes from the beginning of the year through July 2023, the Fed held interest rates steady the remainder of the year and signaled they may begin cutting interest rates as early as the first

half of 2024 amid recent favorable inflation data and an increasing belief that the Fed may achieve a soft landing. Within the Index, seniors housing health care was a top-performing sector for the year, as it benefited from the long-term secular tailwind of an aging U.S. population and the necessity-based nature of seniors housing demand. The mall sector was also a key outperformer, bolstered by the lack of new supply of retail real estate and increased demand from retailers for prime storefronts, creating upward pressure on rents. The data center sector outperformed, as it benefited from favorable secular demand trends driven by data growth and digital transformation combined with limited new supply growth. The hotel sector was another outperformer, primarily a beneficiary of "risk-on" markets and a more optimistic view on the economy in the fourth quarter of 2023. A key underperformer for the year was the life science health care sector, which faced supply headwinds coupled with lower demand for space. Retail net lease was another underperformer due to the higher interest rate environment and narrowing investment spreads. Apartments also underperformed, as third quarter 2023 earnings results were below expectations and a deceleration in rents in September and October 2023 that was worse than anticipated.

o  The Fund's sector overweight to and security selection within seniors housing health care, overweight to data centers, security selection in apartments, and the zero weight allocation to life science health care were the top relative contributors for the year. Key relative performance detractors included the

 

(i)​  The FTSE EPRA Nareit North America Extended Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the North American (U.S. and Canada) real estate market. The FTSE EPRA Nareit Developed Asia Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the Asian real estate markets. The FTSE EPRA Nareit Developed Europe Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the European real estate markets. The performance of the indexes is listed in U.S. dollars and assume reinvestment of net dividends. The indexes are unmanaged, and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. Data as of December 31, 2023.

(ii)​  One basis point = 0.01%


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Focus Real Estate Portfolio

underweight to skilled nursing health care, security selection in the industrial and retail net lease sectors, and the weighting to apartments.

•  Within Asia, property stocks declined 1.15% for the year, as measured by the FTSE EPRA Nareit Developed Asia Net Total Return Index,(i)​ significantly underperforming the broader real estate market for the year.

o  The year was characterized by substantial volatility in bond and equity markets. Elevated global yields, high company leverage ratios and mainland China economic concerns were the focus for much of 2023. However, global yields reversed sharply in November and December 2023 as investors factored in potential rate cuts in 2024. Yield compression in the fourth quarter of 2023 was a material tailwind for Australian real estate investment trusts (REITs), helping drive relative outperformance over the Asian index for the full year. Japan REITs underperformed for most of 2023 due to higher global bond yields, and did not benefit as much as other Asian REIT markets toward the end of the year due to concerns stemming from tighter domestic monetary policy and the Bank of Japan potentially exiting its negative interest rate policy. However, Japan developers were among the best-performing stocks in 2023 as they are perceived as inflation proxies. Despite the initial jump in economic activity in Hong Kong after the reopening of its borders at the beginning of 2023, the economic recovery in the second half of the year was softer than expected due to a sharp slowdown in the mainland Chinese economy and a mix of both cyclical and structural factors, including

international monetary policy and geopolitical tensions. Even though Hong Kong authorities announced a slew of domestic fiscal stimulus policies, including the lowering of housing stamp duties and the re-launch of Hong Kong's investment immigration scheme, Hong Kong was a significant underperformer in 2023. Singapore REITs closed the year with outperformance relative to the Asian index, with strength in the final quarter of the year as global bond yields retreated. Singapore property developers had weakened after the government announced punitive stamp duty measures in April 2023, but share prices recovered modestly toward year-end.

o  The Fund's security selection in Japan and Australia were top relative contributors for the year. Key relative performance detractors included the country overweight to and security selection within Hong Kong, the overweight to Japan, and security selection in Singapore.

•  European property stocks gained 20.42% for the year, as measured by the FTSE EPRA Nareit Developed Europe Net Total Return Index,(i)​ substantially outperforming the broader real estate market.

o  European real estate performance during 2023 was dominated by volatility related to inflation and the interest rate outlook. The peak and subsequent sharp fall in inflation in the second half of the year ultimately drove increased optimism on how quickly central banks may cut interest rates. Financial leverage was a key factor in Europe's relative performance versus global real estate in the year. Relative to global listed real estate, European stocks' relatively

 

(i)​  The FTSE EPRA Nareit North America Extended Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the North American (U.S. and Canada) real estate market. The FTSE EPRA Nareit Developed Asia Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the Asian real estate markets. The FTSE EPRA Nareit Developed Europe Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Extended Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the European real estate markets. The performance of the indexes is listed in U.S. dollars and assume reinvestment of net dividends. The indexes are unmanaged, and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. Data as of December 31, 2023.

(ii)​  One basis point = 0.01%


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Focus Real Estate Portfolio

high levels of financial leverage led to a weak first half of the year, with a much stronger second half as markets rallied and Europe outperformed. Within Europe, German residential stocks outperformed, unwinding some underperformance from 2022, as did Sweden, particularly in the second half of the year, both driven by more highly leveraged balance sheets. The office sector underperformed, particularly in the U.K., due to continuing structural and cyclical concerns.

o  The Fund's country underweight to Germany and security selection in the U.K. were the top relative contributors for the year. Key relative performance detractors included security selection in France, the zero weight allocation to Switzerland, and the country underweight to Sweden.

Management Strategies

•  The team uses internal proprietary research to invest in public real estate companies that we believe offer the best value relative to their underlying assets and growth prospects. The team combines a bottom-up approach, assessing the intrinsic value, equity multiples and growth prospects of each security, with a top-down view that incorporates fundamental inflection points, macroeconomic considerations, and geopolitical and country risk, and actively selects positions in a limited number of equity securities. By incorporating both an equity market valuation and

a more traditional real estate valuation with a top-down overlay, we believe the Fund will be better prepared to identify securities with the best expected total returns.

•  Given the stabilization in interest rates across the globe and the increasing likelihood of interest rate cuts, forecasted returns for the asset class have improved. Moreover, we believe relative strength in cash flows can be expected given the unique nature of listed real estate. Specifically, the contracted rental streams with inflation-linked escalations and the necessity-based nature of real estate — the listed real estate market evolves and grows with the broader needs of society and the economy and sits at the epicenter of how people live, work, shop and communicate — coupled with limited new real estate supply additions in the vast majority of sectors, should result in cash flow growth. Additionally, we believe the relative valuation of real estate securities is attractive, specifically when compared to direct property investment and the broader equities market, and is presenting an interesting pricing arbitrage opportunity for investors.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Focus Real Estate Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on July 30, 2021.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the FTSE EPRA Nareit Developed Extended Net Total Return Index(1) and the Lipper Global Real Estate Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

12.15

%

   

     

     

–5.97

%

 
Fund — Class A Shares
w/o sales charges(4)
   

11.73

     

     

     

–6.32

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

5.82

     

     

     

–8.37

   
Fund — Class C Shares
w/o sales charges(4)
   

10.91

     

     

     

–7.00

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(4)
   

9.91

     

     

     

–7.00

   
Fund — Class R6 Shares
w/o sales charges(4)
   

12.20

     

     

     

–5.92

   
FTSE EPRA Nareit Developed
Extended Net Total Return Index
   

8.72

     

     

     

–6.01

   
Lipper Global Real Estate
Funds Index
   

11.09

     

     

     

–5.27

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The FTSE EPRA Nareit Developed Extended Net Total Return Index is a market capitalization weighted index designed to represent general trends in eligible real estate stocks worldwide. The FTSE EPRA Nareit Developed Extended Index represents the extension of real estate property sectors (e.g. Infrastructure and Timber) and additional securities beyond what is currently eligible for the FTSE EPRA Nareit Developed Index based on membership in the FTSE Nareit All Equity REITs Index. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Real Estate Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Real Estate Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Real Estate Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on July 30, 2021.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Focus Real Estate Portfolio

   

Shares

  Value
(000)
 

Common Stocks (96.9%)

 

Australia (3.9%)

 

Charter Hall Group REIT

   

3,845

   

$

32

   

Goodman Group REIT

   

1,933

     

33

   

National Storage REIT

   

27,391

     

43

   

Stockland REIT

   

19,259

     

58

   
     

166

   

Belgium (0.8%)

 

Montea NV REIT

   

377

     

36

   

Canada (2.5%)

 

Boardwalk REIT

   

1,173

     

63

   

Chartwell Retirement Residences (Units) (a)

   

5,051

     

45

   
     

108

   

France (2.0%)

 

Carmila SA REIT (b)

   

1,273

     

22

   

Gecina SA REIT

   

368

     

45

   

Unibail-Rodamco-Westfield REIT (b)

   

291

     

21

   
     

88

   

Germany (2.3%)

 

LEG Immobilien SE (b)

   

624

     

55

   

Vonovia SE

   

1,410

     

44

   
     

99

   

Hong Kong (2.4%)

 

Link REIT

   

12,180

     

68

   

Wharf Real Estate Investment Co. Ltd.

   

10,500

     

36

   
     

104

   

Japan (9.7%)

 

Comforia Residential, Inc. REIT

   

17

     

38

   

Invincible Investment Corp. REIT

   

188

     

81

   

Japan Metropolitan Fund Invest REIT

   

28

     

20

   

Mitsui Fudosan Co. Ltd.

   

6,500

     

159

   

Mitsui Fudosan Logistics Park, Inc. REIT

   

10

     

33

   

Sumitomo Realty & Development Co. Ltd.

   

3,000

     

89

   
     

420

   

Netherlands (0.8%)

 

CTP NV

   

1,947

     

33

   

Singapore (1.0%)

 

Mapletree Industrial Trust REIT

   

23,100

     

44

   

Spain (1.4%)

 

Merlin Properties Socimi SA REIT

   

5,373

     

60

   

Sweden (1.6%)

 

Castellum AB (b)

   

2,974

     

42

   

Pandox AB

   

1,660

     

25

   
     

67

   

United Kingdom (2.4%)

 

Segro PLC REIT

   

4,485

     

50

   

UNITE Group PLC REIT

   

3,963

     

53

   
     

103

   
   

Shares

  Value
(000)
 

United States (66.1%)

 

Agree Realty Corp. REIT

   

1,295

   

$

82

   

American Homes 4 Rent, Class A REIT

   

2,331

     

84

   

American Tower Corp. REIT

   

1,864

     

402

   

Americold Realty Trust, Inc. REIT

   

1,772

     

54

   

AvalonBay Communities, Inc. REIT

   

648

     

121

   

CareTrust REIT, Inc.

   

1,882

     

42

   

Crown Castle, Inc. REIT

   

604

     

70

   

Digital Realty Trust, Inc. REIT

   

961

     

129

   

Equinix, Inc. REIT

   

265

     

213

   

Essex Property Trust, Inc. REIT

   

494

     

123

   

Extra Space Storage, Inc. REIT

   

845

     

135

   

Federal Realty Investment Trust REIT

   

711

     

73

   

Hilton Worldwide Holdings, Inc.

   

351

     

64

   

Iron Mountain, Inc. REIT

   

909

     

64

   

Kilroy Realty Corp. REIT

   

1,983

     

79

   

Kimco Realty Corp. REIT

   

3,777

     

81

   

Prologis, Inc. REIT

   

1,534

     

204

   

Public Storage REIT

   

439

     

134

   

Realty Income Corp. REIT

   

1,832

     

105

   

Rexford Industrial Realty, Inc. REIT

   

1,113

     

62

   

Simon Property Group, Inc. REIT

   

862

     

123

   

VICI Properties, Inc. REIT

   

2,937

     

94

   

Welltower, Inc. REIT

   

2,708

     

244

   

Weyerhaeuser Co. REIT

   

1,958

     

68

   
     

2,850

   

Total Common Stocks (Cost $3,853)

   

4,178

   

Short-Term Investment (0.8%)

 

Investment Company (0.8%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $34)
   

34,287

     

34

   

Total Investments (97.7%) (Cost $3,887) (c)(d)

   

4,212

   

Other Assets in Excess of Liabilities (2.3%)

   

97

   

Net Assets (100.0%)

 

$

4,309

   

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

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

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $1,220,000 and 28.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $3,972,000. The aggregate gross unrealized appreciation is approximately $370,000 and the aggregate gross unrealized depreciation is approximately $129,000, resulting in net unrealized appreciation of approximately $241,000.

REIT  Real Estate Investment Trust.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Global Focus Real Estate Portfolio

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

14.1

%

 

Residential

   

13.8

   

Diversified

   

13.4

   

Retail

   

12.0

   

Industrial

   

12.0

   

Telecommunications REITs

   

11.2

   

Data Centers

   

8.2

   

Health Care

   

7.9

   

Self Storage

   

7.4

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Focus Real Estate Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $3,853)

 

$

4,178

   

Investment in Security of Affiliated Issuer, at Value (Cost $34)

   

34

   

Total Investments in Securities, at Value (Cost $3,887)

   

4,212

   

Foreign Currency, at Value (Cost $5)

   

5

   

Due from Adviser

   

77

   

Dividends Receivable

   

17

   

Tax Reclaim Receivable

   

@

 

Receivable from Affiliate

   

@

 

Other Assets

   

32

   

Total Assets

   

4,343

   

Liabilities:

 

Payable for Professional Fees

   

21

   

Payable for Custodian Fees

   

3

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

10

   

Total Liabilities

   

34

   

Net Assets

 

$

4,309

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

5,217

   

Total Accumulated Loss

   

(908

)

 

Net Assets

 

$

4,309

   

CLASS I:

 

Net Assets

 

$

4,283

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

523,457

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.18

   

CLASS A:

 

Net Assets

 

$

9

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,041

   

Net Asset Value, Redemption Price Per Share

 

$

8.20

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.45

   

Maximum Offering Price Per Share

 

$

8.65

   

CLASS C:

 

Net Assets

 

$

8

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,026

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.18

   

CLASS R6:

 

Net Assets

 

$

9

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,054

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.18

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Focus Real Estate Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)

 

$

127

   

Dividends from Security of Affiliated Issuer (Note G)

   

1

   

Income from Securities Loaned — Net

   

@

 

Total Investment Income

   

128

   

Expenses:

 

Professional Fees

   

151

   

Registration Fees

   

58

   

Advisory Fees (Note B)

   

29

   

Custodian Fees (Note F)

   

14

   

Shareholder Reporting Fees

   

14

   

Transfer Agency Fees — Class I (Note E)

   

2

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Pricing Fees

   

6

   

Directors' Fees and Expenses

   

6

   

Administration Fees (Note C)

   

3

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

@

 

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

17

   

Total Expenses

   

306

   

Expenses Reimbursed by Adviser (Note B)

   

(233

)

 

Waiver of Advisory Fees (Note B)

   

(29

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(—

@)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

36

   

Net Investment Income

   

92

   

Realized Loss:

 

Investments Sold

   

(407

)

 

Foreign Currency Translation

   

(1

)

 

Net Realized Loss

   

(408

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

786

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

786

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

378

   

Net Increase in Net Assets Resulting from Operations

 

$

470

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Focus Real Estate Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

92

   

$

85

   

Net Realized Loss

   

(408

)

   

(754

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

786

     

(772

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

470

     

(1,441

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(109

)

   

(80

)

 

Class A

   

(—

@)

   

(—

@)

 

Class C

   

(—

@)

   

(—

@)

 

Class R6*

   

(—

@)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(109

)

   

(80

)

 

Capital Share Transactions:(1)

 

Class I:

 

Distributions Reinvested

   

109

     

80

   

Class A:

 

Subscribed

   

     

@

 

Distributions Reinvested

   

@

   

@

 

Redeemed

   

     

(19

)

 

Class C:

 

Distributions Reinvested

   

@

   

@

 

Class R6:*

 

Distributions Reinvested

   

@

   

@

 

Net Increase in Net Assets Resulting from Capital Share Transactions

   

109

     

61

   

Total Increase (Decrease) in Net Assets

   

470

     

(1,460

)

 

Net Assets:

 

Beginning of Period

   

3,839

     

5,299

   

End of Period

 

$

4,309

   

$

3,839

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Issued on Distributions Reinvested

   

14

     

10

   

Class A:

 

Shares Subscribed

   

     

@@

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

     

(3

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

@@

   

(3

)

 

Class C:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Focus Real Estate Portfolio

   

Class I

 
   

Year Ended December 31,

  Period from
July 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

7.50

   

$

10.49

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.18

     

0.17

     

0.04

   

Net Realized and Unrealized Gain (Loss)

   

0.71

     

(3.00

)

   

0.50

   

Total from Investment Operations

   

0.89

     

(2.83

)

   

0.54

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

(0.16

)

   

(0.05

)

 

Net Asset Value, End of Period

 

$

8.18

   

$

7.50

   

$

10.49

   

Total Return(3)

   

12.15

%(4)

   

(27.10

)%

   

5.38

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,283

   

$

3,816

   

$

5,239

   

Ratio of Expenses Before Expense Limitation

   

7.63

%

   

8.66

%

   

8.85

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.90

%(7)(8)(9)

   

0.95

%(9)

   

0.94

%(6)(9)

 

Ratio of Net Investment Income

   

2.38

%(8)(9)

   

1.95

%(9)

   

0.89

%(6)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(6)(10)

 

Portfolio Turnover Rate

   

95

%

   

113

%

   

44

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  Not annualized.

(6)  Annualized.

(7)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.85% for Class I shares. Prior to December 11, 2023, the maximum ratio was 0.95% for Class I shares.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.94

%

   

2.34

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Focus Real Estate Portfolio

   

Class A

 
   

Year Ended December 31,

  Period from
July 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

7.52

   

$

10.49

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.16

     

0.16

     

0.03

   

Net Realized and Unrealized Gain (Loss)

   

0.70

     

(3.02

)

   

0.49

   

Total from Investment Operations

   

0.86

     

(2.86

)

   

0.52

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.18

)

   

(0.11

)

   

(0.03

)

 

Net Asset Value, End of Period

 

$

8.20

   

$

7.52

   

$

10.49

   

Total Return(3)

   

11.73

%(4)

   

(27.38

)%

   

5.23

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9

   

$

8

   

$

39

   

Ratio of Expenses Before Expense Limitation

   

35.38

%

   

16.98

%

   

14.76

%(6)

 

Ratio of Expenses After Expense Limitation

   

1.25

%(7)(8)(9)

   

1.30

%(9)

   

1.30

%(6)(9)

 

Ratio of Net Investment Income

   

2.03

%(8)(9)

   

1.76

%(9)

   

0.63

%(6)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(6)(10)

 

Portfolio Turnover Rate

   

95

%

   

113

%

   

44

%(5)

 

(1)  Commencement of Operations.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  Not annualized.

(6)  Annualized.

(7)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.20% for Class A shares. Prior to December 11, 2023, the maximum ratio was 1.30% for Class A shares.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.29

%

   

1.99

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Focus Real Estate Portfolio

   

Class C

 
   

Year Ended December 31,

  Period from
July 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

7.50

   

$

10.49

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.10

     

0.07

     

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

0.71

     

(2.99

)

   

0.50

   

Total from Investment Operations

   

0.81

     

(2.92

)

   

0.49

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.13

)

   

(0.07

)

   

(0.00

)(3)

 

Net Asset Value, End of Period

 

$

8.18

   

$

7.50

   

$

10.49

   

Total Return(4)

   

10.91

%(5)

   

(27.91

)%

   

4.92

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8

   

$

7

   

$

10

   

Ratio of Expenses Before Expense Limitation

   

37.01

%

   

33.59

%

   

27.58

%(7)

 

Ratio of Expenses After Expense Limitation

   

2.00

%(8)(9)(10)

   

2.05

%(10)

   

2.05

%(7)(10)

 

Ratio of Net Investment Income (Loss)

   

1.28

%(9)(10)

   

0.84

%(10)

   

(0.23

)%(7)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(7)(11)

 

Portfolio Turnover Rate

   

95

%

   

113

%

   

44

%(6)

 

(1)  Commencement of Operations.

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

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  Not annualized.

(7)  Annualized.

(8)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.95% for Class C shares. Prior to December 11, 2023, the maximum ratio was 2.05% for Class C shares.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.04

%

   

1.24

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Focus Real Estate Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
July 30, 2021(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

7.50

   

$

10.49

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(3)

   

0.18

     

0.17

     

0.04

   

Net Realized and Unrealized Gain (Loss)

   

0.71

     

(3.00

)

   

0.50

   

Total from Investment Operations

   

0.89

     

(2.83

)

   

0.54

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

(0.16

)

   

(0.05

)

 

Net Asset Value, End of Period

 

$

8.18

   

$

7.50

   

$

10.49

   

Total Return(4)

   

12.20

%(5)

   

(27.06

)%

   

(5.39

)%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9

   

$

8

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

36.42

%

   

32.89

%

   

26.54

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.85

%(8)(9)(10)

   

0.90

%(10)

   

0.90

%(7)(10)

 

Ratio of Net Investment Income

   

2.42

%(9)(10)

   

2.00

%(10)

   

0.93

%(7)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(7)(11)

 

Portfolio Turnover Rate

   

95

%

   

113

%

   

44

%(6)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

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

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

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  Not annualized.

(7)  Annualized.

(8)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.80% for Class R6 shares. Prior to December 11, 2023, the maximum ratio was 0.90% for Class R6 shares.

(9)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.89

%

   

2.38

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Focus Real Estate Portfolio. The Fund seeks to provide current income and long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-thecounter

("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

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

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Data Centers

 

$

342

   

$

   

$

   

$

342

   

Diversified

   

     

566

     

     

566

   

Health Care

   

331

     

     

     

331

   

Industrial

   

320

     

185

     

     

505

   

Industrial/Office Mixed

   

     

42

     

     

42

   

Lodging/Resorts

   

64

     

106

     

     

170

   

Office

   

79

     

45

     

     

124

   

Residential

   

391

     

190

     

     

581

   

Retail

   

464

     

43

     

     

507

   

Self Storage

   

269

     

43

     

     

312

   

Specialty

   

158

     

     

     

158

   

Telecommunications REITs

   

472

     

     

     

472

   

Timberland REITs

   

68

     

     

     

68

   

Total Common Stocks

   

2,958

     

1,220

     

     

4,178

   

Short-Term Investment

 

Investment Company

   

34

     

     

     

34

   

Total Assets

 

$

2,992

   

$

1,220

   

$

   

$

4,212

   


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations

arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

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

At December 31, 2023, the Fund did not have any outstanding securities on loan.

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains

and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

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

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

First $2
billion
  Over $2
billion
 
  0.75

%

   

0.70

%

 

Effective December 11, 2023, the Adviser provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $2
billion
  Over $2
billion
 
  0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses,


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.95% for Class I shares, 1.30% for Class A shares, 2.05% for Class C shares and 0.90% for Class R6 shares. Effective December 11, 2023, the Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.95% for Class C shares and 0.80% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $29,000 of advisory fees were waived and approximately $239,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $3,728,000 and $3,694,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

110

   

$

924

   

$

1,000

   

$

1

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

34

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the three-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023 Distributions
Paid From:
  2022 Distributions
Paid From:
 
Ordinary Income
(000)
  Ordinary Income
(000)
 
$

109

   

$

80

   

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

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

Permanent differences, due to a nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

2

   

$

(2

)

 

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

47

   

$

   


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $662,000 and $528,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund did not have record owners of 10% or greater.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those

effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Focus Real Estate Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Focus Real Estate Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the two years in the period then ended and the period from July 30, 2021 (commencement of operations) through December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the two years in the period then ended and the period from July 30, 2021 (commencement of operations) through December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated approximately $61,000 of its distributions paid as qualified business income.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $20,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


36


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGFREANN
6337601 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Franchise Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

8

   

Statement of Operations

   

10

   

Statements of Changes in Net Assets

   

11

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Federal Tax Notice

   

27

   

Important Notices

   

28

   

U.S. Customer Privacy Notice

   

29

   

Directors and Officers Information

   

32

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Franchise Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Franchise Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Franchise Portfolio Class I

 

$

1,000.00

   

$

1,041.40

   

$

1,020.57

   

$

4.73

   

$

4.69

     

0.92

%

 

Global Franchise Portfolio Class A

   

1,000.00

     

1,040.30

     

1,019.31

     

6.02

     

5.96

     

1.17

   

Global Franchise Portfolio Class L

   

1,000.00

     

1,037.40

     

1,016.79

     

8.58

     

8.49

     

1.67

   

Global Franchise Portfolio Class C

   

1,000.00

     

1,036.10

     

1,015.63

     

9.75

     

9.65

     

1.90

   

Global Franchise Portfolio Class R6

   

1,000.00

     

1,041.70

     

1,021.07

     

4.22

     

4.18

     

0.82

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Franchise Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 16.42%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI World Net Index (the "Index"), which returned 23.79%.

Factors Affecting Performance

•  For the year, global equity markets (as measured by the Index) delivered an impressive +23.8%. Looking at sectors, information technology was the strongest performer in 2023, helped by its exposure to the artificial intelligence (AI) euphoria. The sector returned more than 50% in the year. Communication services and consumer discretionary were the other strong performers for the year (up +35% and +24% respectively). The more cyclical sectors — notably real estate, industrials and financials — finished behind the Index for the year. The portfolio's key defensive sectors of health care and consumer staples lagged for much of 2023, finishing up only +4% and +2% respectively for the year, 20 percentage points behind the index. Energy finished up a modest +3% in 2023 after its spectacular 2022.

•  For the year, the U.S. (+26%) outperformed Index by 3 percentage points. In euroland, Italy (+37%) and Spain (+32%) finished ahead of the Index, while Germany (+23%) and France (+21%) were roughly in line. Switzerland (+16%) and the U.K. (+14%) were weaker. Japan (+20%) was stronger than its Asia counterparts, while Singapore (+5%) was weak and, amid a slowing Chinese economy, Hong Kong was the only country down double digits (–15%). (Country performance is shown in U.S. dollar terms, unless otherwise noted.)

•  For 2023, the Fund's relative underperformance was due to both sector allocation and stock

selection. Within sector allocation, the main issue was the 20%+ combined overweight in the two defensive sectors, consumer staples and health care, which both underperformed the Index by over 20%. Looking at the three most successful sectors in the year, information technology (IT), communication services and consumer discretionary, the relative performance benefit of the small overweight in IT was outweighed by the larger underweights in the other two. However, the portfolio's relative performance did benefit from the underweights in the lower quality, more cyclical sectors, notably energy. For stock selection, the weakness relative to the Index was largely driven by IT, where the portfolio's very healthy 47% gain was behind the 58% recorded by the Index sector, while health care and consumer discretionary also detracted from relative performance. Another way of looking at allocation is that, of the "Magnificent Seven",(i)​ the portfolio only owned Microsoft, leaving it with less than half of the 17% weight the Seven had in the Index, and therefore detracting significantly from relative performance.

Management Strategies

•  As of the close of the period, the Index's current forward multiple did not look cheap, particularly as it is based on an arguably optimistic, double-digit earnings growth assumption for 2024 and 2025. This looks demanding given expected 2024 nominal gross domestic product growth in developed markets of 3% - 4% and seems to imply that margins will have to rise further from already close to peak levels.(ii)​ The multiples on these potentially optimistic earnings also look high. The Index finished 2023 at 17.3x 12-month forward earnings, and the S&P 500 Index at virtually 20x.(iii)​ The overall setup strikes us as an unfavorable asymmetry, with upside limited due to the ambitious earnings estimates and high multiples, while there could be plenty of downside if there is a recession.

(i)​  The "Magnificent Seven" are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

(ii)​  Source: Bloomberg L.P.

(iii)​  Source: FactSet. The S&P 500 Index measures the performance of the large-cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P Index is one of the most widely used benchmarks of U.S. equity performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Franchise Portfolio

•  When it comes to the methodology behind the Fund's high quality portfolio, we are "double fussy" — concerned with the sustainability of both the earnings and the multiples. At period-end, our view was that the possibility of a downturn is not reflected in today's earnings expectations, nor in the current market multiple. Given the vulnerability of high earnings and high multiples in the event of an economic slowdown, we would argue that investing in a portfolio of high quality compounders makes sense.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI World Net Index(1) and the Lipper Global Large-Cap Core Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(8)
 
Fund — Class I Shares
w/o sales charges(4)
   

16.42

%

   

11.50

%

   

9.68

%

   

10.91

%

 
Fund — Class A Shares
w/o sales charges(4)
   

16.16

     

11.23

     

9.40

     

10.62

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

10.08

     

10.03

     

8.81

     

10.35

   
Fund — Class L Shares
w/o sales charges(5)
   

15.57

     

10.68

     

8.86

     

9.26

   
Fund — Class C Shares
w/o sales charges(7)
   

15.29

     

10.40

     

     

9.99

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(7)
   

14.29

     

10.40

     

     

9.99

   
Fund — Class R6 Shares
w/o sales charges(6)
   

16.52

     

11.60

     

     

10.08

   

MSCI World Net Index

   

23.79

     

12.80

     

8.60

     

7.42

   
Lipper Global Large-Cap
Core Funds Index
   

21.09

     

12.25

     

7.95

     

7.07

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI World Net Index is a free float-adjusted market capitalization weighted index that is designed to measure the global equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI World Net Index currently consists of 23 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Large-Cap Core Funds classification.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Franchise Portfolio

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on November 28, 2001.

(5)​  Commenced offering on April 27, 2012.

(6)​  Commenced offering on May 29, 2015.

(7)​  Commenced offering on September 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(8)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Franchise Portfolio

   

Shares

  Value
(000)
 

Common Stocks (97.8%)

 

France (6.1%)

 

L'Oreal SA

   

123,797

   

$

61,713

   

LVMH Moet Hennessy Louis Vuitton SE

   

52,876

     

42,963

   

Pernod Ricard SA

   

415,782

     

73,478

   
     

178,154

   

Germany (5.8%)

 

SAP SE

   

1,114,231

     

171,504

   

Italy (0.3%)

 

Davide Campari-Milano NV

   

811,253

     

9,161

   

Netherlands (3.4%)

 

Heineken NV

   

764,474

     

77,670

   

Universal Music Group NV

   

796,530

     

22,739

   
     

100,409

   

United Kingdom (9.7%)

 

Experian PLC

   

1,258,663

     

51,348

   

Reckitt Benckiser Group PLC

   

1,829,618

     

126,250

   

RELX PLC (Euronext NV)

   

551,088

     

21,835

   

RELX PLC (LSE)

   

2,115,351

     

83,924

   
     

283,357

   

United States (72.5%)

 

Abbott Laboratories

   

893,457

     

98,343

   

Accenture PLC, Class A

   

496,506

     

174,229

   

Aon PLC, Class A

   

242,590

     

70,598

   

Arthur J Gallagher & Co.

   

238,376

     

53,606

   

Automatic Data Processing, Inc.

   

293,188

     

68,304

   

Becton Dickinson & Co.

   

432,153

     

105,372

   

Broadridge Financial Solutions, Inc.

   

216,452

     

44,535

   

CDW Corp.

   

263,352

     

59,865

   

Coca-Cola Co.

   

1,074,116

     

63,298

   

Danaher Corp.

   

508,122

     

117,549

   

Equifax, Inc.

   

261,218

     

64,597

   

FactSet Research Systems, Inc.

   

36,351

     

17,341

   

Intercontinental Exchange, Inc.

   

967,466

     

124,252

   

Jack Henry & Associates, Inc.

   

88,245

     

14,420

   

Microsoft Corp.

   

618,668

     

232,644

   

Moody's Corp.

   

111,842

     

43,681

   

NIKE, Inc., Class B

   

166,735

     

18,102

   

Otis Worldwide Corp.

   

553,620

     

49,532

   

Philip Morris International, Inc.

   

1,879,600

     

176,833

   

Procter & Gamble Co.

   

490,732

     

71,912

   

Roper Technologies, Inc.

   

143,989

     

78,498

   

Steris PLC

   

175,703

     

38,628

   

Thermo Fisher Scientific, Inc.

   

242,904

     

128,931

   

Veralto Corp.

   

169,374

     

13,933

   

Visa, Inc., Class A

   

635,717

     

165,509

   

Zoetis, Inc.

   

154,328

     

30,460

   
     

2,124,972

   

Total Common Stocks (Cost $1,868,971)

   

2,867,557

   
   

Shares

  Value
(000)
 

Short-Term Investment (2.2%)

 

Investment Company (2.2%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $64,813)
   

64,812,648

   

$

64,813

   

Total Investments (100.0%) (Cost $1,933,784) (a)(b)

   

2,932,370

   

Liabilities in Excess of Other Assets (–0.0%)‡

   

(1,087

)

 

Net Assets (100.0%)

 

$

2,931,283

   

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

‡  Amount is less than 0.05%.

(a)  The approximate fair value and percentage of net assets, $742,585,000 and 25.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(b)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $1,962,335,000. The aggregate gross unrealized appreciation is approximately $1,013,087,000 and the aggregate gross unrealized depreciation is approximately $43,052,000, resulting in net unrealized appreciation of approximately $970,035,000.

Euronext NV  Euronext Amsterdam Stock Market.

LSE  London Stock Exchange.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

16.6

%

 

Software

   

16.4

   

Professional Services

   

11.4

   

Life Sciences Tools & Services

   

8.4

   

Health Care Equipment & Supplies

   

8.3

   

Beverages

   

7.6

   

Household Products

   

6.8

   

Capital Markets

   

6.3

   

Financial Services

   

6.2

   

Tobacco

   

6.0

   

Information Technology Services

   

6.0

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Franchise Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,868,971)

 

$

2,867,557

   

Investment in Security of Affiliated Issuer, at Value (Cost $64,813)

   

64,813

   

Total Investments in Securities, at Value (Cost $1,933,784)

   

2,932,370

   

Foreign Currency, at Value (Cost $645)

   

651

   

Dividends Receivable

   

3,315

   

Receivable for Fund Shares Sold

   

1,986

   

Tax Reclaim Receivable

   

668

   

Receivable from Affiliate

   

233

   

Other Assets

   

178

   

Total Assets

   

2,939,401

   

Liabilities:

 

Payable for Advisory Fees

   

5,122

   

Payable for Fund Shares Redeemed

   

1,902

   

Payable for Sub Transfer Agency Fees — Class I

   

448

   

Payable for Sub Transfer Agency Fees — Class A

   

57

   

Payable for Sub Transfer Agency Fees — Class L

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

15

   

Payable for Administration Fees

   

197

   

Payable for Shareholder Services Fees — Class A

   

71

   

Payable for Distribution and Shareholder Services Fees — Class L

   

5

   

Payable for Distribution and Shareholder Services Fees — Class C

   

87

   

Payable for Custodian Fees

   

24

   

Payable for Professional Fees

   

22

   

Payable for Transfer Agency Fees — Class I

   

3

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class R6

   

1

   

Dividends Payable

   

@

 

Other Liabilities

   

161

   

Total Liabilities

   

8,118

   

Net Assets

 

$

2,931,283

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

1,955,549

   

Total Distributable Earnings

   

975,734

   

Net Assets

 

$

2,931,283

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Franchise Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

2,160,291

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

62,868,289

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

34.36

   

CLASS A:

 

Net Assets

 

$

337,938

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

10,101,043

   

Net Asset Value, Redemption Price Per Share

 

$

33.46

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.85

   

Maximum Offering Price Per Share

 

$

35.31

   

CLASS L:

 

Net Assets

 

$

8,048

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

240,906

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

33.41

   

CLASS C:

 

Net Assets

 

$

103,671

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

3,183,788

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

32.56

   

CLASS R6:

 

Net Assets

 

$

321,335

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

9,348,179

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

34.37

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Franchise Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $1,349 of Foreign Taxes Withheld)

 

$

50,568

   

Dividends from Security of Affiliated Issuer (Note G)

   

2,364

   

Total Investment Income

   

52,932

   

Expenses:

 

Advisory Fees (Note B)

   

21,377

   

Sub Transfer Agency Fees — Class I

   

1,984

   

Sub Transfer Agency Fees — Class A

   

291

   

Sub Transfer Agency Fees — Class L

   

5

   

Sub Transfer Agency Fees — Class C

   

78

   

Administration Fees (Note C)

   

2,357

   

Shareholder Service Fees — Class A (Note D)

   

842

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

58

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

1,069

   

Professional Fees

   

154

   

Registration Fees

   

130

   

Custodian Fees (Note F)

   

99

   

Shareholder Reporting Fees

   

82

   

Transfer Agency Fees — Class I (Note E)

   

34

   

Transfer Agency Fees — Class A (Note E)

   

7

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

5

   

Transfer Agency Fees — Class R6 (Note E)

   

6

   

Directors' Fees and Expenses

   

52

   

Pricing Fees

   

2

   

Other Expenses

   

164

   

Total Expenses

   

28,798

   

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(132

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(94

)

 

Net Expenses

   

28,572

   

Net Investment Income

   

24,360

   

Realized Gain (Loss):

 

Investments Sold

   

61,288

   

Foreign Currency Translation

   

(275

)

 

Net Realized Gain

   

61,013

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

365,615

   

Foreign Currency Translation

   

45

   

Net Change in Unrealized Appreciation (Depreciation)

   

365,660

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

426,673

   

Net Increase in Net Assets Resulting from Operations

 

$

451,033

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Franchise Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

24,360

   

$

24,812

   

Net Realized Gain

   

61,013

     

8,064

   

Net Change in Unrealized Appreciation (Depreciation)

   

365,660

     

(729,578

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

451,033

     

(696,702

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(41,648

)

   

(34,494

)

 

Class A

   

(5,853

)

   

(4,840

)

 

Class L

   

(104

)

   

(74

)

 

Class C

   

(1,178

)

   

(988

)

 

Class R6*

   

(6,476

)

   

(9,092

)

 

Total Dividends and Distributions to Shareholders

   

(55,259

)

   

(49,488

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

351,348

     

478,735

   

Distributions Reinvested

   

40,461

     

33,501

   

Redeemed

   

(556,850

)

   

(734,314

)

 

Class A:

 

Subscribed

   

46,023

     

90,329

   

Distributions Reinvested

   

5,586

     

4,642

   

Redeemed

   

(86,953

)

   

(84,642

)

 

Class L:

 

Exchanged

   

     

404

   

Distributions Reinvested

   

104

     

74

   

Redeemed

   

(471

)

   

(796

)

 

Class C:

 

Subscribed

   

8,550

     

23,164

   

Distributions Reinvested

   

1,144

     

957

   

Redeemed

   

(30,484

)

   

(41,978

)

 

Class R6:*

 

Subscribed

   

4,831

     

48,652

   

Distributions Reinvested

   

6,248

     

8,897

   

Redeemed

   

(259,847

)

   

(34,245

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(470,310

)

   

(206,620

)

 

Total Decrease in Net Assets

   

(74,536

)

   

(952,810

)

 

Net Assets:

 

Beginning of Period

   

3,005,819

     

3,958,629

   

End of Period

 

$

2,931,283

   

$

3,005,819

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Franchise Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

10,888

     

14,970

   

Shares Issued on Distributions Reinvested

   

1,192

     

1,118

   

Shares Redeemed

   

(17,209

)

   

(23,524

)

 

Net Decrease in Class I Shares Outstanding

   

(5,129

)

   

(7,436

)

 

Class A:

 

Shares Subscribed

   

1,457

     

2,861

   

Shares Issued on Distributions Reinvested

   

169

     

159

   

Shares Redeemed

   

(2,745

)

   

(2,769

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(1,119

)

   

251

   

Class L:

 

Shares Exchanged

   

     

13

   

Shares Issued on Distributions Reinvested

   

3

     

3

   

Shares Redeemed

   

(15

)

   

(27

)

 

Net Decrease in Class L Shares Outstanding

   

(12

)

   

(11

)

 

Class C:

 

Shares Subscribed

   

277

     

758

   

Shares Issued on Distributions Reinvested

   

36

     

34

   

Shares Redeemed

   

(993

)

   

(1,411

)

 

Net Decrease in Class C Shares Outstanding

   

(680

)

   

(619

)

 

Class R6:*

 

Shares Subscribed

   

150

     

1,478

   

Shares Issued on Distributions Reinvested

   

184

     

297

   

Shares Redeemed

   

(8,005

)

   

(1,116

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(7,671

)

   

659

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Franchise Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

30.10

   

$

36.99

   

$

31.20

   

$

28.53

   

$

23.03

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.29

     

0.25

     

0.27

     

0.30

     

0.30

   

Net Realized and Unrealized Gain (Loss)

   

4.64

     

(6.63

)

   

6.54

     

3.45

     

6.51

   

Total from Investment Operations

   

4.93

     

(6.38

)

   

6.81

     

3.75

     

6.81

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.30

)

   

(0.25

)

   

(0.27

)

   

(0.28

)

   

(0.27

)

 

Net Realized Gain

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.80

)

   

(1.04

)

 

Paid-in-Capital

   

     

     

(0.01

)

   

     

   

Total Distributions

   

(0.67

)

   

(0.51

)

   

(1.02

)

   

(1.08

)

   

(1.31

)

 

Net Asset Value, End of Period

 

$

34.36

   

$

30.10

   

$

36.99

   

$

31.20

   

$

28.53

   

Total Return(2)

   

16.42

%(3)

   

(17.24

)%

   

21.92

%

   

13.22

%

   

29.60

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

2,160,291

   

$

2,046,621

   

$

2,790,499

   

$

2,300,448

   

$

1,593,092

   

Ratio of Expenses Before Expense Limitation

   

0.92

%

   

0.92

%

   

0.91

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

0.92

%(4)

   

0.92

%(4)

   

0.91

%(4)

   

0.92

%(4)

   

0.93

%(4)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

0.92

%(4)

   

0.93

%(4)

 

Ratio of Net Investment Income

   

0.88

%(4)

   

0.79

%(4)

   

0.79

%(4)

   

1.04

%(4)

   

1.09

%(4)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(5)

   

0.00

%(5)

   

0.00

%(5)

   

0.00

%(5)

   

0.00

%(5)

 

Portfolio Turnover Rate

   

15

%

   

15

%

   

17

%

   

19

%

   

16

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(5)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Franchise Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

29.32

   

$

36.05

   

$

30.44

   

$

27.86

   

$

22.53

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.20

     

0.17

     

0.18

     

0.22

     

0.23

   

Net Realized and Unrealized Gain (Loss)

   

4.53

     

(6.46

)

   

6.37

     

3.37

     

6.35

   

Total from Investment Operations

   

4.73

     

(6.29

)

   

6.55

     

3.59

     

6.58

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.22

)

   

(0.18

)

   

(0.19

)

   

(0.21

)

   

(0.21

)

 

Net Realized Gain

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.80

)

   

(1.04

)

 

Paid-in-Capital

   

     

     

(0.01

)

   

     

   

Total Distributions

   

(0.59

)

   

(0.44

)

   

(0.94

)

   

(1.01

)

   

(1.25

)

 

Net Asset Value, End of Period

 

$

33.46

   

$

29.32

   

$

36.05

   

$

30.44

   

$

27.86

   

Total Return(2)

   

16.16

%(3)

   

(17.45

)%

   

21.61

%

   

12.95

%

   

29.24

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

337,938

   

$

328,979

   

$

395,450

   

$

317,673

   

$

292,491

   

Ratio of Expenses Before Expense Limitation

   

1.17

%

   

1.16

%

   

1.16

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

1.16

%(4)(5)

   

1.16

%(5)

   

1.16

%(5)

   

1.16

%(5)

   

1.19

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.16

%(5)

   

1.19

%(5)

 

Ratio of Net Investment Income

   

0.64

%(4)(5)

   

0.57

%(5)

   

0.54

%(5)

   

0.77

%(5)

   

0.83

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

15

%

   

15

%

   

17

%

   

19

%

   

16

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.17

%

   

0.63

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Franchise Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

29.29

   

$

36.01

   

$

30.41

   

$

27.84

   

$

22.51

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.04

     

0.02

     

0.01

     

0.07

     

0.09

   

Net Realized and Unrealized Gain (Loss)

   

4.51

     

(6.45

)

   

6.36

     

3.36

     

6.35

   

Total from Investment Operations

   

4.55

     

(6.43

)

   

6.37

     

3.43

     

6.44

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.06

)

   

(0.03

)

   

(0.02

)

   

(0.06

)

   

(0.07

)

 

Net Realized Gain

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.80

)

   

(1.04

)

 

Paid-in-Capital

   

     

     

(0.01

)

   

     

   

Total Distributions

   

(0.43

)

   

(0.29

)

   

(0.77

)

   

(0.86

)

   

(1.11

)

 

Net Asset Value, End of Period

 

$

33.41

   

$

29.29

   

$

36.01

   

$

30.41

   

$

27.84

   

Total Return(2)

   

15.57

%(3)

   

(17.86

)%

   

21.02

%

   

12.38

%

   

28.62

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8,048

   

$

7,397

   

$

9,473

   

$

8,390

   

$

8,388

   

Ratio of Expenses Before Expense Limitation

   

1.67

%

   

1.66

%

   

1.66

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

1.66

%(4)(5)

   

1.66

%(5)

   

1.66

%(5)

   

1.66

%(5)

   

1.69

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.66

%(5)

   

1.69

%(5)

 

Ratio of Net Investment Income

   

0.13

%(4)(5)

   

0.06

%(5)

   

0.05

%(5)

   

0.26

%(5)

   

0.31

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

15

%

   

15

%

   

17

%

   

19

%

   

16

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.67

%

   

0.12

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Franchise Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

28.57

   

$

35.18

   

$

29.77

   

$

27.30

   

$

22.13

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

(0.03

)

   

(0.06

)

   

(0.06

)

   

0.01

     

0.02

   

Net Realized and Unrealized Gain (Loss)

   

4.39

     

(6.29

)

   

6.21

     

3.27

     

6.23

   

Total from Investment Operations

   

4.36

     

(6.35

)

   

6.15

     

3.28

     

6.25

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

     

(0.01

)

   

(0.04

)

 

Net Realized Gain

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.80

)

   

(1.04

)

 

Paid-in-Capital

   

     

     

(0.00

)(2)

   

     

   

Total Distributions

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.81

)

   

(1.08

)

 

Net Asset Value, End of Period

 

$

32.56

   

$

28.57

   

$

35.18

   

$

29.77

   

$

27.30

   

Total Return(3)

   

15.29

%(4)

   

(18.06

)%

   

20.74

%

   

12.09

%

   

28.27

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

103,671

   

$

110,399

   

$

157,721

   

$

125,919

   

$

99,141

   

Ratio of Expenses Before Expense Limitation

   

1.91

%

   

1.90

%

   

1.90

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

1.90

%(5)(6)

   

1.90

%(6)

   

1.90

%(6)

   

1.91

%(6)

   

1.95

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.91

%(6)

   

1.95

%(6)

 

Ratio of Net Investment Income (Loss)

   

(0.10

)%(5)(6)

   

(0.19

)%(6)

   

(0.20

)%(6)

   

0.03

%(6)

   

0.07

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

15

%

   

15

%

   

17

%

   

19

%

   

16

%

 

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

(2)  Amount is less than $0.005.

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.91

%

   

(0.11

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Franchise Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

30.11

   

$

37.01

   

$

31.21

   

$

28.53

   

$

23.03

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.31

     

0.29

     

0.31

     

0.33

     

0.32

   

Net Realized and Unrealized Gain (Loss)

   

4.65

     

(6.64

)

   

6.54

     

3.45

     

6.51

   

Total from Investment Operations

   

4.96

     

(6.35

)

   

6.85

     

3.78

     

6.83

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.33

)

   

(0.29

)

   

(0.30

)

   

(0.30

)

   

(0.29

)

 

Net Realized Gain

   

(0.37

)

   

(0.26

)

   

(0.74

)

   

(0.80

)

   

(1.04

)

 

Paid-in-Capital

   

     

     

(0.01

)

   

     

   

Total Distributions

   

(0.70

)

   

(0.55

)

   

(1.05

)

   

(1.10

)

   

(1.33

)

 

Net Asset Value, End of Period

 

$

34.37

   

$

30.11

   

$

37.01

   

$

31.21

   

$

28.53

   

Total Return(3)

   

16.52

%(4)

   

(17.17

)%

   

22.05

%

   

13.33

%

   

29.67

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

321,335

   

$

512,423

   

$

605,486

   

$

370,127

   

$

137,283

   

Ratio of Expenses Before Expense Limitation

   

0.83

%

   

0.83

%

   

0.82

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

0.82

%(5)(6)

   

0.83

%(6)

   

0.82

%(6)

   

0.83

%(6)

   

0.86

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

0.83

%(6)

   

0.86

%(6)

 

Ratio of Net Investment Income

   

0.97

%(5)(6)

   

0.90

%(6)

   

0.90

%(6)

   

1.14

%(6)

   

1.21

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

15

%

   

15

%

   

17

%

   

19

%

   

16

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.83

%

   

0.96

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Franchise Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked

prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Beverages

 

$

63,298

   

$

160,309

   

$

   

$

223,607

   

Capital Markets

   

185,274

     

     

     

185,274

   
Commercial
Services &
Supplies
   

13,933

     

     

     

13,933

   
Electronic
Equipment,
Instruments &
Components
   

59,865

     

     

     

59,865

   

Entertainment

   

     

22,739

     

     

22,739

   

Financial Services

   

179,929

     

     

     

179,929

   
Health Care
Equipment &
Supplies
   

242,343

     

     

     

242,343

   

Household Products

   

71,912

     

126,250

     

     

198,162

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Information
Technology
Services
 

$

174,229

   

$

   

$

   

$

174,229

   

Insurance

   

124,204

     

     

     

124,204

   
Life Sciences
Tools & Services
   

246,480

     

     

     

246,480

   

Machinery

   

49,532

     

     

     

49,532

   
Personal Care
Products
   

     

61,713

     

     

61,713

   

Pharmaceuticals

   

30,460

     

     

     

30,460

   

Professional Services

   

177,436

     

157,107

     

     

334,543

   

Software

   

311,142

     

171,504

     

     

482,646

   
Textiles, Apparel &
Luxury Goods
   

18,102

     

42,963

     

     

61,065

   

Tobacco

   

176,833

     

     

     

176,833

   

Total Common Stocks

   

2,124,972

     

742,585

     

     

2,867,557

   

Short-Term Investment

 

Investment Company

   

64,813

     

     

     

64,813

   

Total Assets

 

$

2,189,785

   

$

742,585

   

$

   

$

2,932,370

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

5.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

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

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

First $500
million
  Next $500
million
  Over $1
billion
 
  0.80

%

   

0.75

%

   

0.70

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.72% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the

Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. This arrangement had no effect for the year ended December 31, 2023.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $4,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $440,887,000 and $963,720,000, respectively. There were no purchases and sales of long-term

U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $94,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

49,756

   

$

601,127

   

$

586,070

   

$

2,364

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

64,813

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

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

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

23,775

   

$

31,484

   

$

24,079

   

$

25,409

   

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

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

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

242

   

$

5,567

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 57.2%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Franchise Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Franchise Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 100% of the dividends qualified for the dividends received deduction.

The Fund designated and paid approximately $31,484,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $23,774,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


37


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGFANN
6337610 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global

Infrastructure

Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

14

   

Notes to Financial Statements

   

20

   

Report of Independent Registered Public Accounting Firm

   

28

   

Liquidity Risk Management Program

   

29

   

Federal Tax Notice

   

30

   

Important Notices

   

31

   

U.S. Customer Privacy Notice

   

32

   

Directors and Officers Information

   

35

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Infrastructure Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Infrastructure Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Infrastructure Portfolio Class I

 

$

1,000.00

   

$

1,010.30

   

$

1,021.22

   

$

4.00

   

$

4.02

     

0.79

%

 

Global Infrastructure Portfolio Class A

   

1,000.00

     

1,008.50

     

1,019.91

     

5.32

     

5.35

     

1.05

   

Global Infrastructure Portfolio Class L

   

1,000.00

     

1,006.10

     

1,017.04

     

8.19

     

8.24

     

1.62

   

Global Infrastructure Portfolio Class C

   

1,000.00

     

1,004.10

     

1,015.43

     

9.80

     

9.86

     

1.94

   

Global Infrastructure Portfolio Class R6

   

1,000.00

     

1,009.80

     

1,021.27

     

3.95

     

3.97

     

0.78

   

Global Infrastructure Portfolio Class IR

   

1,000.00

     

1,010.60

     

1,021.27

     

3.95

     

3.97

     

0.78

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Infrastructure Portfolio

The Fund seeks to provide both capital appreciation and income.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 4.13%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the Dow Jones Brookfield Global Infrastructure IndexSM​ (the "Index"), which returned 4.51%.

Factors Affecting Performance

•  Infrastructure shares gained 4.51% in the year ending December 31, 2023, as measured by the Index. From a sector perspective, airports, diversified, European regulated utilities, gas midstream and toll roads outperformed the Index, while other utilities, water & waste, gas distribution utilities, pipeline companies, ports, communications, and electricity transmission & distribution underperformed.

•  The year 2023 was strong for the global equity markets, despite lingering concerns over the level of inflation and the ability of the U.S. Federal Reserve and other major central banks to orchestrate a soft landing in their economies following many years of monetary policy easing. Unfortunately, 2023 was not similarly strong for listed infrastructure securities, as the asset class suffered alongside other defensive parts of the equity markets, such as consumer staples and health care. Indeed, listed infrastructure securities' relative outperformance of 2022 versus the broader global equity markets was more than eroded by the relative underperformance in 2023. Underscoring the challenges of 2023 was the performance of utilities, in particular those domiciled in the United States. Despite the fundamental tailwinds afforded due to the transition to clean energy and related infrastructure needs, U.S. utilities had their worst performance relative to the S&P 500 Index in roughly 50 years.(i)​ Looking at the other infrastructure sectors, outside of the transportation sector, returns were generally lackluster to poor in the one-year period.

•  For the full-year 2023, the Fund modestly underperformed the Index, with positive bottom-up stock selection offset by negative top-down sector allocation. From a bottom-up perspective, the Fund benefited from favorable stock selection in the water & waste, communications, other utilities, gas midstream, airports, pipeline companies, diversified and toll roads sectors; this was modestly offset by adverse stock selection in the gas distribution utilities, electricity transmission & distribution, and European regulated utilities sectors. From a top-down perspective, the Fund benefited from underweights to pipeline companies, electricity transmission & distribution, and ports; this was offset by overweight positioning in other utilities and water & waste, an underweight in gas midstream, an overweight in gas distribution utilities, an underweight in European regulated utilities, an overweight in communications, and underweights in diversified and toll roads.

Management Strategies

•  We remain committed to our core investment philosophy as an infrastructure value investor. As a value-oriented, bottom-up driven investor, our investment perspective is that over the medium and long term, the key factor in determining the performance of infrastructure securities will be underlying infrastructure asset values. Given the large and growing private infrastructure market, we believe that there are limits as to the level of premium or discount at which the public sector should trade relative to its underlying private infrastructure value. These limits can be viewed as the point at which the arbitrage opportunity between owning infrastructure in the private versus public markets becomes compelling. In aiming to achieve core infrastructure exposure in a cost-effective manner, we invest in equity securities of publicly listed infrastructure companies that we believe offer the best value relative to their underlying infrastructure value and growth prospects.

•  As of the end of the reporting period, our research currently led us to an overweighting in the Fund to

(i)​  The Standard & Poor's 500®​ Index (S&P 500®​ Index) measures the performance of the large cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Infrastructure Portfolio

a group of companies in other utilities, water & waste, communications, airports and gas distribution utilities, and an underweighting to companies in the electricity transmission & distribution, pipeline companies, gas midstream, European regulated utilities, diversified, toll roads and ports sectors. Finally, we continued to retain out-of-benchmark positions in renewables.

•  For 2024, we are constructive on listed infrastructure, predominantly due to the material adverse relative performance witnessed in 2023. That is not to dilute, our favorable view on fundamentals as well. While there are areas to monitor — most notably political interference associated with elections and customer affordability for some infrastructure services — we view the fundamental backdrop as a whole to be relatively solid in the context of a softening global economic backdrop. Furthermore, we believe some infrastructure areas that had a challenging 2023 from a fundamental perspective, such as the communications sector, look to be lapping such challenges and entering 2024 and beyond in a much better position.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Infrastructure Portfolio

Performance Compared to the Dow Jones Brookfield Global Infrastructure IndexSM(1) and the Lipper Global Infrastructure Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(8)
 
Fund — Class I Shares w/o
sales charges(4)
   

4.13

%

   

6.54

%

   

5.03

%

   

7.97

%

 
Fund — Class A Shares w/o
sales charges(4)
   

3.78

     

6.27

     

4.76

     

7.70

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

–1.67

     

5.14

     

4.19

     

7.27

   
Fund — Class L Shares w/o
sales charges(4)
   

3.19

     

5.67

     

4.16

     

7.10

   
Fund — Class C Shares w/o
sales charges(6)
   

2.95

     

5.37

     

     

2.58

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(6)
   

1.95

     

5.37

     

     

2.58

   
Fund — Class R6 Shares w/o
sales charges(5)
   

4.09

     

6.46

     

5.00

     

5.79

   
Fund — Class IR Shares w/o
sales charges(7)
   

4.15

     

6.57

     

     

5.02

   
Dow Jones Brookfield Global
Infrastructure IndexSM
   

4.51

     

6.97

     

5.29

     

7.81

   
Lipper Global Infrastructure
Funds Index
   

3.93

     

6.77

     

5.59

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Dow Jones Brookfield Global Infrastructure IndexSM​ is a float-adjusted market capitalization weighted index that measures the stock performance of companies that exhibit strong infrastructure characteristics. The Index intends to measure all sectors of the infrastructure market. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Infrastructure Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Infrastructure Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Infrastructure Funds classification. The history of this Index began in October 2011. Therefore, there is no "Since Inception" return data available.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on September 20, 2010.

(5)​  Commenced offering on September 13, 2013.

(6)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(7)​  Commenced offering on June 15. 2018.

(8)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Infrastructure Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.5%)

 

Australia (2.6%)

 

Transurban Group (Units) (a)

   

730,929

   

$

6,830

   

Canada (19.8%)

 

Enbridge, Inc.

   

315,839

     

11,370

   

Fortis, Inc. (b)

   

104,305

     

4,291

   

GFL Environmental, Inc.

   

488,450

     

16,856

   

Keyera Corp. (b)

   

103,065

     

2,491

   

Pembina Pipeline Corp.

   

242,704

     

8,356

   

TC Energy Corp. (b)

   

221,377

     

8,648

   
     

52,012

   

China (2.2%)

 

China Gas Holdings Ltd. (c)

   

5,730,400

     

5,662

   

France (4.6%)

 

Aeroports de Paris

   

4,010

     

520

   

Getlink SE

   

88,352

     

1,618

   

Vinci SA

   

79,150

     

9,961

   
     

12,099

   

Italy (3.2%)

 

Infrastrutture Wireless Italiane SpA

   

445,697

     

5,643

   

Snam SpA

   

97,650

     

502

   

Terna — Rete Elettrica Nazionale

   

286,095

     

2,387

   
     

8,532

   

Mexico (2.1%)

 
Grupo Aeroportuario del Pacifico SAB de CV,
Class B
   

220,733

     

3,872

   
Grupo Aeroportuario del Sureste SAB de CV,
Class B
   

59,743

     

1,750

   
     

5,622

   

New Zealand (0.6%)

 

Auckland International Airport Ltd.

   

269,381

     

1,499

   

Portugal (0.4%)

 

EDP Renovaveis SA

   

54,370

     

1,113

   

Spain (7.3%)

 

Aena SME SA

   

27,184

     

4,934

   

Cellnex Telecom SA (d)

   

131,622

     

5,182

   

Ferrovial SE

   

147,747

     

5,393

   

Iberdrola SA

   

279,800

     

3,670

   
     

19,179

   

Switzerland (0.7%)

 

Flughafen Zurich AG (Registered)

   

9,374

     

1,959

   

United Kingdom (6.7%)

 

National Grid PLC

   

875,211

     

11,790

   

Pennon Group PLC

   

130,428

     

1,251

   

Severn Trent PLC

   

91,082

     

2,995

   

United Utilities Group PLC

   

108,749

     

1,469

   
     

17,505

   
   

Shares

  Value
(000)
 

United States (49.3%)

 

American Electric Power Co., Inc.

   

74,958

   

$

6,088

   

American Tower Corp. REIT

   

84,269

     

18,192

   

American Water Works Co., Inc.

   

43,340

     

5,721

   

Atmos Energy Corp.

   

41,609

     

4,823

   

CenterPoint Energy, Inc.

   

235,725

     

6,735

   

Cheniere Energy, Inc.

   

43,291

     

7,390

   

CMS Energy Corp.

   

22,580

     

1,311

   

Crown Castle, Inc. REIT

   

57,527

     

6,627

   

Edison International

   

76,247

     

5,451

   

Essential Utilities, Inc.

   

17,588

     

657

   

Eversource Energy

   

73,783

     

4,554

   

Exelon Corp.

   

186,057

     

6,679

   

Kinder Morgan, Inc.

   

76,737

     

1,354

   

NiSource, Inc.

   

188,151

     

4,995

   

ONEOK, Inc.

   

117,149

     

8,226

   

PG&E Corp.

   

297,917

     

5,371

   

SBA Communications Corp. REIT

   

41,721

     

10,584

   

Sempra

   

153,479

     

11,470

   

Southern Co.

   

11,367

     

797

   

Targa Resources Corp.

   

53,541

     

4,651

   

WEC Energy Group, Inc.

   

32,202

     

2,710

   

Williams Cos., Inc.

   

132,513

     

4,615

   

Xcel Energy, Inc.

   

10,711

     

663

   
     

129,664

   

Total Common Stocks (Cost $228,857)

   

261,676

   

Short-Term Investments (3.9%)

 

Investment Company (0.5%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $1,220)
   

1,219,846

     

1,220

   

Securities held as Collateral on Loaned Securities (3.4%)

 

Investment Company (2.8%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

7,314,056

     

7,314

   
    Face
Amount
(000)
     

Repurchase Agreements (0.6%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $538; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00%
due 5/15/24 - 11/15/49;
valued at $549)
 

$

538

     

538

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24;
proceeds $538; fully collateralized by a
U.S. Government obligation; 0.00%
due 8/15/27; valued at $549)
   

538

     

538

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Global Infrastructure Portfolio

    Face
Amount
(000)
  Value
(000)
 
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24;
proceeds $538; fully collateralized by a
U.S. Government obligation; 4.75%
due 11/15/53; valued at $549)
 

$

538

   

$

538

   
     

1,614

   
Total Securities held as Collateral on Loaned
Securities (Cost $8,928)
   

8,928

   

Total Short-Term Investments (Cost $10,148)

   

10,148

   
Total Investments (103.4%) (Cost $239,005)
Including $12,387 of Securities Loaned (e)(f)
   

271,824

   

Liabilities in Excess of Other Assets (–3.4%)

   

(8,814

)

 

Net Assets (100.0%)

 

$

263,010

   

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

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

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  Security trades on the Hong Kong exchange.

(d)  Non-income producing security.

(e)  The approximate fair value and percentage of net assets, $74,378,000 and 28.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(f)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $247,758,000. The aggregate gross unrealized appreciation is approximately $37,847,000 and the aggregate gross unrealized depreciation is approximately $13,998,000, resulting in net unrealized appreciation of approximately $23,849,000.

REIT  Real Estate Investment Trust.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Oil & Gas Storage & Transportation

   

32.2

%

 

Communications

   

17.6

   

Electricity Transmission & Distribution

   

15.4

   

Diversified

   

12.1

   

Others

   

8.9

   

Other**

   

8.3

   

Airports

   

5.5

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Infrastructure Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $230,471)

 

$

263,290

   

Investment in Security of Affiliated Issuer, at Value (Cost $8,534)

   

8,534

   

Total Investments in Securities, at Value (Cost $239,005)

   

271,824

   

Foreign Currency, at Value (Cost $170)

   

170

   

Dividends Receivable

   

805

   

Receivable for Fund Shares Sold

   

88

   

Receivable from Affiliate

   

15

   

Tax Reclaim Receivable

   

10

   

Receivable for Investments Sold

   

8

   

Receivable from Securities Lending Income

   

3

   

Other Assets

   

68

   

Total Assets

   

272,991

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

8,928

   

Payable for Fund Shares Redeemed

   

447

   

Payable for Advisory Fees

   

397

   

Payable for Sub Transfer Agency Fees — Class I

   

24

   

Payable for Sub Transfer Agency Fees — Class A

   

23

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Directors' Fees and Expenses

   

37

   

Payable for Shareholder Services Fees — Class A

   

33

   

Payable for Distribution and Shareholder Services Fees — Class L

   

2

   

Payable for Distribution and Shareholder Services Fees — Class C

   

1

   

Payable for Professional Fees

   

21

   

Payable for Administration Fees

   

18

   

Payable for Custodian Fees

   

16

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

6

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Investments Purchased

   

@

 

Other Liabilities

   

28

   

Total Liabilities

   

9,981

   

Net Assets

 

$

263,010

   

Net Assets Consist of:

 
Paid-in-Capital    

255,038

   
Total Distributable Earnings    

7,972

   

Net Assets

 

$

263,010

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Infrastructure Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

101,389

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

8,551,174

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.86

   

CLASS A:

 

Net Assets

 

$

157,533

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

13,322,139

   

Net Asset Value, Redemption Price Per Share

 

$

11.82

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.65

   

Maximum Offering Price Per Share

 

$

12.47

   

CLASS L:

 

Net Assets

 

$

2,571

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

218,086

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.79

   

CLASS C:

 

Net Assets

 

$

1,493

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

128,481

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.62

   

CLASS R6:

 

Net Assets

 

$

12

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,048

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.78

   

CLASS IR:

 

Net Assets

 

$

12

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,019

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.85

   
(1)​ Including:
Securities on Loan, at Value:
   

12,387

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Infrastructure Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $498 of Foreign Taxes Withheld)

 

$

8,812

   

Dividends from Security of Affiliated Issuer (Note G)

   

323

   

Income from Securities Loaned — Net

   

29

   

Total Investment Income

   

9,164

   

Expenses:

 

Advisory Fees (Note B)

   

2,176

   

Shareholder Services Fees — Class A (Note D)

   

418

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

23

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

20

   

Sub Transfer Agency Fees — Class I

   

101

   

Sub Transfer Agency Fees — Class A

   

116

   

Sub Transfer Agency Fees — Class L

   

2

   

Sub Transfer Agency Fees — Class C

   

2

   

Administration Fees (Note C)

   

205

   

Professional Fees

   

145

   

Registration Fees

   

93

   

Transfer Agency Fees — Class I (Note E)

   

5

   

Transfer Agency Fees — Class A (Note E)

   

52

   

Transfer Agency Fees — Class L (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Custodian Fees (Note F)

   

51

   

Shareholder Reporting Fees

   

28

   

Directors' Fees and Expenses

   

11

   

Pricing Fees

   

3

   

Interest Expenses

   

3

   

Other Expenses

   

26

   

Total Expenses

   

3,490

   

Waiver of Advisory Fees (Note B)

   

(333

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(81

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(135

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(199

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(12

)

 

Net Expenses

   

2,721

   

Net Investment Income

   

6,443

   

Realized Gain (Loss):

 

Investments Sold

   

(11,520

)

 

Foreign Currency Translation

   

19

   

Net Realized Loss

   

(11,501

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

17,837

   

Foreign Currency Translation

   

9

   

Net Change in Unrealized Appreciation (Depreciation)

   

17,846

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

6,345

   

Net Increase in Net Assets Resulting from Operations

 

$

12,788

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Infrastructure Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

6,443

   

$

5,256

   

Net Realized Gain (Loss)

   

(11,501

)

   

21,567

   

Net Change in Unrealized Appreciation (Depreciation)

   

17,846

     

(54,489

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

12,788

     

(27,666

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(3,232

)

   

(13,364

)

 

Class A

   

(4,568

)

   

(28,502

)

 

Class L

   

(60

)

   

(422

)

 

Class C

   

(22

)

   

(549

)

 

Class R6*

   

(—

@)

   

(2

)

 

Class IR

   

(—

@)

   

(2

)

 

Total Dividends and Distributions to Shareholders

   

(7,882

)

   

(42,841

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

72,427

     

57,338

   

Distributions Reinvested

   

3,179

     

13,364

   

Redeemed

   

(55,927

)

   

(62,098

)

 

Class A:

 

Subscribed

   

1,441

     

3,337

   

Distributions Reinvested

   

4,459

     

27,793

   

Redeemed

   

(25,103

)

   

(32,795

)

 

Class L:

 

Exchanged

   

     

49

   

Distributions Reinvested

   

58

     

413

   

Redeemed

   

(212

)

   

(309

)

 

Class C:

 

Subscribed

   

96

     

2,037

   

Distributions Reinvested

   

22

     

549

   

Redeemed

   

(2,005

)

   

(2,388

)

 

Class R6:*

 

Distributions Reinvested

   

@

   

2

   

Class IR:

 

Distributions Reinvested

   

@

   

2

   

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(1,565

)

   

7,294

   

Total Increase (Decrease) in Net Assets

   

3,341

     

(63,213

)

 

Net Assets:

 

Beginning of Period

   

259,669

     

322,882

   

End of Period

 

$

263,010

   

$

259,669

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Infrastructure Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

6,351

     

4,062

   

Shares Issued on Distributions Reinvested

   

272

     

1,141

   

Shares Redeemed

   

(4,720

)

   

(4,521

)

 

Net Increase in Class I Shares Outstanding

   

1,903

     

682

   

Class A:

 

Shares Subscribed

   

119

     

228

   

Shares Issued on Distributions Reinvested

   

383

     

2,380

   

Shares Redeemed

   

(2,132

)

   

(2,395

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(1,630

)

   

213

   

Class L:

 

Shares Exchanged

   

     

4

   

Shares Issued on Distributions Reinvested

   

5

     

35

   

Shares Redeemed

   

(18

)

   

(23

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(13

)

   

16

   

Class C:

 

Shares Subscribed

   

8

     

141

   

Shares Issued on Distributions Reinvested

   

2

     

48

   

Shares Redeemed

   

(171

)

   

(183

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

(161

)

   

6

   

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Class IR:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.76

   

$

15.26

   

$

14.47

   

$

15.37

   

$

12.39

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.32

     

0.28

     

0.30

     

0.13

     

0.35

   

Net Realized and Unrealized Gain (Loss)

   

0.16

     

(1.57

)

   

1.72

     

(0.36

)

   

3.11

   

Total from Investment Operations

   

0.48

     

(1.29

)

   

2.02

     

(0.23

)

   

3.46

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.38

)

   

(0.36

)

   

(0.35

)

   

(0.40

)

   

(0.36

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.38

)

   

(2.21

)

   

(1.23

)

   

(0.67

)

   

(0.48

)

 

Net Asset Value, End of Period

 

$

11.86

   

$

11.76

   

$

15.26

   

$

14.47

   

$

15.37

   

Total Return(2)

   

4.13

%(3)

   

(8.40

)%

   

14.14

%

   

(1.45

)%

   

27.94

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

101,389

   

$

78,217

   

$

91,045

   

$

68,255

   

$

89,371

   

Ratio of Expenses Before Expense Limitation

   

1.20

%

   

1.20

%

   

1.18

%

   

1.18

%

   

1.16

%

 

Ratio of Expenses After Expense Limitation

   

0.88

%(4)(5)

   

0.97

%(5)

   

0.97

%(5)

   

0.97

%(5)

   

0.97

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

0.88

%(4)(5)

   

N/A

     

N/A

     

0.97

%(5)

   

0.97

%(5)

 

Ratio of Net Investment Income

   

2.71

%(4)(5)

   

1.96

%(5)

   

1.95

%(5)

   

0.94

%(5)

   

2.40

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.97

%

   

2.62

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.73

   

$

15.22

   

$

14.44

   

$

15.33

   

$

12.36

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.29

     

0.24

     

0.27

     

0.11

     

0.31

   

Net Realized and Unrealized Gain (Loss)

   

0.15

     

(1.56

)

   

1.70

     

(0.37

)

   

3.10

   

Total from Investment Operations

   

0.44

     

(1.32

)

   

1.97

     

(0.26

)

   

3.41

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.35

)

   

(0.32

)

   

(0.31

)

   

(0.36

)

   

(0.32

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.35

)

   

(2.17

)

   

(1.19

)

   

(0.63

)

   

(0.44

)

 

Net Asset Value, End of Period

 

$

11.82

   

$

11.73

   

$

15.22

   

$

14.44

   

$

15.33

   

Total Return(2)

   

3.78

%(3)

   

(8.60

)%

   

13.89

%

   

(1.69

)%

   

27.62

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

157,533

   

$

175,406

   

$

224,318

   

$

213,128

   

$

240,350

   

Ratio of Expenses Before Expense Limitation

   

1.42

%

   

1.41

%

   

1.39

%

   

1.38

%

   

1.37

%

 

Ratio of Expenses After Expense Limitation

   

1.14

%(4)(5)

   

1.21

%(5)

   

1.21

%(5)

   

1.21

%(5)

   

1.21

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

1.14

%(4)(5)

   

N/A

     

N/A

     

1.21

%(5)

   

1.21

%(5)

 

Ratio of Net Investment Income

   

2.45

%(4)(5)

   

1.70

%(5)

   

1.74

%(5)

   

0.74

%(5)

   

2.16

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.21

%

   

2.38

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.70

   

$

15.18

   

$

14.40

   

$

15.29

   

$

12.33

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.22

     

0.16

     

0.18

     

0.02

     

0.23

   

Net Realized and Unrealized Gain (Loss)

   

0.15

     

(1.55

)

   

1.69

     

(0.36

)

   

3.08

   

Total from Investment Operations

   

0.37

     

(1.39

)

   

1.87

     

(0.34

)

   

3.31

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.28

)

   

(0.24

)

   

(0.21

)

   

(0.28

)

   

(0.23

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.28

)

   

(2.09

)

   

(1.09

)

   

(0.55

)

   

(0.35

)

 

Net Asset Value, End of Period

 

$

11.79

   

$

11.70

   

$

15.18

   

$

14.40

   

$

15.29

   

Total Return(2)

   

3.19

%(3)

   

(9.09

)%

   

13.28

%

   

(2.27

)%

   

26.87

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

2,571

   

$

2,708

   

$

3,275

   

$

3,163

   

$

3,718

   

Ratio of Expenses Before Expense Limitation

   

2.01

%

   

1.95

%

   

1.98

%

   

1.94

%

   

1.93

%

 

Ratio of Expenses After Expense Limitation

   

1.70

%(4)(5)

   

1.78

%(5)

   

1.78

%(5)

   

1.78

%(5)

   

1.78

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

1.70

%(4)(5)

   

N/A

     

N/A

     

1.78

%(5)

   

1.78

%(5)

 

Ratio of Net Investment Income

   

1.88

%(4)(5)

   

1.15

%(5)

   

1.17

%(5)

   

0.17

%(5)

   

1.58

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.78

%

   

1.80

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.46

   

$

14.90

   

$

14.18

   

$

15.08

   

$

12.17

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.18

     

0.12

     

0.14

     

(0.02

)

   

0.18

   

Net Realized and Unrealized Gain (Loss)

   

0.15

     

(1.54

)

   

1.66

     

(0.36

)

   

3.05

   

Total from Investment Operations

   

0.33

     

(1.42

)

   

1.80

     

(0.38

)

   

3.23

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.17

)

   

(0.17

)

   

(0.20

)

   

(0.25

)

   

(0.20

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.17

)

   

(2.02

)

   

(1.08

)

   

(0.52

)

   

(0.32

)

 

Net Asset Value, End of Period

 

$

11.62

   

$

11.46

   

$

14.90

   

$

14.18

   

$

15.08

   

Total Return(2)

   

2.95

%(3)

   

(9.42

)%

   

12.93

%

   

(2.53

)%

   

26.55

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,493

   

$

3,314

   

$

4,218

   

$

2,787

   

$

2,901

   

Ratio of Expenses Before Expense Limitation

   

2.27

%

   

2.22

%

   

2.19

%

   

2.22

%

   

2.20

%

 

Ratio of Expenses After Expense Limitation

   

2.02

%(4)(5)

   

2.07

%(5)

   

2.07

%(5)

   

2.07

%(5)

   

2.07

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

2.02

%(4)(5)

   

N/A

     

N/A

     

2.07

%(5)

   

2.07

%(5)

 

Ratio of Net Investment Income (Loss)

   

1.56

%(4)(5)

   

0.89

%(5)

   

0.92

%(5)

   

(0.12

)%(5)

   

1.30

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.07

%

   

1.51

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.69

   

$

15.18

   

$

14.40

   

$

15.29

   

$

12.38

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.32

     

0.32

     

0.34

     

0.15

     

0.38

   

Net Realized and Unrealized Gain (Loss)

   

0.15

     

(1.60

)

   

1.67

     

(0.37

)

   

3.01

   

Total from Investment Operations

   

0.47

     

(1.28

)

   

2.01

     

(0.22

)

   

3.39

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.38

)

   

(0.36

)

   

(0.35

)

   

(0.40

)

   

(0.36

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.38

)

   

(2.21

)

   

(1.23

)

   

(0.67

)

   

(0.48

)

 

Net Asset Value, End of Period

 

$

11.78

   

$

11.69

   

$

15.18

   

$

14.40

   

$

15.29

   

Total Return(3)

   

4.09

%(4)

   

(8.35

)%

   

14.17

%

   

(1.37

)%

   

27.31

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

12

   

$

12

   

$

13

   

$

11

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

21.87

%

   

17.69

%

   

20.38

%

   

20.65

%

   

1.05

%

 

Ratio of Expenses After Expense Limitation

   

0.86

%(5)(6)

   

0.94

%(6)

   

0.94

%(6)

   

0.94

%(6)

   

0.94

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

0.86

%(5)(6)

   

N/A

     

N/A

     

0.94

%(6)

   

0.94

%(6)

 

Ratio of Net Investment Income

   

2.71

%(5)(6)

   

2.28

%(6)

   

2.21

%(6)

   

1.03

%(6)

   

2.71

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

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

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.94

%

   

2.63

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Infrastructure Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.75

   

$

15.25

   

$

14.47

   

$

15.36

   

$

12.38

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.32

     

0.32

     

0.34

     

0.15

     

0.35

   

Net Realized and Unrealized Gain (Loss)

   

0.16

     

(1.61

)

   

1.67

     

(0.37

)

   

3.11

   

Total from Investment Operations

   

0.48

     

(1.29

)

   

2.01

     

(0.22

)

   

3.46

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.38

)

   

(0.36

)

   

(0.35

)

   

(0.40

)

   

(0.36

)

 

Net Realized Gain

   

     

(1.85

)

   

(0.88

)

   

(0.27

)

   

(0.12

)

 

Total Distributions

   

(0.38

)

   

(2.21

)

   

(1.23

)

   

(0.67

)

   

(0.48

)

 

Net Asset Value, End of Period

 

$

11.85

   

$

11.75

   

$

15.25

   

$

14.47

   

$

15.36

   

Total Return(2)

   

4.15

%(3)

   

(8.38

)%

   

14.18

%

   

(1.43

)%

   

27.99

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

12

   

$

12

   

$

13

   

$

11

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

19.17

%

   

18.17

%

   

17.82

%

   

19.68

%

   

19.62

%

 

Ratio of Expenses After Expense Limitation

   

0.86

%(4)(5)

   

0.94

%(5)

   

0.94

%(5)

   

0.94

%(5)

   

0.94

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

0.86

%(4)(5)

   

N/A

     

N/A

     

0.94

%(5)

   

0.94

%(5)

 

Ratio of Net Investment Income

   

2.74

%(4)(5)

   

2.28

%(5)

   

2.20

%(5)

   

1.03

%(5)

   

2.65

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

42

%

   

57

%

   

61

%

   

62

%

   

30

%

 

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

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

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(4)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.94

%

   

2.66

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Infrastructure Portfolio. The Fund seeks to provide both capital appreciation and income.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked

prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a whollyowned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Airports

 

$

5,622

   

$

8,912

   

$

   

$

14,534

   

Communications

   

35,403

     

10,825

     

     

46,228

   

Diversified

   

12,823

     

19,024

     

     

31,847

   
Electricity
Transmission &
Distribution
   

26,346

     

14,177

     

     

40,523

   
Oil & Gas Storage &
Transportation
   

78,389

     

6,164

     

     

84,553

   

Others

   

22,337

     

1,113

     

     

23,450

   

Toll Roads

   

     

8,448

     

     

8,448

   

Water

   

6,378

     

5,715

     

     

12,093

   

Total Common Stocks

   

187,298

     

74,378

     

     

261,676

   

Short-Term Investments

 

Investment Company

   

8,534

     

     

     

8,534

   

Repurchase Agreements

   

     

1,614

     

     

1,614

   
Total Short-Term
Investments
   

8,534

     

1,614

     

     

10,148

   

Total Assets

 

$

195,832

   

$

75,992

   

$

   

$

271,824

   


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

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

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

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

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

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

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


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

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

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

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amount
Presented in
the Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

12,387

(a)

 

$

   

$

(12,387

)(b)(c)

 

$

0

   

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

(b) The Fund received cash collateral of approximately $8,928,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $4,089,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

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

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

8,928

   

$

   

$

   

$

   

$

8,928

   

Total Borrowings

 

$

8,928

   

$

   

$

   

$

   

$

8,928

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

8,928

   

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-divdend 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. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at an annual rate of 0.85% of the average daily net assets of the Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.97% for Class I shares, 1.21% for Class A shares, 1.78% for Class L shares, 2.07% for Class C shares, 0.94% for Class R6 shares and 0.94% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $333,000 of advisory fees were waived and approximately $225,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

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

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

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

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

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

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

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Fees" in the Statement of Operations, amounted to approximately $5,000.

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

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $103,626,000 and $108,004,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $12,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

   

$

84,739

   

$

76,205

   

$

323

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

8,534

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with

Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded noncontributory defined benefit pension plan covering certain independent Directors of the Fund who will have served as independent Directors for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. The Directors voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the year ended December 31, 2023, included in "Directors' Fees and Expenses" in the Statement of Operations amounted to approximately $2,000. At December 31, 2023, the Fund had an accrued pension liability of approximately $37,000, which is reflected as "Payable for Directors' Fees and Expenses" in the Statement of Assets and Liabilities.

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

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

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

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

7,882

   

$

   

$

6,885

   

$

35,956

   

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

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

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

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

199

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $2,869,000 and $13,159,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability

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

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 72.2%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Infrastructure Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Infrastructure Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 32.73% of the dividends qualified for the dividends received deduction.

The Fund designated approximately $457,000 of its distributions paid as qualified business income.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $6,733,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $498,000 and has derived net income from sources within foreign countries amounting to approximately $5,644,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

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

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


40


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

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISGIANN
6337625 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Insight Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

8

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

13

   

Notes to Consolidated Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

29

   

Liquidity Risk Management Program

   

30

   

Important Notices

   

31

   

U.S. Customer Privacy Notice

   

32

   

Directors and Officers Information

   

35

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

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

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Insight Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

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

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Global Insight Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Insight Portfolio Class I

 

$

1,000.00

   

$

1,125.10

   

$

1,020.57

   

$

4.93

   

$

4.69

     

0.92

%

 

Global Insight Portfolio Class A

   

1,000.00

     

1,123.40

     

1,018.95

     

6.64

     

6.31

     

1.24

   

Global Insight Portfolio Class L

   

1,000.00

     

1,120.80

     

1,016.33

     

9.41

     

8.94

     

1.76

   

Global Insight Portfolio Class C

   

1,000.00

     

1,118.60

     

1,015.02

     

10.79

     

10.26

     

2.02

   

Global Insight Portfolio Class R6

   

1,000.00

     

1,125.10

     

1,020.87

     

4.61

     

4.38

     

0.86

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Insight Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 50.84%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World Net Index (the "Index"), which returned 22.20%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Global equities performed well in 2023, as economies did a better-than-expected job of withstanding the rapid increases in interest rates needed to cool inflation from post-pandemic highs and excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform. While tightening conditions had become a headwind to the eurozone and U.K. economies toward the end of 2023, the widely predicted recessions did not materialize and the U.S. economy remained particularly resilient. Over the year, softening inflation data and relatively tight labor markets allowed central banks to slow and eventually pause interest rate increases, bolstering sentiment that rate hiking cycles were ending and rate cuts would follow. Meanwhile, markets also faced a U.S. regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, a disappointing economic recovery in China and multiple geopolitical flashpoints.

•  Global equities, as measured by the Index, advanced in the 12-month period. All sectors had positive performance, led by information technology, communication services and consumer discretionary. Utilities, consumer staples and health care were the weakest performing sectors in the Index over this period.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the

benchmark, with securities weighted on our assessment of the quality of the company and our conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period due to favorable stock selection and sector allocations.

•  Stock selection in consumer discretionary was the greatest contributor to relative performance. A Latin American ecommerce and payments company was the top contributor within the sector and second largest across the portfolio. The company reported solid quarterly results that beat analysts' expectations; its shares advanced as the company continued to demonstrate strong execution on key initiatives, provided an upbeat outlook for its payments business, and gained ecommerce market share.

•  Stock selection in financials added to relative gains. A technology platform specializing in consumer buy-now-pay-later point of sale financing and payment processing was the largest contributor in the sector and fifth largest in the portfolio. The company reported results that came in ahead of expectations, driven primarily by strong credit execution, including better-than-expected provisioning, as the company continues to proactively manage loan performance in an uncertain and volatile macroeconomic environment.

•  Information technology also drove relative outperformance, as both stock selection and an average overweight in the sector were advantageous. A company that operates a cloud-based software and services platform that enables merchants to build an ecommerce presence and was the greatest contributor in the sector and across the portfolio. Its outperformance was driven by continued strong business execution in a tougher economic environment, ongoing traction with new product offerings, and divestment of the company's capital intense logistics business unit.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Insight Portfolio

•  Health care was the largest detractor (and only sector-level detractor) from relative performance, with an adverse impact from both stock selection and an average overweight in the sector. One of the largest buyers of biopharmaceutical royalties and a leading funder of innovation across academic institutions, non-profits, biotechnology and pharmaceutical companies was the greatest detractor in the sector and across the portfolio. The company reported solid results, but its shares remained pressured due to investors' ongoing concerns around clinical trial results for a few of its partners' new therapies and the impact to potential related royalties.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country World Net Index(1) and the Lipper Global Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(7)
 
Fund — Class I Shares
w/o sales charges(4)
   

50.84

%

   

7.02

%

   

6.99

%

   

9.21

%

 
Fund — Class A Shares w/o
sales charges(4)
   

50.54

     

6.70

     

6.64

     

8.87

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

42.62

     

5.56

     

6.07

     

8.42

   
Fund — Class L Shares w/o
sales charges(4)
   

49.78

     

6.13

     

6.08

     

8.31

   
Fund — Class C Shares w/o
sales charges(5)
   

49.15

     

5.89

     

     

6.17

   
Fund — Class C Shares with
maximum 1.00% deferred sales
charges(5)
   

48.15

     

5.89

     

     

6.17

   
Fund — Class R6 Shares
w/o sales charges(6)
   

51.03

     

     

     

–20.60

   

MSCI All Country World Net Index

   

22.20

     

11.72

     

7.93

     

8.39

   
Lipper Global Multi-Cap Growth
Funds Index
   

22.35

     

11.65

     

8.00

     

8.25

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on December 28, 2010.

(5)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(6)​  Commenced offering on June 14, 2021.

(7)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Global Insight Portfolio

   

Shares

  Value
(000)
 

Common Stocks (95.7%)

 

Brazil (0.4%)

 

NU Holdings Ltd., Class A (a)

   

38,210

   

$

318

   

Canada (6.9%)

 

Shopify, Inc., Class A (a)

   

69,213

     

5,392

   

Israel (4.9%)

 

Global-e Online Ltd. (a)

   

95,557

     

3,787

   

Korea, Republic of (2.1%)

 

Coupang, Inc. (a)

   

101,571

     

1,645

   

Netherlands (7.3%)

 

Adyen NV (a)

   

4,404

     

5,685

   

Singapore (3.5%)

 

Grab Holdings Ltd., Class A (a)

   

703,687

     

2,372

   

Sea Ltd. ADR (a)

   

9,145

     

370

   
     

2,742

   

United States (70.6%)

 

Affirm Holdings, Inc. (a)

   

104,106

     

5,116

   

Agilon Health, Inc. (a)

   

173,485

     

2,177

   

Airbnb, Inc., Class A (a)

   

13,132

     

1,788

   

Arbutus Biopharma Corp. (a)

   

119,129

     

298

   

Aurora Innovation, Inc. (a)

   

388,681

     

1,699

   

Bill Holdings, Inc. (a)

   

24,767

     

2,021

   

Carvana Co. (a)

   

51,724

     

2,738

   

Cloudflare, Inc., Class A (a)

   

85,956

     

7,157

   

Dlocal Ltd. (a)

   

19,865

     

351

   

DoorDash, Inc., Class A (a)

   

35,205

     

3,481

   

Ginkgo Bioworks Holdings, Inc. (a)

   

141,030

     

238

   

MercadoLibre, Inc. (a)

   

3,356

     

5,274

   

MicroStrategy, Inc., Class A (a)

   

2,172

     

1,372

   

Peloton Interactive, Inc., Class A (a)

   

69,142

     

421

   

ProKidney Corp. (a)

   

41,461

     

74

   

ROBLOX Corp., Class A (a)

   

59,716

     

2,730

   

Roivant Sciences Ltd. (a)

   

89,500

     

1,005

   

Royalty Pharma PLC, Class A

   

118,132

     

3,318

   

Snowflake, Inc., Class A (a)

   

18,137

     

3,609

   

Spotify Technology SA (a)

   

407

     

77

   

Tesla, Inc. (a)

   

14,981

     

3,722

   

Trade Desk, Inc., Class A (a)

   

37,264

     

2,682

   

Uber Technologies, Inc. (a)

   

59,621

     

3,671

   
     

55,019

   

Total Common Stocks (Cost $54,325)

   

74,588

   

Preferred Stock (0.0%)‡

 

United States (0.0%)‡

 
Lookout, Inc., Series F (a)(b)(c)
(acquisition cost — $73; acquired 6/17/14)
   

6,374

     

19

   

Total Preferred Stocks (Cost $73)

   

19

   

Investment Company (2.3%)

 

United States (2.3%)

 
Grayscale Bitcoin Trust (a)
(Cost $1,202)
   

52,211

     

1,807

   
   

Shares

  Value
(000)
 

Short-Term Investment (2.1%)

 

Investment Company (2.1%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $1,663)
   

1,662,917

   

$

1,663

   
Total Investments Excluding Purchased
Options (100.1%) (Cost $57,263)
   

78,077

   
Total Purchased Options Outstanding (0.1%)
(Cost $258)
   

45

   

Total Investments (100.2%) (Cost $57,521) (d)(e)(f)

   

78,122

   

Liabilities in Excess of Other Assets (–0.2%)

   

(141

)

 

Net Assets (100.0%)

 

$

77,981

   

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

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at December 31, 2023 amounts to approximately $19,000 and represents less than 0.05% of net assets.

(c)  At December 31, 2023, the Fund held a fair valued security at approximately $19,000, representing less than 0.05% of net assets. This security has been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(d)  The approximate fair value and percentage of net assets, $5,685,000 and 7.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(e)  Securities are available for collateral in connection with purchased options.

(f)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $70,926,000. The aggregate gross unrealized appreciation is approximately $27,739,000 and the aggregate gross unrealized depreciation is approximately $20,054,000, resulting in net unrealized appreciation of approximately $7,685,000.

ADR  American Depositary Receipt.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Global Insight Portfolio

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

 

Strike
Price

 

Expiration
Date

 

Number of
Contracts

 

Notional
Amount
(000)

 

Value
(000)

 

Premiums
Paid
(000)

 

Unrealized
Depreciation
(000)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.43

   

Jan-24

   

17,249,664

   

$

17,250

   

$

2

   

$

81

   

$

(79

)

 

Standard Chartered Bank

 

USD/CNH

 

CNH

7.57

   

May-24

   

21,463,987

     

21,464

     

22

     

91

     

(69

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.79

   

Aug-24

   

20,862,233

     

20,862

     

21

     

86

     

(65

)

 
                       

$

45

   

$

258

   

$

(213

)

 

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

30.3

%

 

Information Technology Services

   

20.7

   

Financial Services

   

14.2

   

Broadline Retail

   

13.7

   

Ground Transportation

   

7.7

   

Hotels, Restaurants & Leisure

   

6.8

   

Software

   

6.6

   

Total Investments

   

100.0

%

 

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

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Insight Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $55,858)

 

$

76,459

   

Investment in Security of Affiliated Issuer, at Value (Cost $1,663)

   

1,663

   

Total Investments in Securities, at Value (Cost $57,521)

   

78,122

   

Foreign Currency, at Value (Cost $6)

   

6

   

Receivable for Investments Sold

   

144

   

Receivable for Fund Shares Sold

   

19

   

Tax Reclaim Receivable

   

5

   

Receivable from Affiliate

   

5

   

Dividends Receivable

   

1

   

Other Assets

   

30

   

Total Assets

   

78,332

   

Liabilities:

 

Payable for Fund Shares Redeemed

   

165

   

Due to Broker

   

60

   

Payable for Advisory Fees

   

43

   

Payable for Professional Fees

   

24

   

Payable for Sub Transfer Agency Fees — Class I

   

10

   

Payable for Sub Transfer Agency Fees — Class A

   

5

   

Payable for Sub Transfer Agency Fees — Class C

   

1

   

Payable for Shareholder Services Fees — Class A

   

4

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

4

   

Payable for Custodian Fees

   

7

   

Payable for Administration Fees

   

5

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

23

   

Total Liabilities

   

351

   

Net Assets

 

$

77,981

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

192,950

   

Total Accumulated Loss

   

(114,969

)

 

Net Assets

 

$

77,981

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Insight Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

52,218

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

4,464,981

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.69

   

CLASS A:

 

Net Assets

 

$

21,056

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,895,105

   

Net Asset Value, Redemption Price Per Share

 

$

11.11

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.62

   

Maximum Offering Price Per Share

 

$

11.73

   

CLASS L:

 

Net Assets

 

$

253

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

25,279

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.02

   

CLASS C:

 

Net Assets

 

$

4,448

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

462,300

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

9.62

   

CLASS R6:

 

Net Assets

 

$

6

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

475

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.69

   

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Insight Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers* (Net of $3 of Foreign Taxes Withheld)

 

$

180

   

Dividends from Security of Affiliated Issuer (Note G)

   

61

   

Income from Securities Loaned — Net

   

7

   

Total Investment Income

   

248

   

Expenses:

 

Advisory Fees (Note B)

   

672

   

Professional Fees

   

170

   

Registration Fees

   

103

   

Shareholder Services Fees — Class A (Note D)

   

52

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

2

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

44

   

Sub Transfer Agency Fees — Class I

   

41

   

Sub Transfer Agency Fees — Class A

   

24

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

4

   

Administration Fees (Note C)

   

67

   

Custodian Fees (Note F)

   

22

   

Shareholder Reporting Fees

   

19

   

Transfer Agency Fees — Class I (Note E)

   

7

   

Transfer Agency Fees — Class A (Note E)

   

5

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Directors' Fees and Expenses

   

7

   

Pricing Fees

   

2

   

Other Expenses

   

23

   

Total Expenses

   

1,271

   

Waiver of Advisory Fees (Note B)

   

(287

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(30

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(19

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(5

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(2

)

 

Net Expenses

   

924

   

Net Investment Loss

   

(676

)

 

Realized Gain (Loss):

 

Investments Sold

   

(24,960

)

 

Foreign Currency Translation

   

1

   

Net Realized Loss

   

(24,959

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

59,911

   

Foreign Currency Translation

   

4

   

Net Change in Unrealized Appreciation (Depreciation)

   

59,915

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

34,956

   

Net Increase in Net Assets Resulting from Operations

 

$

34,280

   

*  Includes foreign tax reclaims for previously withheld taxes on dividends earned in certain European Union countries in the amount of approximately $16 (000).

@  Amount is less than $500.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Insight Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(676

)

 

$

(1,109

)

 

Net Realized Loss

   

(24,959

)

   

(91,822

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

59,915

     

(53,379

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

34,280

     

(146,310

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

     

(59

)

 

Class A

   

     

(21

)

 

Class L

   

     

(—

@)

 

Class C

   

     

(6

)

 

Class R6*

   

     

(—

@)

 

Total Dividends and Distributions to Shareholders

   

     

(86

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

8,973

     

41,330

   

Distributions Reinvested

   

     

58

   

Redeemed

   

(35,837

)

   

(86,880

)

 

Class A:

 

Subscribed

   

2,245

     

6,444

   

Distributions Reinvested

   

     

21

   

Redeemed

   

(8,820

)

   

(23,332

)

 

Class L:

 

Distributions Reinvested

   

     

@

 

Redeemed

   

(3

)

   

(87

)

 

Class C:

 

Subscribed

   

434

     

1,048

   

Distributions Reinvested

   

     

6

   

Redeemed

   

(2,054

)

   

(5,335

)

 

Class R6:*

 

Distributions Reinvested

   

     

@

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(35,062

)

   

(66,727

)

 

Total Decrease in Net Assets

   

(782

)

   

(213,123

)

 

Net Assets:

 

Beginning of Period

   

78,763

     

291,886

   

End of Period

 

$

77,981

   

$

78,763

   

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Insight Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

942

     

3,866

   

Shares Issued on Distributions Reinvested

   

     

7

   

Shares Redeemed

   

(3,590

)

   

(7,746

)

 

Net Decrease in Class I Shares Outstanding

   

(2,648

)

   

(3,873

)

 

Class A:

 

Shares Subscribed

   

237

     

590

   

Shares Issued on Distributions Reinvested

   

     

3

   

Shares Redeemed

   

(938

)

   

(2,115

)

 

Net Decrease in Class A Shares Outstanding

   

(701

)

   

(1,522

)

 

Class L:

 

Shares Issued on Distributions Reinvested

   

     

@@

 

Shares Redeemed

   

(—

@@)

   

(12

)

 

Net Decrease in Class L Shares Outstanding

   

(—

@@)

   

(12

)

 

Class C:

 

Shares Subscribed

   

48

     

110

   

Shares Issued on Distributions Reinvested

   

     

1

   

Shares Redeemed

   

(253

)

   

(601

)

 

Net Decrease in Class C Shares Outstanding

   

(205

)

   

(490

)

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

     

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Insight Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.75

   

$

18.32

   

$

33.83

   

$

17.96

   

$

13.96

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.06

)

   

(0.07

)

   

(0.04

)

   

(0.24

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

4.00

     

(10.49

)

   

(5.05

)

   

17.29

     

4.41

   

Total from Investment Operations

   

3.94

     

(10.56

)

   

(5.09

)

   

17.05

     

4.39

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.01

)

   

     

   

Net Realized Gain

   

     

(0.01

)

   

(10.41

)

   

(1.18

)

   

(0.39

)

 

Total Distributions

   

     

(0.01

)

   

(10.42

)

   

(1.18

)

   

(0.39

)

 

Net Asset Value, End of Period

 

$

11.69

   

$

7.75

   

$

18.32

   

$

33.83

   

$

17.96

   

Total Return(3)

   

50.84

%(4)

   

(57.65

)%

   

(14.25

)%

   

94.98

%

   

31.49

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

52,218

   

$

55,114

   

$

201,294

   

$

314,038

   

$

87,595

   

Ratio of Expenses Before Expense Limitation

   

1.37

%

   

1.34

%

   

1.08

%

   

N/A

     

1.21

%

 

Ratio of Expenses After Expense Limitation

   

0.96

%(5)(6)

   

1.00

%(6)

   

1.00

%(6)(7)

   

1.09

%(6)

   

1.09

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(6)

   

1.00

%(6)(7)

   

N/A

     

1.09

%(6)

 

Ratio of Net Investment Loss

   

(0.67

)%(5)(6)

   

(0.71

)%(6)

   

(0.12

)%(6)

   

(0.94

)%(6)

   

(0.11

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

43

%

   

51

%

   

112

%

   

85

%

   

95

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.00

%

   

(0.71

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective March 31, 2021, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.00% for Class I shares. Prior to March 31, 2021, the maximum ratio was 1.10% for Class I shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Insight Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.38

   

$

17.52

   

$

32.98

   

$

17.57

   

$

13.71

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.09

)

   

(0.11

)

   

(0.13

)

   

(0.29

)

   

(0.07

)

 

Net Realized and Unrealized Gain (Loss)

   

3.82

     

(10.02

)

   

(4.92

)

   

16.88

     

4.32

   

Total from Investment Operations

   

3.73

     

(10.13

)

   

(5.05

)

   

16.59

     

4.25

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

(10.41

)

   

(1.18

)

   

(0.39

)

 

Net Asset Value, End of Period

 

$

11.11

   

$

7.38

   

$

17.52

   

$

32.98

   

$

17.57

   

Total Return(3)

   

50.54

%(4)

   

(57.83

)%

   

(14.49

)%

   

94.46

%

   

31.04

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

21,056

   

$

19,176

   

$

72,157

   

$

103,550

   

$

43,576

   

Ratio of Expenses Before Expense Limitation

   

1.69

%

   

1.64

%

   

1.36

%

   

N/A

     

1.48

%

 

Ratio of Expenses After Expense Limitation

   

1.28

%(5)(6)

   

1.32

%(6)

   

1.30

%(6)(7)

   

1.35

%(6)

   

1.41

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.32

%(6)

   

1.30

%(6)(7)

   

N/A

     

1.41

%(6)

 

Ratio of Net Investment Loss

   

(0.99

)%(5)(6)

   

(1.03

)%(6)

   

(0.41

)%(6)

   

(1.20

)%(6)

   

(0.43

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

43

%

   

51

%

   

112

%

   

85

%

   

95

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.32

%

   

(1.03

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective March 31, 2021, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.32% for Class A shares. Prior to March 31, 2021, the maximum ratio was 1.42% for Class A shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Insight Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

6.69

   

$

15.97

   

$

31.34

   

$

16.82

   

$

13.21

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.13

)

   

(0.14

)

   

(0.30

)

   

(0.40

)

   

(0.16

)

 

Net Realized and Unrealized Gain (Loss)

   

3.46

     

(9.13

)

   

(4.66

)

   

16.10

     

4.16

   

Total from Investment Operations

   

3.33

     

(9.27

)

   

(4.96

)

   

15.70

     

4.00

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

(10.41

)

   

(1.18

)

   

(0.39

)

 

Net Asset Value, End of Period

 

$

10.02

   

$

6.69

   

$

15.97

   

$

31.34

   

$

16.82

   

Total Return(3)

   

49.78

%(4)

   

(58.06

)%

   

(14.96

)%

   

93.38

%

   

30.32

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

253

   

$

171

   

$

602

   

$

923

   

$

573

   

Ratio of Expenses Before Expense Limitation

   

3.18

%

   

2.72

%

   

2.04

%

   

2.09

%

   

2.16

%

 

Ratio of Expenses After Expense Limitation

   

1.80

%(5)(6)

   

1.85

%(6)

   

1.87

%(6)(7)

   

1.94

%(6)

   

1.94

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.85

%(6)

   

1.87

%(6)(7)

   

N/A

     

1.94

%(6)

 

Ratio of Net Investment Loss

   

(1.51

)%(5)(6)

   

(1.54

)%(6)

   

(0.98

)%(6)

   

(1.79

)%(6)

   

(0.96

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

43

%

   

51

%

   

112

%

   

85

%

   

95

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.85

%

   

(1.56

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective March 31, 2021, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class L shares. Prior to March 31, 2021, the maximum ratio was 1.95% for Class L shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Insight Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

6.45

   

$

15.40

   

$

30.73

   

$

16.54

   

$

13.03

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.14

)

   

(0.16

)

   

(0.34

)

   

(0.43

)

   

(0.19

)

 

Net Realized and Unrealized Gain (Loss)

   

3.31

     

(8.78

)

   

(4.58

)

   

15.80

     

4.09

   

Total from Investment Operations

   

3.17

     

(8.94

)

   

(4.92

)

   

15.37

     

3.90

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

(10.41

)

   

(1.18

)

   

(0.39

)

 

Net Asset Value, End of Period

 

$

9.62

   

$

6.45

   

$

15.40

   

$

30.73

   

$

16.54

   

Total Return(3)

   

49.15

%(4)

   

(58.07

)%

   

(15.14

)%

   

92.97

%

   

29.97

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,448

   

$

4,298

   

$

17,824

   

$

20,633

   

$

10,984

   

Ratio of Expenses Before Expense Limitation

   

2.44

%

   

2.36

%

   

2.08

%

   

N/A

     

2.24

%

 

Ratio of Expenses After Expense Limitation

   

2.06

%(5)(6)

   

2.06

%(6)

   

2.04

%(6)(7)

   

2.11

%(6)

   

2.19

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.06

%(6)

   

2.04

%(6)(7)

   

N/A

     

2.19

%(6)

 

Ratio of Net Investment Loss

   

(1.77

)%(5)(6)

   

(1.76

)%(6)

   

(1.14

)%(6)

   

(1.96

)%(6)

   

(1.21

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

43

%

   

51

%

   

112

%

   

85

%

   

95

%

 

(1)  Not consolidated.

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

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

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.10

%

   

(1.81

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Effective March 31, 2021, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class C shares. Prior to March 31, 2021, the maximum ratio was 2.20% for Class C shares.

(8)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Insight Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
June 14, 2021(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

7.74

   

$

18.30

   

$

33.39

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.06

)

   

(0.07

)

   

(0.20

)

 

Net Realized and Unrealized Gain (Loss)

   

4.01

     

(10.48

)

   

(4.45

)

 

Total from Investment Operations

   

3.95

     

(10.55

)

   

(4.65

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.03

)

 

Net Realized Gain

   

     

(0.01

)

   

(10.41

)

 

Total Distributions

   

     

(0.01

)

   

(10.44

)

 

Net Asset Value, End of Period

 

$

11.69

   

$

7.74

   

$

18.30

   

Total Return(4)

   

51.03

%(5)

   

(57.66

)%

   

(13.11

)%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

6

   

$

4

   

$

9

   

Ratio of Expenses Before Expense Limitation

   

51.28

%

   

44.13

%

   

17.00

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.90

%(8)(9)

   

0.95

%(9)

   

0.95

%(7)(9)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.95

%(9)

   

0.95

%(7)(9)

 

Ratio of Net Investment Loss

   

(0.60

)%(8)(9)

   

(0.67

)%(9)

   

(0.62

)%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(7)(10)

 

Portfolio Turnover Rate

   

43

%

   

51

%

   

112

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Offering.

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

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

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.95

%

   

(0.65

)%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

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


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

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

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Global Insight Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

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

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Global Insight Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements

include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $1,991,000 or approximately 2.55% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which clarifies the guidance in ASC Topic No. 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and introduces new disclosures related to such equity security. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security's fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by ASU 2022-03). In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The new guidance is effective for public companies with annual reporting periods in fiscal years beginning after December 15, 2023, and interim periods in the following year, with early adoption permitted. An investment company that holds equity securities that are subject to contractual sale restrictions executed before the date at which the investment company first adopts ASU 2022-03 shall continue to account for that


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

equity security using the accounting policy applied before the adoption of ASU 2022-03 until the contractual sale restriction expires or is modified.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/dealer or valued by a pricing service/vendor; (4) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a

wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

2.  Fair Value Measurement: FASB ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

3,722

   

$

   

$

   

$

3,722

   

Banks

   

318

     

     

     

318

   

Biotechnology

   

1,377

     

     

     

1,377

   

Broadline Retail

   

10,706

     

     

     

10,706

   

Chemicals

   

238

     

     

     

238

   

Entertainment

   

3,177

     

     

     

3,177

   

Financial Services

   

5,467

     

5,685

     

     

11,152

   

Ground Transportation

   

6,043

     

     

     

6,043

   
Health Care Providers &
Services
   

2,177

     

     

     

2,177

   
Hotels, Restaurants &
Leisure
   

5,269

     

     

     

5,269

   
Information Technology
Services
   

16,158

     

     

     

16,158

   

Leisure Products

   

421

     

     

     

421

   

Media

   

2,682

     

     

     

2,682

   

Pharmaceuticals

   

3,318

     

     

     

3,318

   

Software

   

5,092

     

     

     

5,092

   

Specialty Retail

   

2,738

     

     

     

2,738

   

Total Common Stocks

   

68,903

     

5,685

     

     

74,588

   

Preferred Stock

 

Software

   

     

     

19

     

19

   

Investment Company

   

1,807

     

     

     

1,807

   

Call Options Purchased

   

     

45

     

     

45

   

Short-Term Investment

 

Investment Company

   

1,663

     

     

     

1,663

   

Total Assets

 

$

72,373

   

$

5,730

   

$

19

   

$

78,122

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

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

    Preferred
Stock
(000)
 

Beginning Balance

 

$

30

   

Purchases

   

   

Sales

   

   

Transfers in

   

   

Transfers out

   

   

Corporate actions

   

   

Change in unrealized appreciation (depreciation)

   

(11

)

 

Realized gains (losses)

   

   

Ending Balance

 

$

19

   
Net change in unrealized appreciation (depreciation) from
investments still held as of December 31, 2023
 

$

(11

)

 


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2023. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance. The Fund calculated the weighted averages of the unobservable inputs relative to each investment's fair value as of December 31, 2023:

    Fair Value at
December 31, 2023
(000)
  Valuation
Technique
  Unobservable
Input
 

Amount*

  Impact to
Valuation from an
Increase in Input**
 
Preferred Stock
 

$

19
 
  Discounted Cash Flow
 
  Weighted Average
Cost of Capital
   

16.5

%

 

Decrease

 
       

 

     

Perpetual Growth Rate

   

3.5

%

 

Increase

 
         
 
  Market Comparable
Companies
  Enterprise Value/
Revenue
   

7.8

x

 

Increase

 
         
 
   
 
  Discount for Lack
of Marketability
   

15.0

%

 

Decrease

 
         
 
  Comparable
Transactions
  Enterprise Value/
Revenue
   

8.8

x

 

Increase

 

*  Amount is indicative of the weighted average.

**  Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.

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

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

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

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

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

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

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


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

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

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

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

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


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated Statement
of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 
Currency Risk
 

$

45

(a)

 

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 
Currency Risk
 
  Investments
(Purchased Options)
 

$

(236

)(a)

 

(a) Amounts are included in Realized Loss on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(127

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

45

(a)

 

$

   

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

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

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA

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

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented
in the
Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received(b)
(000)
  Net Amount
(not less
than $0)
(000)
 

JPMorgan Chase Bank NA

 

$

23

   

$

   

$

(20

)

 

$

3

   

Standard Chartered Bank

   

22

     

     

(22

)

   

0

   

Total

 

$

45

   

$

   

$

(42

)

 

$

3

   

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

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


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

67,622,000

   

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

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

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

At December 31, 2023, the Fund did not have any outstanding securities on loan.

6.  Restricted Securities: The Fund invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price.

In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Consolidated Portfolio of Investments.

7.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

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

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


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

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

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.46% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.32% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $287,000 of advisory fees were waived and approximately $28,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $35,335,000 and $72,170,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $2,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

767

   

$

37,456

   

$

36,560

   

$

61

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

1,663

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Ordinary
Income
(000)
 
$

   

$

86

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

1,787

   

$

(1,787

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $45,833,000 and $76,570,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of

0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 67.6%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Insight Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Global Insight Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds
in Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since
August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since
February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since
August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds
in Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds
in Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since
January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since
July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since
August 1994
(Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds
in Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


40


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGIANN
6337649 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Opportunity Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

8

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

13

   

Notes to Consolidated Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

27

   

Liquidity Risk Management Program

   

28

   

Federal Tax Notice

   

29

   

Important Notices

   

30

   

U.S. Customer Privacy Notice

   

31

   

Directors and Officers Information

   

34

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Opportunity Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Global Opportunity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Opportunity Portfolio Class I

 

$

1,000.00

   

$

1,114.10

   

$

1,020.97

   

$

4.48

   

$

4.28

     

0.84

%

 

Global Opportunity Portfolio Class A

   

1,000.00

     

1,112.60

     

1,019.41

     

6.12

     

5.85

     

1.15

   

Global Opportunity Portfolio Class L

   

1,000.00

     

1,112.10

     

1,018.90

     

6.65

     

6.36

     

1.25

   

Global Opportunity Portfolio Class C

   

1,000.00

     

1,108.60

     

1,015.78

     

9.94

     

9.50

     

1.87

   

Global Opportunity Portfolio Class R6

   

1,000.00

     

1,114.40

     

1,021.22

     

4.21

     

4.02

     

0.79

   

Global Opportunity Portfolio Class IR

   

1,000.00

     

1,114.60

     

1,021.37

     

4.05

     

3.87

     

0.76

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Opportunity Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 49.70%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World Net Index (the "Index"), which returned 22.20%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Global equities advanced during the 12-month period ended December 31, 2023. The move was driven by signs of moderating inflation and optimism that interest rates may have peaked with central banks expected to lower interest rates in 2024.

•  Our team remained focused on assessing company prospects over a longer-term period of five to ten years, and owning a portfolio of high quality companies with diverse business drivers not tied to a particular market environment.

•  The team manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Our longer-term focus results in lower turnover than many of our peers. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process. For the 12-month period, the Fund outperformed the Index due to favorable stock selection and sector allocation.

•  The primary contributors to the Fund's relative performance were stock selection in industrials, information technology and communication services.

•  The main detractors from relative performance were stock selection in financials and sector overweight allocations to financials and industrials.

Management Strategies

•  There were no changes to our bottom-up investment process during the period. The Fund seeks long-term capital appreciation by investing globally in high quality established and emerging companies that the investment team believes are undervalued at the time of purchase. To achieve its objective, the investment team typically favors companies it believes have sustainable competitive advantages that can be monetized through growth. The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental and social externalities and governance (also referred to as ESG).

•  At the close of the period, consumer discretionary represented the largest sector weight in the Fund, followed by information technology and financials. Our bottom-up investment process resulted in sector overweight positions in consumer discretionary, communication services, industrials, financials and information technology, and underweight positions in real estate, utilities, materials, energy, consumer staples and health care. The Fund had no real estate, utilities, materials, energy, consumer staples and health care holdings at the end of the reporting period.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Opportunity Portfolio

Performance Compared to the MSCI All Country World Net Index(1)​ and the Lipper Global Large-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(8)
 
Fund — Class I Shares
w/o sales charges(4)
   

49.70

%

   

13.06

%

   

13.02

%

   

11.93

%

 
Fund — Class A Shares
w/o sales charges(4)
   

49.29

     

12.72

     

12.65

     

14.63

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

41.47

     

11.51

     

12.04

     

14.18

   
Fund — Class L Shares
w/o sales charges(4)
   

49.17

     

12.66

     

12.57

     

11.52

   
Fund — Class C Shares
w/o sales charges(6)
   

48.23

     

11.92

     

     

11.45

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(6)
   

47.23

     

11.92

     

     

11.45

   
Fund — Class R6 Shares
w/o sales charges(5)
   

49.82

     

13.15

     

13.07

     

14.53

   
Fund — Class IR Shares
w/o sales charges(7)
   

49.85

     

13.15

     

     

7.70

   

MSCI All Country World Net Index

   

22.20

     

11.72

     

7.93

     

6.20

   
Lipper Global Large-Cap
Growth Funds Index
   

26.51

     

11.79

     

8.65

     

6.78

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Large-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  On May 21, 2010 Class C and Class I shares of Van Kampen Global Growth Fund ("the Predecessor Fund") were reorganized into Class L and Class I shares of Morgan Stanley Global Growth Portfolio ("the Fund"), respectively. Class L and Class I shares' returns of the Fund will differ from the Predecessor Fund as they have different expenses. Performance shown for the Fund's Class I and Class L shares reflects the performance of the shares of the Predecessor Fund for periods prior to May 21, 2010. The Class C and I shares of the Predecessor Fund commenced operations on May 30, 2008. Class P shares, which were renamed Class A shares effective September 9, 2013, commenced operations on May 21, 2010. In October 2010, the Morgan Stanley Global Growth Portfolio changed its name to the Morgan Stanley Global Opportunity Portfolio.

(5)​  Commenced offering on September 13, 2013.

(6)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(7)​  Commenced offering on June 15, 2018.

(8)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Global Opportunity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (98.5%)

 

Argentina (0.6%)

 

Globant SA (a)

   

72,445

   

$

17,241

   

Brazil (0.9%)

 

NU Holdings Ltd., Class A (a)

   

3,067,586

     

25,553

   

Canada (4.8%)

 

Shopify, Inc., Class A (a)

   

1,759,356

     

137,054

   

China (4.6%)

 

Meituan, Class B (a)(b)

   

7,261,000

     

76,231

   

Trip.com Group Ltd. ADR (a)

   

1,496,464

     

53,888

   
     

130,119

   

Denmark (4.8%)

 

DSV AS

   

781,126

     

137,249

   

France (3.1%)

 

Hermes International

   

41,240

     

87,656

   

India (7.7%)

 

Axis Bank Ltd.

   

319,704

     

4,231

   

HDFC Bank Ltd.

   

7,056,290

     

144,485

   

ICICI Bank Ltd. ADR

   

2,972,630

     

70,867

   
     

219,583

   

Italy (3.4%)

 

Moncler SpA

   

1,551,117

     

95,501

   

Japan (1.4%)

 

Keyence Corp.

   

89,400

     

39,279

   

Korea, Republic of (4.3%)

 

Coupang, Inc. (a)

   

5,247,951

     

84,964

   

KakaoBank Corp. (a)

   

611,700

     

13,469

   

NAVER Corp.

   

141,114

     

24,416

   
     

122,849

   

Netherlands (0.8%)

 

Adyen NV (a)

   

17,244

     

22,261

   

Singapore (1.4%)

 

Grab Holdings Ltd., Class A (a)

   

11,462,196

     

38,628

   

Switzerland (0.9%)

 

On Holding AG, Class A (a)

   

985,642

     

26,583

   

United States (59.8%)

 

Adobe, Inc. (a)

   

209,930

     

125,244

   

Amazon.com, Inc. (a)

   

810,709

     

123,179

   

Block, Inc., Class A (a)

   

813,084

     

62,892

   

Crowdstrike Holdings, Inc., Class A (a)

   

283,165

     

72,298

   

Deckers Outdoor Corp. (a)

   

39,506

     

26,407

   

DoorDash, Inc., Class A (a)

   

824,489

     

81,534

   

Endeavor Group Holdings, Inc., Class A

   

1,049,766

     

24,911

   
Magic Leap, Inc., Class A (a)(c)(d)
(acquisition cost — $3,175;
acquired 12/22/15)
   

6,530

     

   

Mastercard, Inc., Class A

   

154,032

     

65,696

   

MercadoLibre, Inc. (a)

   

99,799

     

156,838

   

Meta Platforms, Inc., Class A (a)

   

380,422

     

134,654

   
   

Shares

  Value
(000)
 

Salesforce, Inc. (a)

   

255,374

   

$

67,199

   

ServiceNow, Inc. (a)

   

308,643

     

218,053

   

Snowflake, Inc., Class A (a)

   

96,549

     

19,213

   

Spotify Technology SA (a)

   

419,021

     

78,738

   

TKO Group Holdings, Inc.

   

401,831

     

32,781

   

Uber Technologies, Inc. (a)

   

4,040,348

     

248,765

   

Visa, Inc., Class A

   

308,502

     

80,319

   

Walt Disney Co.

   

859,867

     

77,638

   
     

1,696,359

   

Total Common Stocks (Cost $1,602,646)

   

2,795,915

   

Short-Term Investment (1.4%)

 

Investment Company (1.4%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $39,395)
   

39,395,395

     

39,395

   

Total Investments (99.9%) (Cost $1,642,041) (e)(f)

   

2,835,310

   

Other Assets in Excess of Liabilities (0.1%)

   

1,493

   

Net Assets (100.0%)

 

$

2,836,803

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted security (excluding 144A holdings) at December 31, 2023 amounts to $0 and represents 0.0% of net assets.

(d)  At December 31, 2023, the Fund held a fair valued security at $0, representing 0.0% of net assets. This security has been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(e)  The approximate fair value and percentage of net assets, $644,778,000 and 22.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(f)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $1,721,504,000. The aggregate gross unrealized appreciation is approximately $1,319,870,000 and the aggregate gross unrealized depreciation is approximately $210,823,000, resulting in net unrealized appreciation of approximately $1,109,047,000.

ADR  American Depositary Receipt.

The accompanying notes are an integral part of the consolidated financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Global Opportunity Portfolio

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Software

   

17.1

%

 

Broadline Retail

   

12.8

   

Ground Transportation

   

10.2

   

Banks

   

9.2

   

Textiles, Apparel & Luxury Goods

   

8.3

   

Financial Services

   

8.1

   

Entertainment

   

7.6

   

Other*

   

7.6

   

Hotels, Restaurants & Leisure

   

7.5

   

Information Technology Services

   

6.1

   

Interactive Media & Services

   

5.5

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Opportunity Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,602,646)

 

$

2,795,915

   

Investment in Security of Affiliated Issuer, at Value (Cost $39,395)

   

39,395

   

Total Investments in Securities, at Value (Cost $1,642,041)

   

2,835,310

   

Foreign Currency, at Value (Cost $3,155)

   

3,154

   

Cash

   

3

   

Receivable for Investments Sold

   

18,116

   

Receivable for Fund Shares Sold

   

1,292

   

Tax Reclaim Receivable

   

702

   

Receivable from Affiliate

   

280

   

Dividends Receivable

   

254

   

Other Assets

   

226

   

Total Assets

   

2,859,337

   

Liabilities:

 

Payable for Investments Purchased

   

7,808

   

Payable for Advisory Fees

   

4,935

   

Deferred Capital Gain Country Tax

   

4,796

   

Payable for Fund Shares Redeemed

   

3,608

   

Payable for Sub Transfer Agency Fees — Class I

   

276

   

Payable for Sub Transfer Agency Fees — Class A

   

182

   

Payable for Sub Transfer Agency Fees — Class L

   

3

   

Payable for Sub Transfer Agency Fees — Class C

   

30

   

Payable for Shareholder Services Fees — Class A

   

185

   

Payable for Distribution and Shareholder Services Fees — Class L

   

8

   

Payable for Distribution and Shareholder Services Fees — Class C

   

151

   

Payable for Administration Fees

   

192

   

Payable for Custodian Fees

   

82

   

Payable for Transfer Agency Fees — Class I

   

4

   

Payable for Transfer Agency Fees — Class A

   

11

   

Payable for Transfer Agency Fees — Class L

   

3

   

Payable for Transfer Agency Fees — Class C

   

4

   

Payable for Transfer Agency Fees — Class R6

   

1

   

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Professional Fees

   

21

   

Other Liabilities

   

234

   

Total Liabilities

   

22,534

   

Net Assets

 

$

2,836,803

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

1,679,487

   

Total Distributable Earnings

   

1,157,316

   

Net Assets

 

$

2,836,803

   

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Opportunity Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

1,562,251

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

52,408,140

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

29.81

   

CLASS A:

 

Net Assets

 

$

880,157

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

31,419,432

   

Net Asset Value, Redemption Price Per Share

 

$

28.01

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.55

   

Maximum Offering Price Per Share

 

$

29.56

   

CLASS L:

 

Net Assets

 

$

33,251

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,212,779

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

27.42

   

CLASS C:

 

Net Assets

 

$

178,304

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

6,997,378

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

25.48

   

CLASS R6:

 

Net Assets

 

$

60,134

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,002,139

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

30.03

   

CLASS IR:

 

Net Assets

 

$

122,706

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

4,079,075

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

30.08

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Opportunity Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $1,057 of Foreign Taxes Withheld)

 

$

7,948

   

Dividends from Security of Affiliated Issuer (Note G)

   

2,010

   

Total Investment Income

   

9,958

   

Expenses:

 

Advisory Fees (Note B)

   

19,398

   

Shareholder Services Fees — Class A (Note D)

   

1,985

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

225

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

1,712

   

Sub Transfer Agency Fees — Class I

   

1,213

   

Sub Transfer Agency Fees — Class A

   

858

   

Sub Transfer Agency Fees — Class L

   

15

   

Sub Transfer Agency Fees — Class C

   

165

   

Administration Fees (Note C)

   

2,088

   

Transfer Agency Fees — Class I (Note E)

   

58

   

Transfer Agency Fees — Class A (Note E)

   

236

   

Transfer Agency Fees — Class L (Note E)

   

41

   

Transfer Agency Fees — Class C (Note E)

   

7

   

Transfer Agency Fees — Class R6 (Note E)

   

18

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Custodian Fees (Note F)

   

272

   

Shareholder Reporting Fees

   

178

   

Professional Fees

   

169

   

Registration Fees

   

158

   

Directors' Fees and Expenses

   

47

   

Pricing Fees

   

3

   

Other Expenses

   

186

   

Total Expenses

   

29,034

   

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(1,225

)

 

Distribution Fees — Class L Shares waived (Note D)

   

(135

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(79

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(18

)

 

Net Expenses

   

27,577

   

Net Investment Loss

   

(17,619

)

 

Realized Gain (Loss):

 

Investments Sold (Net of $1,891 of Capital Gain Country Tax)

   

165,446

   

Foreign Currency Translation

   

(160

)

 

Net Realized Gain

   

165,286

   

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Decrease in Deferred Capital Gain Country Tax of $1,346)

   

879,803

   

Foreign Currency Translation

   

48

   

Net Change in Unrealized Appreciation (Depreciation)

   

879,851

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

1,045,137

   

Net Increase in Net Assets Resulting from Operations

 

$

1,027,518

   

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Opportunity Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(17,619

)

 

$

(29,730

)

 

Net Realized Gain

   

165,286

     

144,760

   

Net Change in Unrealized Appreciation (Depreciation)

   

879,851

     

(2,776,642

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

1,027,518

     

(2,661,612

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(32,938

)

   

(245,165

)

 

Class A

   

(19,667

)

   

(138,660

)

 

Class L

   

(756

)

   

(5,119

)

 

Class C

   

(4,378

)

   

(33,274

)

 

Class R6*

   

(1,284

)

   

(15,609

)

 

Class IR

   

(2,538

)

   

(19,569

)

 

Total Dividends and Distributions to Shareholders

   

(61,561

)

   

(457,396

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

313,332

     

597,831

   

Distributions Reinvested

   

31,657

     

234,271

   

Redeemed

   

(532,631

)

   

(2,265,331

)

 

Class A:

 

Subscribed

   

55,572

     

74,546

   

Distributions Reinvested

   

19,420

     

136,586

   

Redeemed

   

(163,105

)

   

(327,122

)

 

Class L:

 

Exchanged

   

7

     

81

   

Distributions Reinvested

   

722

     

4,829

   

Redeemed

   

(3,152

)

   

(3,732

)

 

Class C:

 

Subscribed

   

14,807

     

11,942

   

Distributions Reinvested

   

4,303

     

32,674

   

Redeemed

   

(51,061

)

   

(117,606

)

 

Class R6:*

 

Subscribed

   

12,496

     

39,201

   

Distributions Reinvested

   

1,238

     

14,898

   

Redeemed

   

(58,262

)

   

(137,749

)

 

Class IR:

 

Subscribed

   

     

21,000

   

Distributions Reinvested

   

2,538

     

19,569

   

Redeemed

   

(27,332

)

   

   

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(379,451

)

   

(1,664,112

)

 

Total Increase (Decrease) in Net Assets

   

586,506

     

(4,783,120

)

 

Net Assets:

 

Beginning of Period

   

2,250,297

     

7,033,417

   

End of Period

 

$

2,836,803

   

$

2,250,297

   

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Opportunity Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

12,247

     

19,655

   

Shares Issued on Distributions Reinvested

   

1,068

     

11,400

   

Shares Redeemed

   

(20,846

)

   

(78,663

)

 

Net Decrease in Class I Shares Outstanding

   

(7,531

)

   

(47,608

)

 

Class A:

 

Shares Subscribed

   

2,223

     

2,599

   

Shares Issued on Distributions Reinvested

   

697

     

7,041

   

Shares Redeemed

   

(6,728

)

   

(12,083

)

 

Net Decrease in Class A Shares Outstanding

   

(3,808

)

   

(2,443

)

 

Class L:

 

Shares Exchanged

   

1

     

3

   

Shares Issued on Distributions Reinvested

   

26

     

254

   

Shares Redeemed

   

(130

)

   

(144

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(103

)

   

113

   

Class C:

 

Shares Subscribed

   

664

     

448

   

Shares Issued on Distributions Reinvested

   

170

     

1,834

   

Shares Redeemed

   

(2,283

)

   

(4,550

)

 

Net Decrease in Class C Shares Outstanding

   

(1,449

)

   

(2,268

)

 

Class R6:*

 

Shares Subscribed

   

467

     

1,176

   

Shares Issued on Distributions Reinvested

   

41

     

720

   

Shares Redeemed

   

(2,215

)

   

(4,898

)

 

Net Decrease in Class R6 Shares Outstanding

   

(1,707

)

   

(3,002

)

 

Class IR:

 

Shares Subscribed

   

     

586

   

Shares Issued on Distributions Reinvested

   

85

     

944

   

Shares Redeemed

   

(1,145

)

   

   

Net Increase (Decrease) in Class IR Shares Outstanding

   

(1,060

)

   

1,530

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

20.34

   

$

42.69

   

$

44.75

   

$

29.12

   

$

21.50

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.13

)

   

(0.19

)

   

(0.36

)

   

(0.28

)

   

(0.12

)

 

Net Realized and Unrealized Gain (Loss)

   

10.24

     

(17.49

)

   

0.40

     

16.43

     

7.74

   

Total from Investment Operations

   

10.11

     

(17.68

)

   

0.04

     

16.15

     

7.62

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

29.81

   

$

20.34

   

$

42.69

   

$

44.75

   

$

29.12

   

Total Return(3)

   

49.70

%(4)

   

(41.54

)%

   

0.22

%

   

55.47

%

   

35.44

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,562,251

   

$

1,219,122

   

$

4,591,358

   

$

4,498,617

   

$

2,220,219

   

Ratio of Expenses Before Expense Limitation

   

0.95

%

   

0.95

%

   

0.92

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

0.90

%(5)(6)

   

0.95

%(6)

   

0.92

%(6)

   

0.92

%(6)

   

0.94

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.94

%(6)

 

Ratio of Net Investment Loss

   

(0.52

)%(5)(6)

   

(0.64

)%(6)

   

(0.78

)%(6)

   

(0.79

)%(6)

   

(0.44

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.10% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 49.60%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.95

%

   

(0.57

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.20

   

$

40.86

   

$

43.04

   

$

28.10

   

$

20.81

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.20

)

   

(0.26

)

   

(0.47

)

   

(0.35

)

   

(0.18

)

 

Net Realized and Unrealized Gain (Loss)

   

9.65

     

(16.73

)

   

0.39

     

15.81

     

7.47

   

Total from Investment Operations

   

9.45

     

(16.99

)

   

(0.08

)

   

15.46

     

7.29

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

28.01

   

$

19.20

   

$

40.86

   

$

43.04

   

$

28.10

   

Total Return(3)

   

49.29

%(4)

   

(41.74

)%

   

(0.05

)%

   

55.03

%

   

35.03

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

880,157

   

$

676,246

   

$

1,539,078

   

$

1,697,016

   

$

1,070,124

   

Ratio of Expenses Before Expense Limitation

   

1.25

%

   

1.24

%

   

1.20

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

1.20

%(5)(6)

   

1.24

%(6)

   

1.20

%(6)

   

1.20

%(6)

   

1.22

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.22

%(6)

 

Ratio of Net Investment Loss

   

(0.82

)%(5)(6)

   

(0.94

)%(6)

   

(1.06

)%(6)

   

(1.06

)%(6)

   

(0.72

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.05% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 49.24%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.25

%

   

(0.87

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

18.82

   

$

40.23

   

$

42.44

   

$

27.72

   

$

20.54

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.22

)

   

(0.28

)

   

(0.48

)

   

(0.36

)

   

(0.19

)

 

Net Realized and Unrealized Gain (Loss)

   

9.46

     

(16.46

)

   

0.37

     

15.60

     

7.37

   

Total from Investment Operations

   

9.24

     

(16.74

)

   

(0.11

)

   

15.24

     

7.18

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

27.42

   

$

18.82

   

$

40.23

   

$

42.44

   

$

27.72

   

Total Return(3)

   

49.17

%(4)

   

(41.77

)%

   

(0.12

)%

   

54.99

%

   

34.96

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

33,251

   

$

24,766

   

$

48,426

   

$

53,675

   

$

40,836

   

Ratio of Expenses Before Expense Limitation

   

1.80

%

   

1.76

%

   

1.69

%

   

1.71

%

   

1.74

%

 

Ratio of Expenses After Expense Limitation

   

1.30

%(5)(6)

   

1.31

%(6)

   

1.24

%(6)

   

1.25

%(6)

   

1.28

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.28

%(6)

 

Ratio of Net Investment Loss

   

(0.92

)%(5)(6)

   

(1.01

)%(6)

   

(1.10

)%(6)

   

(1.10

)%(6)

   

(0.78

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.05% for Class L shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class L shares would have been 49.12%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.35

%

   

(0.97

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

17.63

   

$

38.43

   

$

40.90

   

$

26.90

   

$

20.07

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.34

)

   

(0.43

)

   

(0.74

)

   

(0.57

)

   

(0.35

)

 

Net Realized and Unrealized Gain (Loss)

   

8.83

     

(15.70

)

   

0.37

     

15.09

     

7.18

   

Total from Investment Operations

   

8.49

     

(16.13

)

   

(0.37

)

   

14.52

     

6.83

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

25.48

   

$

17.63

   

$

38.43

   

$

40.90

   

$

26.90

   

Total Return(3)

   

48.23

%(4)

   

(42.15

)%

   

(0.77

)%

   

53.99

%

   

34.03

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

178,304

   

$

148,874

   

$

411,765

   

$

436,790

   

$

251,160

   

Ratio of Expenses Before Expense Limitation

   

1.96

%

   

1.95

%

   

1.90

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

1.91

%(5)(6)

   

1.95

%(6)

   

1.90

%(6)

   

1.91

%(6)

   

1.94

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.94

%(6)

 

Ratio of Net Investment Loss

   

(1.53

)%(5)(6)

   

(1.64

)%(6)

   

(1.76

)%(6)

   

(1.77

)%(6)

   

(1.45

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.06% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 48.17%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.96

%

   

(1.58

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

20.47

   

$

42.89

   

$

44.90

   

$

29.18

   

$

21.53

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.12

)

   

(0.17

)

   

(0.31

)

   

(0.25

)

   

(0.14

)

 

Net Realized and Unrealized Gain (Loss)

   

10.32

     

(17.58

)

   

0.40

     

16.49

     

7.79

   

Total from Investment Operations

   

10.20

     

(17.75

)

   

0.09

     

16.24

     

7.65

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

30.03

   

$

20.47

   

$

42.89

   

$

44.90

   

$

29.18

   

Total Return(4)

   

49.82

%(5)

   

(41.51

)%

   

0.33

%

   

55.67

%

   

35.53

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

60,134

   

$

75,921

   

$

287,811

   

$

367,927

   

$

124,173

   

Ratio of Expenses Before Expense Limitation

   

0.88

%

   

0.87

%

   

0.82

%

   

N/A

     

0.86

%

 

Ratio of Expenses After Expense Limitation

   

0.83

%(6)(7)

   

0.86

%(7)

   

0.82

%(7)

   

0.82

%(7)

   

0.84

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.84

%(7)

 

Ratio of Net Investment Loss

   

(0.45

)%(6)(7)

   

(0.57

)%(7)

   

(0.68

)%(7)

   

(0.70

)%(7)

   

(0.51

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.05% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 49.77%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.86

%

   

(0.48

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Opportunity Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

20.50

   

$

42.94

   

$

44.96

   

$

29.22

   

$

21.56

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.11

)

   

(0.16

)

   

(0.32

)

   

(0.24

)

   

(0.09

)

 

Net Realized and Unrealized Gain (Loss)

   

10.33

     

(17.61

)

   

0.40

     

16.50

     

7.75

   

Total from Investment Operations

   

10.22

     

(17.77

)

   

0.08

     

16.26

     

7.66

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.64

)

   

(4.67

)

   

(2.10

)

   

(0.52

)

   

   

Net Asset Value, End of Period

 

$

30.08

   

$

20.50

   

$

42.94

   

$

44.96

   

$

29.22

   

Total Return(3)

   

49.85

%(4)

   

(41.51

)%

   

0.31

%

   

55.66

%

   

35.53

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

122,706

   

$

105,368

   

$

154,979

   

$

114,510

   

$

73,569

   

Ratio of Expenses Before Expense Limitation

   

0.86

%

   

0.86

%

   

0.82

%

   

N/A

     

N/A

   

Ratio of Expenses After Expense Limitation

   

0.81

%(5)(6)

   

0.86

%(6)

   

0.82

%(6)

   

0.82

%(6)

   

0.84

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.84

%(6)

 

Ratio of Net Investment Loss

   

(0.43

)%(5)(6)

   

(0.57

)%(6)

   

(0.68

)%(6)

   

(0.69

)%(6)

   

(0.35

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

11

%

   

23

%

   

21

%

   

22

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.05% for Class IR shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class IR shares would have been 49.80%. Refer to Note B in the Notes to Consolidated Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.86

%

   

(0.48

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Global Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective December 31, 2020, the Fund suspended offering of Class I, Class A, Class C, Class R6 and Class IR shares to new investors with certain exception. Effective January 2, 2023, the Fund recommenced offering Class I, Class A, Class C, Class R6 and Class IR shares. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Global Opportunity Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests

in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented 0% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs; and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include,


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 
Air Freight &
Logistics
 

$

   

$

137,249

   

$

   

$

137,249

   

Banks

   

96,420

     

162,185

     

     

258,605

   

Broadline Retail

   

364,981

     

     

     

364,981

   
Electronic
Equipment,
Instruments &
Components
   

     

39,279

     

   

39,279

 

Entertainment

   

214,068

     

     

     

214,068

   

Financial Services

   

208,907

     

22,261

     

     

231,168

   
Ground
Transportation
   

287,393

     

     

     

287,393

   
Hotels,
Restaurants &
Leisure
   

135,422

     

76,231

     

     

211,653

   
Information
Technology
Services
   

173,508

     

     

     

173,508

   
Interactive Media &
Services
   

134,654

     

24,416

     

     

159,070

   

Software

   

482,794

     

     

     

482,794

   
Textiles, Apparel &
Luxury Goods
   

52,990

     

183,157

     

     

236,147

   
Total Common
Stocks
   

2,151,137

     

644,778

     

   

2,795,915

 
Short-Term
Investment
 
Investment
Company
   

39,395

     

     

     

39,395

   

Total Assets

 

$

2,190,532

   

$

644,778

   

$

 

$

2,835,310

 

†  Includes a security valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

    Common
Stock
(000)
 

Beginning Balance

 

$

 

Purchases

   

   

Sales

   

   

Transfers in

   

   

Transfers out

   

   

Corporate actions

   

   

Change in unrealized appreciation (depreciation)

   

   

Realized gains (losses)

   

   

Ending Balance

 

$

 
Net change in unrealized appreciation (depreciation)
from investments still held as of December 31, 2023
 

$

   

†  Includes a security valued at zero.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Restricted Securities: The Fund invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may

elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Consolidated Portfolio of Investments.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, co-transfer agency, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

quarterly, at the annual rate based on the daily net assets as follows:

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.80

%

   

0.75

%

   

0.70

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.74% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.40% for Class L shares, 2.10% for Class C shares, 0.95% for Class R6 shares and 0.95% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $18,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares. The Distributor has agreed to waive for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate, the 12b-1 fees on Class L shares of the Fund to the extent it exceeds 0.30% of the average daily net assets of such shares on an annualized basis. For the year ended December 31, 2023, this waiver amounted to approximately $135,000.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement,


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $34,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $271,680,000 and $754,961,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $79,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

   

$

577,813

   

$

538,418

   

$

2,010

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

39,395

   

During the year ended December 31, 2023, the Fund incurred approximately $5,000 in brokerage commissions with Morgan Stanley & Co. LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

   

$

61,561

   

$

   

$

457,396

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the compoents of net assets at December 31, 2023:

Total
Distribution
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

15,129

   

$

(15,129

)

 

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

   

$

48,422

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street.

Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 53.8%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Opportunity Portfolio and the Board of
Directors of Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Global Opportunity Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated and paid approximately $ 61,561,000 as a long-term capital gain distribution.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


39


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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGOANN
6337674 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Permanence Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

7

   

Consolidated Statement of Assets and Liabilities

   

9

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

12

   

Notes to Consolidated Financial Statements

   

16

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Federal Tax Notice

   

27

   

Important Notices

   

28

   

U.S. Customer Privacy Notice

   

29

   

Directors and Officers Information

   

32

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Permanence Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Global Permanence Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Permanence Portfolio Class I

 

$

1,000.00

   

$

1,012.40

   

$

1,021.63

   

$

3.60

   

$

3.62

     

0.71

%

 

Global Permanence Portfolio Class A

   

1,000.00

     

1,010.30

     

1,019.31

     

5.93

     

5.96

     

1.17

   

Global Permanence Portfolio Class C

   

1,000.00

     

1,006.50

     

1,015.12

     

10.11

     

10.16

     

2.00

   

Global Permanence Portfolio Class R6

   

1,000.00

     

1,012.90

     

1,022.13

     

3.09

     

3.11

     

0.61

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Permanence Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 20.92%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI All Country World Net Index (the "Index"), which returned 22.20%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Global equities performed well in 2023, as economies did a better-than-expected job of withstanding the rapid increases in interest rates needed to cool inflation from post-pandemic highs and excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform. While tightening conditions had become a headwind to the eurozone and U.K. economies toward the end of 2023, the widely predicted recessions did not materialize and the U.S. economy remained particularly resilient. Over the year, softening inflation data and relatively tight labor markets allowed central banks to slow and eventually pause interest rate increases, bolstering sentiment that rate hiking cycles were ending and rate cuts would follow. Meanwhile, markets also faced a U.S. regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, a disappointing economic recovery in China and multiple geopolitical flashpoints.

•  Global equities, as measured by the Index, advanced in the 12-month period. All sectors had positive performance, led by information technology, communication services and consumer discretionary. Utilities, consumer staples and health care were the weakest performing sectors in the Index over this period.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the

benchmark, with securities weighted on our assessment of the quality of the company and our conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund underperformed the Index in this reporting period due to unfavorable stock selection, despite a positive contribution from sector allocation.

•  Stock selection in health care detracted the most from relative performance. A leader in next generation sequencing was the top detractor in the sector and second greatest in the portfolio. The company's shares underperformed in the period due to a weaker sales growth outlook and uncertainty resulting from a CEO transition.

•  Stock selection in consumer staples, industrials and consumer discretionary each had a mildly negative impact on relative performance. Within these sectors, performance was hampered by a contemporary carpets and floor coverings company, which was the greatest detractor in the portfolio as a whole, and a discount retailer that provides various merchandise products across the United States. The carpets company's shares underperformed due to lower-than-expected quarterly results characterized by softer demand due to near-term macroeconomic challenges, including lower consumer confidence, higher interest rates and reduced home reselling activity. The discount retailer's shares underperformed due to concerns about softer sales trends, weaker near-term profitability and greater inventory shrink. We continued to monitor the company management's progress in restoring the business to prior profitability levels and getting shrink under control. The weak performance of these and a diverse set of other holdings was partly offset by strength in an online retail and cloud computing leader, which was the second greatest contributor across the portfolio. Its shares advanced as the company reported solid quarterly results characterized by strong retail performance, better-than-expected growth within its cloud-computing


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Permanence Portfolio

platform business, and continued improvements in operational efficiency.

•  The information technology sector was the largest positive contributor to relative performance due to both stock selection and an average overweight in the sector. A company that offers a global cloud platform that provides security, performance and reliability services to the applications of its customers was the greatest contributor across the portfolio. Despite facing a tougher demand environment and longer sales cycles, the company's shares performed well based on improving investor sentiment toward the software sector.

•  The real estate sector contributed to relative performance, with both stock selection and an average sector underweight adding relative gains. Utilities, which the portfolio had no exposure to, and average underweight allocations in consumer staples and energy were also beneficial to relative performance.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Permanence Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on April 30, 2019.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country World Net Index(1) and the Lipper Global Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

20.92

%

   

     

     

10.09

%

 
Fund — Class A Shares
w/o sales charges(4)
   

20.42

     

     

     

9.70

   
Fund — Class A Shares
with maximum 5.25% sales
charges(4)
   

14.12

     

     

     

8.45

   
Fund — Class C Shares
w/o sales charges(4)
   

19.56

     

     

     

8.88

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(4)
   

18.56

     

     

     

8.88

   
Fund — Class R6 Shares
w/o sales charges(4)
   

20.95

     

     

     

10.14

   

MSCI All Country World Net Index

   

22.20

     

     

     

9.08

   
Lipper Global Multi-Cap Growth
Funds Index
   

22.35

     

     

     

8.48

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Global Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on April 30, 2019.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Global Permanence Portfolio

   

Shares

  Value
(000)
 

Common Stocks (95.6%)

 

Brazil (0.1%)

 

Vale SA

   

540

   

$

9

   

Canada (11.9%)

 

Canadian National Railway Co.

   

2,449

     

308

   

Constellation Software, Inc.

   

88

     

218

   

FirstService Corp.

   

48

     

8

   

Lumine Group, Inc. (a)

   

326

     

7

   

Topicus.com, Inc. (a)

   

2,978

     

200

   
     

741

   

France (12.6%)

 

Airbus SE

   

607

     

94

   

Christian Dior SE

   

279

     

218

   

EssilorLuxottica SA

   

152

     

31

   

Eurofins Scientific SE

   

5,064

     

330

   

Hermes International

   

3

     

6

   

L'Oreal SA

   

16

     

8

   

Remy Cointreau SA

   

257

     

33

   

Safran SA

   

353

     

62

   
     

782

   

India (1.1%)

 

HDFC Bank Ltd. ADR

   

1,024

     

69

   

Italy (0.7%)

 

Brunello Cucinelli SpA

   

396

     

39

   

Ferrari NV

   

22

     

7

   
     

46

   

Netherlands (1.7%)

 

ASML Holding NV (Registered)

   

128

     

97

   

Universal Music Group NV

   

277

     

8

   
     

105

   

Switzerland (1.5%)

 

On Holding AG, Class A (a)

   

3,387

     

91

   

United Kingdom (12.9%)

 

Babcock International Group PLC

   

41,468

     

209

   

Rentokil Initial PLC

   

59,369

     

335

   

Victoria PLC (a)

   

66,711

     

256

   
     

800

   

United States (53.1%)

 

Amazon.com, Inc. (a)

   

2,225

     

338

   

American Tower Corp. REIT

   

735

     

159

   

Birkenstock Holding PLC (a)

   

2,004

     

98

   

Brown & Brown, Inc.

   

878

     

62

   

Celsius Holdings, Inc. (a)

   

1,854

     

101

   

Cloudflare, Inc., Class A (a)

   

8,523

     

709

   

Danaher Corp.

   

941

     

218

   

Dollar General Corp.

   

1,171

     

159

   

Floor & Decor Holdings, Inc., Class A (a)

   

2,423

     

270

   

Intercontinental Exchange, Inc.

   

2,809

     

361

   

Linde PLC

   

18

     

7

   

MSCI, Inc.

   

13

     

7

   

Procore Technologies, Inc. (a)

   

1,604

     

111

   
   

Shares

  Value
(000)
 

Royal Gold, Inc.

   

1,203

   

$

145

   

Royalty Pharma PLC, Class A

   

14,310

     

402

   

S&P Global, Inc.

   

236

     

104

   

Texas Pacific Land Corp.

   

19

     

30

   

Veralto Corp.

   

217

     

18

   

Waste Connections, Inc.

   

51

     

8

   

   

3,307

   
Total Common Stocks (Cost $5,386)    

5,950

   

Investment Company (1.9%)

 

United States (1.9%)

 
Grayscale Bitcoin Trust (a) (Cost $40)    

3,446

     

119

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Canada (0.0%)‡

 
Constellation Software, Inc. expires 3/31/40 (a)
(Cost $—)
   

186

     

1

   
   

Shares

     

Short-Term Investment (1.3%)

 

Investment Company (1.3%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $79)
   

78,664

     

79

   
Total Investments Excluding Purchased
Options (98.8%) (Cost $5,505)
   

6,149

   
Total Purchased Options Outstanding (0.1%)
(Cost $26)
   

6

   

Total Investments (98.9%) (Cost $5,531) (b)(c)(d)

   

6,155

   

Other Assets in Excess of Liabilities (1.1%)

   

71

   

Net Assets (100.0%)

 

$

6,226

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $1,638,000 and 26.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(c)  Securities are available for collateral in connection with purchased options.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $5,721,000. The aggregate gross unrealized appreciation is approximately $1,079,000 and the aggregate gross unrealized depreciation is approximately $643,000, resulting in net unrealized appreciation of approximately $436,000.

ADR  American Depositary Receipt.

REIT  Real Estate Investment Trust.

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Global Permanence Portfolio

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

 

Strike
Price

 

Expiration
Date

 

Number of
Contracts

 

Notional
Amount
(000)

 

Value
(000)

 

Premiums
Paid
(000)

 

Unrealized
Depreciation
(000)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.43

   

Jan-24

   

1,007,380

   

$

1,007

   

$

@

 

$

5

   

$

(5

)

 

Standard Chartered Bank

 

USD/CNH

 

CNH

7.57

   

May-24

   

2,268,747

     

2,269

     

3

     

10

     

(7

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.79

   

Aug-24

   

2,624,782

     

2,625

     

3

     

11

     

(8

)

 
                       

$

6

   

$

26

   

$

(20

)

 

@    Value is less than $500.

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

26.9

%

 

Information Technology Services

   

11.5

   

Life Sciences Tools & Services

   

8.9

   

Software

   

8.8

   

Capital Markets

   

7.7

   

Textiles, Apparel & Luxury Goods

   

7.4

   

Pharmaceuticals

   

6.5

   

Aerospace & Defense

   

5.9

   

Commercial Services & Supplies

   

5.9

   

Broadline Retail

   

5.5

   

Ground Transportation

   

5.0

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Permanence Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,452)

 

$

6,076

   

Investment in Security of Affiliated Issuer, at Value (Cost $79)

   

79

   

Total Investments in Securities, at Value (Cost $5,531)

   

6,155

   

Foreign Currency, at Value (Cost $10)

   

10

   

Receivable for Investments Sold

   

104

   

Due from Adviser

   

59

   

Dividends Receivable

   

3

   

Receivable from Affiliate

   

@

 

Other Assets

   

26

   

Total Assets

   

6,357

   

Liabilities:

 

Payable for Investments Purchased

   

94

   

Payable for Professional Fees

   

22

   

Payable for Custodian Fees

   

5

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Sub Transfer Agency Fees — Class I

   

@

 

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

10

   

Total Liabilities

   

131

   

Net Assets

 

$

6,226

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

5,693

   

Total Distributable Earnings

   

533

   

Net Assets

 

$

6,226

   

CLASS I:

 

Net Assets

 

$

4,089

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

329,846

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.40

   

CLASS A:

 

Net Assets

 

$

1,903

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

155,707

   

Net Asset Value, Redemption Price Per Share

 

$

12.22

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.68

   

Maximum Offering Price Per Share

 

$

12.90

   

CLASS C:

 

Net Assets

 

$

218

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

18,483

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.77

   

CLASS R6:

 

Net Assets

 

$

16

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,264

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.42

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Permanence Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)

 

$

67

   

Dividends from Security of Affiliated Issuer (Note G)

   

14

   

Non-Cash Dividends from Securities of Unaffiliated Issuers

   

5

   

Total Investment Income

   

86

   

Expenses:

 

Professional Fees

   

150

   

Advisory Fees (Note B)

   

65

   

Registration Fees

   

65

   

Custodian Fees (Note F)

   

21

   

Shareholder Reporting Fees

   

13

   

Transfer Agency Fees — Class I (Note E)

   

3

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Administration Fees (Note C)

   

6

   

Directors' Fees and Expenses

   

6

   

Pricing Fees

   

3

   

Shareholder Services Fees — Class A (Note D)

   

7

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

7

   

Sub Transfer Agency Fees — Class I

   

2

   

Sub Transfer Agency Fees — Class A

   

1

   

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

18

   

Total Expenses

   

375

   

Expenses Reimbursed by Adviser (Note B)

   

(205

)

 

Waiver of Advisory Fees (Note B)

   

(65

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(10

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(—

@)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(1

)

 

Net Expenses

   

87

   

Net Investment Loss

   

(1

)

 

Realized Gain:

 

Investments Sold

   

289

   

Foreign Currency Translation

   

2

   

Net Realized Gain

   

291

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

725

   

Foreign Currency Translation

   

(—

@)

 

Net Change in Unrealized Appreciation (Depreciation)

   

725

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

1,016

   

Net Increase in Net Assets Resulting from Operations

 

$

1,015

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Permanence Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(1

)

 

$

(3

)

 

Net Realized Gain (Loss)

   

291

     

(21

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

725

     

(970

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

1,015

     

(994

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(205

)

   

(58

)

 

Class A

   

(98

)

   

(20

)

 

Class C

   

(12

)

   

(2

)

 

Class R6*

   

(1

)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(316

)

   

(80

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

1,736

     

290

   

Distributions Reinvested

   

205

     

58

   

Redeemed

   

(1,668

)

   

(158

)

 

Class A:

 

Subscribed

   

2,928

     

1,950

   

Distributions Reinvested

   

98

     

20

   

Redeemed

   

(2,141

)

   

(927

)

 

Class C:

 

Subscribed

   

913

     

65

   

Distributions Reinvested

   

12

     

2

   

Redeemed

   

(790

)

   

(1

)

 

Class R6:*

 

Distributions Reinvested

   

1

     

@

 

Net Increase in Net Assets Resulting from Capital Share Transactions

   

1,294

     

1,299

   

Total Increase in Net Assets

   

1,993

     

225

   

Net Assets:

 

Beginning of Period

   

4,233

     

4,008

   

End of Period

 

$

6,226

   

$

4,233

   

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

145

     

25

   

Shares Issued on Distributions Reinvested

   

17

     

5

   

Shares Redeemed

   

(136

)

   

(14

)

 

Net Increase in Class I Shares Outstanding

   

26

     

16

   

Class A:

 

Shares Subscribed

   

249

     

165

   

Shares Issued on Distributions Reinvested

   

8

     

2

   

Shares Redeemed

   

(182

)

   

(89

)

 

Net Increase in Class A Shares Outstanding

   

75

     

78

   

Class C:

 

Shares Subscribed

   

79

     

7

   

Shares Issued on Distributions Reinvested

   

1

     

@@

 

Shares Redeemed

   

(70

)

   

(—

@@)

 

Net Increase in Class C Shares Outstanding

   

10

     

7

   

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Permanence Portfolio

   

Class I

 
   

Year Ended December 31,

  Period from
April 30, 2019(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

December 31, 2019(2)

 

Net Asset Value, Beginning of Period

 

$

10.80

   

$

13.72

   

$

13.41

   

$

10.63

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

0.03

     

(0.00

)(4)

   

(0.01

)

   

(0.03

)

   

0.04

   

Net Realized and Unrealized Gain (Loss)

   

2.22

     

(2.73

)

   

2.56

     

2.90

     

0.59

   

Total from Investment Operations

   

2.25

     

(2.73

)

   

2.55

     

2.87

     

0.63

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.02

)

   

     

(0.05

)

   

(0.07

)

   

   

Net Realized Gain

   

(0.63

)

   

(0.19

)

   

(2.19

)

   

(0.02

)

   

   

Total Distributions

   

(0.65

)

   

(0.19

)

   

(2.24

)

   

(0.09

)

   

   

Net Asset Value, End of Period

 

$

12.40

   

$

10.80

   

$

13.72

   

$

13.41

   

$

10.63

   

Total Return(5)

   

20.92

%(6)

   

(19.88

)%

   

19.73

%

   

27.06

%

   

6.30

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,089

   

$

3,278

   

$

3,947

   

$

3,202

   

$

2,471

   

Ratio of Expenses Before Expense Limitation

   

4.40

%

   

7.62

%

   

7.77

%

   

8.62

%

   

12.79

%(8)

 

Ratio of Expenses After Expense Limitation

   

0.85

%(9)(10)

   

1.00

%(10)

   

1.00

%(10)

   

1.00

%(10)

   

0.99

%(8)(10)

 

Ratio of Net Investment Income (Loss)

   

0.21

%(9)(10)

   

(0.02

)%(10)

   

(0.04

)%(10)

   

(0.30

)%(10)

   

0.53

%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(11)

   

0.01

%(8)

 

Portfolio Turnover Rate

   

107

%

   

68

%

   

57

%

   

113

%

   

35

%(7)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Performance was positively impacted by approximately 0.19% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 20.73%. Refer to Note B in the Notes to Consolidated Financial Statements.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.99

%

   

0.07

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Permanence Portfolio

   

Class A

 
   

Year Ended December 31,

  Period from
April 30, 2019(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

December 31, 2019(2)

 

Net Asset Value, Beginning of Period

 

$

10.68

   

$

13.61

   

$

13.37

   

$

10.61

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

(0.02

)

   

(0.02

)

   

(0.06

)

   

(0.07

)

   

0.01

   

Net Realized and Unrealized Gain (Loss)

   

2.19

     

(2.72

)

   

2.54

     

2.89

     

0.60

   

Total from Investment Operations

   

2.17

     

(2.74

)

   

2.48

     

2.82

     

0.61

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.05

)

   

(0.04

)

   

   

Net Realized Gain

   

(0.63

)

   

(0.19

)

   

(2.19

)

   

(0.02

)

   

   

Total Distributions

   

(0.63

)

   

(0.19

)

   

(2.24

)

   

(0.06

)

   

   

Net Asset Value, End of Period

 

$

12.22

   

$

10.68

   

$

13.61

   

$

13.37

   

$

10.61

   

Total Return(4)

   

20.42

%(5)

   

(20.11

)%

   

19.27

%

   

26.57

%

   

6.10

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,903

   

$

858

   

$

29

   

$

19

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

4.69

%

   

8.05

%

   

17.77

%

   

26.08

%

   

30.61

%(7)

 

Ratio of Expenses After Expense Limitation

   

1.24

%(8)(9)

   

1.35

%(9)

   

1.35

%(9)

   

1.35

%(9)

   

1.34

%(7)(9)

 

Ratio of Net Investment Income (Loss)

   

(0.18

)%(8)(9)

   

(0.20

)%(9)

   

(0.42

)%(9)

   

(0.65

)%(9)

   

0.17

%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(10)

   

0.01

%(7)

 

Portfolio Turnover Rate

   

107

%

   

68

%

   

57

%

   

113

%

   

35

%(6)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.20% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 20.22%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.34

%

   

(0.28

)%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Permanence Portfolio

   

Class C

 
   

Year Ended December 31,

  Period from
April 30, 2019(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

December 31, 2019(2)

 

Net Asset Value, Beginning of Period

 

$

10.38

   

$

13.34

   

$

13.24

   

$

10.56

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.12

)

   

(0.14

)

   

(0.16

)

   

(0.15

)

   

(0.04

)

 

Net Realized and Unrealized Gain (Loss)

   

2.14

     

(2.63

)

   

2.50

     

2.85

     

0.60

   

Total from Investment Operations

   

2.02

     

(2.77

)

   

2.34

     

2.70

     

0.56

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.05

)

   

     

   

Net Realized Gain

   

(0.63

)

   

(0.19

)

   

(2.19

)

   

(0.02

)

   

   

Total Distributions

   

(0.63

)

   

(0.19

)

   

(2.24

)

   

(0.02

)

   

   

Net Asset Value, End of Period

 

$

11.77

   

$

10.38

   

$

13.34

   

$

13.24

   

$

10.56

   

Total Return(4)

   

19.56

%(5)

   

(20.74

)%

   

18.39

%

   

25.60

%

   

5.60

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

218

   

$

84

   

$

16

   

$

13

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

5.69

%

   

15.54

%

   

24.91

%

   

28.45

%

   

31.59

%(7)

 

Ratio of Expenses After Expense Limitation

   

2.04

%(8)(9)

   

2.10

%(9)

   

2.10

%(9)

   

2.10

%(9)

   

2.09

%(7)(9)

 

Ratio of Net Investment Loss

   

(0.98

)%(8)(9)

   

(1.29

)%(9)

   

(1.13

)%(9)

   

(1.40

)%(9)

   

(0.57

)%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(10)

   

0.01

%(7)

 

Portfolio Turnover Rate

   

107

%

   

68

%

   

57

%

   

113

%

   

35

%(6)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.20% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 19.36%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.09

%

   

(1.03

)%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Global Permanence Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
April 30, 2019(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(3)

 

December 31, 2019(3)

 

Net Asset Value, Beginning of Period

 

$

10.82

   

$

13.73

   

$

13.42

   

$

10.64

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(4)

   

0.03

     

0.00

(5)

   

0.00

(5)

   

(0.03

)

   

0.04

   

Net Realized and Unrealized Gain (Loss)

   

2.23

     

(2.72

)

   

2.55

     

2.91

     

0.60

   

Total from Investment Operations

   

2.26

     

(2.72

)

   

2.55

     

2.88

     

0.64

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.03

)

   

     

(0.05

)

   

(0.08

)

   

   

Net Realized Gain

   

(0.63

)

   

(0.19

)

   

(2.19

)

   

(0.02

)

   

   

Total Distributions

   

(0.66

)

   

(0.19

)

   

(2.24

)

   

(0.10

)

   

   

Net Asset Value, End of Period

 

$

12.42

   

$

10.82

   

$

13.73

   

$

13.42

   

$

10.64

   

Total Return(6)

   

20.95

%(7)

   

(19.79

)%

   

19.71

%

   

27.09

%

   

6.40

%(8)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

16

   

$

13

   

$

16

   

$

14

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

21.25

%

   

22.37

%

   

22.49

%

   

26.62

%

   

30.53

%(9)

 

Ratio of Expenses After Expense Limitation

   

0.77

%(10)(11)

   

0.95

%(11)

   

0.95

%(11)

   

0.95

%(11)

   

0.94

%(9)(11)

 

Ratio of Net Investment Income (Loss)

   

0.28

%(10)(11)

   

0.02

%(11)

   

0.01

%(11)

   

(0.24

)%(11)

   

0.59

%(9)(11)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(12)

   

0.00

%(12)

   

0.00

%(12)

   

0.01

%(9)

 

Portfolio Turnover Rate

   

107

%

   

68

%

   

57

%

   

113

%

   

35

%(8)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

(3)  Not consolidated.

(4)  Per share amount is based on average shares outstanding.

(5)  Amount is less than $0.005 per share.

(6)  Calculated based on the net asset value as of the last business day of the period.

(7)  Performance was positively impacted by approximately 0.19% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 20.76%. Refer to Note B in the Notes to Consolidated Financial Statements.

(8)  Not annualized.

(9)  Annualized.

(10)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.94

%

   

0.11

%

 

(11)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(12)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Global Permanence Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Global Permanence Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $120,000 or approximately 1.92% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers;(3) listed options are valued at the last reported sales price on the


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (4) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (5) when market quotations are not readily available as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

   

$

365

   

$

   

$

365

   

Automobiles

   

7

     

     

     

7

   

Banks

   

69

     

     

     

69

   

Beverages

   

101

     

33

     

     

134

   

Broadline Retail

   

338

     

     

     

338

   

Capital Markets

   

472

     

     

     

472

   

Chemicals

   

7

     

     

     

7

   
Commercial Services &
Supplies
   

26

     

335

     

     

361

   
Consumer Staples
Distribution & Retail
   

159

     

     

     

159

   

Entertainment

   

     

8

     

     

8

   

Ground Transportation

   

308

     

     

     

308

   
Health Care Equipment &
Supplies
   

     

31

     

     

31

   

Household Durables

   

     

256

     

     

256

   
Information Technology
Services
   

709

     

     

     

709

   

Insurance

   

62

     

     

     

62

   
Life Sciences Tools &
Services
   

218

     

330

     

     

548

   

Metals & Mining

   

145

     

9

     

     

154

   
Oil, Gas & Consumable
Fuels
   

30

     

     

     

30

   

Personal Care Products

   

     

8

     

     

8

   

Pharmaceuticals

   

402

     

     

     

402

   
Real Estate
Management &
Development
   

8

     

     

     

8

   
Semiconductors &
Semiconductor
Equipment
   

97

     

     

     

97

   

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Software

 

$

536

   

$

   

$

   

$

536

   

Specialized REITs

   

159

     

     

     

159

   

Specialty Retail

   

270

     

     

     

270

   
Textiles, Apparel &
Luxury Goods
   

189

     

263

     

     

452

   

Total Common Stocks

   

4,312

     

1,638

     

     

5,950

   

Investment Company

   

119

     

     

     

119

   

Warrants

   

     

1

     

     

1

   

Call Options Purchased

   

     

6

     

     

6

   

Short-Term Investment

 

Investment Company

   

79

     

     

     

79

   

Total Assets

 

$

4,510

   

$

1,645

   

$

   

$

6,155

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative

instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency ex-change risk in the normal course of pursuing its investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated
Statement of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

6

(a)

 

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(8

)(a)

 

(a) Amounts are included in Realized Gain (Loss) on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(17

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

6

(a)

 

$

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

(b) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented in the
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 

JPMorgan Chase Bank NA

 

$

3

   

$

   

$

   

$

3

   

Standard Chartered Bank

   

3

     

     

     

3

   

Total

 

$

6

   

$

   

$

   

$

6

   

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

4,600,000

   

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains

and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $65,000 of advisory fees were waived and approximately $212,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agent and sub transfer agent fees. This was reflected as "Reimbursement of Transfer Agent and Sub Transfer Agent Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining

accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $9,760,000 and $8,135,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Fund.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

51

   

$

6,853

   

$

6,825

   

$

14

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

79

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

55

   

$

261

   

$

   

$

80

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

   

$

106

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 71.5%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to

economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Permanence Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Global Permanence Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for the year ended December 31, 2020 and the period from April 30, 2019 (commencement of operations) through December 31, 2019 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for the year ended December 31, 2020 and the period from April 30, 2019 (commencement of operations) through December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 33.05% of the dividends qualified for the dividends received deduction.

The Fund designated and paid approximately $261,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $54,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Directors
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Trustee**
  Other Directorships
Held by Independent
Trustee***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Directors
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Trustee**
  Other Directorships
Held by Independent
Trustee***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Directors
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Trustee**
  Other Directorships
Held by Independent
Trustee***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Directors
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Trustee**
  Other Directorships
Held by Independent
Trustee***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


37


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGPERMANN
6337725 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Real Estate Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

8

   

Statement of Assets and Liabilities

   

10

   

Statement of Operations

   

12

   

Statements of Changes in Net Assets

   

13

   

Financial Highlights

   

15

   

Notes to Financial Statements

   

21

   

Report of Independent Registered Public Accounting Firm

   

29

   

Liquidity Risk Management Program

   

30

   

Federal Tax Notice

   

31

   

Important Notices

   

32

   

U.S. Customer Privacy Notice

   

33

   

Directors and Officers Information

   

36

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Real Estate Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Real Estate Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Real Estate Portfolio Class I

 

$

1,000.00

   

$

1,087.00

   

$

1,021.17

   

$

4.21

   

$

4.08

     

0.80

%

 

Global Real Estate Portfolio Class A

   

1,000.00

     

1,083.10

     

1,019.41

     

6.04

     

5.85

     

1.15

   

Global Real Estate Portfolio Class L

   

1,000.00

     

1,079.80

     

1,016.28

     

9.28

     

9.00

     

1.77

   

Global Real Estate Portfolio Class C

   

1,000.00

     

1,079.40

     

1,015.68

     

9.91

     

9.60

     

1.89

   

Global Real Estate Portfolio Class R6

   

1,000.00

     

1,087.60

     

1,021.37

     

4.00

     

3.87

     

0.76

   

Global Real Estate Portfolio Class IR

   

1,000.00

     

1,087.80

     

1,021.42

     

3.95

     

3.82

     

0.75

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Real Estate Portfolio

The Fund seeks to provide current income and capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 12.68%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the FTSE EPRA Nareit Developed Net Total Return Index (the "Index"), which returned 9.67%.

Factors Affecting Performance

•  Global real estate securities gained 9.67% during the 12-month period ending December 31, 2023, as measured by the Index. 2023 was a year marred by concerns of a recession that never came as economic data remained surprisingly resilient even while inflation hovered stubbornly above central banks' targets for much of the year. While real estate securities lagged equities for the full year, real estate displayed outsized strength in the fourth quarter of 2023. More specifically, the real estate market rallied in November and December 2023, propelled by strong indications that the Federal Reserve (Fed) and other big central banks are winning the battle against inflation, interest rate cuts in 2024 are likely, and a "soft landing" in their economies may be achievable.

•  North American property stocks rose 11.60% for the year as measured by the FTSE EPRA Nareit North America Net Total Return Index,(i)​ outperforming the broader real estate market.

o  After four 25-basis point(ii)​ interest rate hikes from the beginning of the year through July 2023, the Fed held interest rates steady the remainder of the year and signaled it may begin cutting interest rates as early as the first half of 2024 amid recent favorable inflation data and

an increasing belief that the Fed may achieve a soft landing. Within the Index, seniors housing health care was a top-performing sector for the year, as it benefited from the long-term secular tailwind of an aging U.S. population and the necessity-based nature of seniors housing demand. The mall sector was also a key outperformer, bolstered by the lack of new supply of retail real estate and increased demand from retailers for prime storefronts, creating upward pressure on rents. The data center sector outperformed, as it benefited from favorable secular demand trends driven by data growth and digital transformation combined with limited new supply growth. The hotel sector was another outperformer, primarily a beneficiary of "risk-on" markets and a more optimistic view on the economy in the fourth quarter of 2023. A key underperformer for the year was the life science health care sector, which faced supply headwinds coupled with lower demand for space. Retail net lease was another underperformer due to the higher interest rate environment and narrowing investment spreads. Apartments also underperformed, as third quarter 2023 earnings results were below expectations and a deceleration in rents in September and October 2023 that was worse than anticipated.

o  The Fund's sector overweight to seniors housing health care and data centers, the sector underweight to life science health care, and security selection in apartments and storage were the top relative contributors for the year. Key relative performance detractors included the sector underweight to skilled nursing health care, security selection in the industrial and retail net lease sectors, and the weighting to apartments.

 

(i)​  The FTSE EPRA Nareit North America Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the North American (U.S. and Canada) real estate market. The FTSE EPRA Nareit Developed Asia Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the Asian real estate markets. The FTSE EPRA Nareit Developed Europe Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the European real estate markets. The performance of the indexes is listed in U.S. dollars and assumes reinvestment of net dividends. The indexes are unmanaged, and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. Data as of December 31, 2023.

(ii)​  One basis point = 0.01%


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Real Estate Portfolio

•  Within Asia, property stocks declined 1.15% for the year, as measured by the FTSE EPRA Nareit Developed Asia Net Total Return Index,(i)​ significantly underperforming the broader real estate market.

o  The year was characterized by substantial volatility in bond and equity markets. Elevated global yields, high company leverage ratios and mainland China economic concerns were the focus for much of 2023. However, global yields reversed sharply in November and December 2023 as investors factored in potential rate cuts in 2024. Yield compression in the fourth quarter of 2023 was a material tailwind for Australian real estate investment trusts (REITs), helping drive relative outperformance over the Asian index for the full year. Japan REITs underperformed for most of 2023 due to higher global bond yields, and did not benefit as much as other Asian REIT markets toward the end of the year due to concerns stemming from tighter domestic monetary policy and the Bank of Japan potentially exiting its negative interest rate policy. However, Japan developers were among the best-performing stocks in 2023 as they are perceived as inflation proxies. Despite the initial jump in economic activity in Hong Kong after the reopening of its borders at the beginning of 2023, the economic recovery in the second half of the year was softer than expected due to a sharp slowdown in the mainland Chinese economy and a mix of both cyclical and structural factors, including international monetary policy and geopolitical tensions. Even though Hong Kong authorities announced a slew of domestic fiscal stimulus policies, including the lowering of housing stamp duties and the re-launch of Hong Kong's

investment immigration scheme, Hong Kong was a significant underperformer in 2023. Singapore REITs closed the year with outperformance relative to the Asian index, with strength in the final quarter of the year as global bond yields retreated. Singapore property developers had weakened after the government announced punitive stamp duty measures in April 2023, but share prices recovered modestly toward year-end.

o  The Fund's security selection in Japan and Australia were top relative contributors for the year. Key relative performance detractors included the country overweight to and security selection within Hong Kong, the weighting to Japan, and security selection in Singapore.

•  European property stocks gained 20.42% for the year, as measured by the FTSE EPRA Nareit Developed Europe Net Total Return Index,(i)​ substantially outperforming the broader real estate market.

o  European real estate performance during 2023 was dominated by volatility related to inflation and the interest rate outlook. The peak and subsequent sharp fall in inflation in the second half of the year ultimately drove increased optimism on how quickly central banks may cut interest rates. Financial leverage was a key factor in Europe's relative performance versus global real estate in the year. Relative to global listed real estate, European stocks' relatively high levels of financial leverage led to a weak first half of the year, with a much stronger second half as markets rallied and Europe outperformed. Within Europe, German residential stocks outperformed, unwinding some underperformance from 2022, as did

 

(i)​  The FTSE EPRA Nareit North America Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the North American (U.S. and Canada) real estate market. The FTSE EPRA Nareit Developed Asia Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the Asian real estate markets. The FTSE EPRA Nareit Developed Europe Net Total Return Index is a subset of the FTSE EPRA Nareit Developed Net Total Return Index and is a free float-adjusted market capitalization weighted index composed of listed real estate securities in the European real estate markets. The performance of the indexes is listed in U.S. dollars and assumes reinvestment of net dividends. The indexes are unmanaged, and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. Data as of December 31, 2023.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Real Estate Portfolio

Sweden, particularly in the second half of the year, both driven by more highly leveraged balance sheets. The office sector underperformed, particularly in the U.K., due to continuing structural and cyclical concerns.

o  The Fund's security selection in the U.K. and country underweight to Germany were the top relative contributors for the year. Key relative performance detractors included security selection in France and the country underweight to Sweden.

Management Strategies

•  The team uses internal proprietary research to invest in public real estate companies that we believe offer the best value relative to their underlying assets and growth prospects. The team combines a bottom-up approach, assessing the intrinsic value, equity multiples and growth prospects of each security, with a top-down view that incorporates fundamental inflection points, macroeconomic considerations, and geopolitical and country risk. By incorporating both an equity market valuation and a more traditional real estate valuation with a top-down overlay, we believe the Fund will be better prepared to identify securities with the best expected total returns.

•  Given the stabilization in interest rates across the globe and the increasing likelihood of interest rate cuts, we believe forecasted returns for the asset class have improved. Moreover, we believe relative strength in cash flows can be expected given the unique nature of listed real estate. Specifically, the contracted rental streams with inflation-linked escalations and the necessity-based nature of real estate — the listed real estate market evolves and grows with the broader needs of society and the economy and sits at the epicenter of how people live, work, shop and communicate — coupled with limited new real estate supply additions in the vast majority of sectors, should result in cash flow growth. Additionally, we believe the relative valuation of real estate securities is attractive, specifically when compared to direct property investment and the broader equities market, and is presenting an interesting pricing arbitrage opportunity for investors.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Real Estate Portfolio

Performance Compared to the FTSE EPRA Nareit Developed Net Total Return Index(1) and the Lipper Global Real Estate Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(9)
 
Fund — Class I Shares
w/o sales charges(4)
   

12.68

%

   

0.94

%

   

2.15

%

   

2.43

%

 
Fund — Class A Shares
w/o sales charges(4)
   

12.28

     

0.61

     

1.85

     

2.14

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

6.30

     

–0.47

     

1.30

     

1.82

   
Fund — Class L Shares
w/o sales charges(5)
   

11.73

     

0.03

     

1.30

     

1.71

   
Fund — Class C Shares
w/o sales charges(7)
   

11.57

     

–0.21

     

     

–0.47

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(7)
   

10.57

     

–0.21

     

     

–0.47

   
Fund — Class R6 Shares
w/o sales charges(6)
   

13.02

     

1.01

     

2.23

     

2.27

   
Fund — Class IR Shares
w/o sales charges(8)
   

12.77

     

0.98

     

     

–0.52

   
FTSE EPRA Nareit Developed
Net Total Return Index
   

9.67

     

2.81

     

3.57

     

2.82

   
Lipper Global Real Estate
Funds Index
   

11.09

     

4.32

     

4.46

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The FTSE EPRA Nareit Developed Net Total Return Index is a free float-adjusted market capitalization weighted index designed to reflect the stock performance of companies engaged in the North American, European and Asian real estate markets. The performance of the index is listed in U.S. dollars and assumes reinvestment of net dividends. It is not possible to invest directly in an index.

(2)​  The Lipper Global Real Estate Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Real Estate Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Real Estate Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on August 30, 2006.

(5)​  Commenced offering on June 16, 2008.

(6)​  Commenced offering September 13, 2013.

(7)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(8)​  Commenced offering on June 15, 2018

(9)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Real Estate Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.0%)

 

Australia (3.7%)

 

Goodman Group REIT

   

26,507

   

$

457

   

National Storage REIT

   

149,033

     

233

   

Region RE Ltd. REIT

   

214,066

     

329

   

Stockland REIT

   

136,186

     

413

   
     

1,432

   

Belgium (1.8%)

 

Aedifica SA REIT

   

2,788

     

196

   

Montea NV REIT

   

2,742

     

261

   

Shurgard Self Storage Ltd. REIT

   

4,794

     

237

   
     

694

   

Canada (2.5%)

 

Boardwalk REIT

   

7,209

     

388

   

Chartwell Retirement Residences (Units) (a)

   

28,427

     

252

   

InterRent REIT

   

35,776

     

357

   
     

997

   

France (2.2%)

 

Carmila SA REIT (b)

   

13,371

     

230

   

Gecina SA REIT

   

1,231

     

150

   

Klepierre SA REIT

   

6,819

     

186

   

Unibail-Rodamco-Westfield REIT (b)

   

4,203

     

311

   
     

877

   

Germany (2.6%)

 

LEG Immobilien SE (b)

   

4,631

     

405

   

Vonovia SE

   

19,788

     

622

   
     

1,027

   

Hong Kong (2.9%)

 

Link REIT

   

98,129

     

551

   

Sun Hung Kai Properties Ltd.

   

38,367

     

415

   

Wharf Real Estate Investment Co. Ltd.

   

56,075

     

190

   
     

1,156

   

Japan (10.8%)

 

Comforia Residential, Inc. REIT

   

69

     

155

   

Heiwa Real Estate, Inc. REIT

   

180

     

172

   

Hulic Co. Ltd. (c)

   

32,000

     

334

   

Invincible Investment Corp. REIT

   

1,113

     

481

   

Japan Hotel REIT Investment Corp.

   

540

     

265

   

Japan Metropolitan Fund Invest REIT

   

221

     

160

   

Japan Real Estate Investment Corp. REIT

   

75

     

310

   

Mitsubishi Estate Co. Ltd.

   

9,400

     

129

   

Mitsui Fudosan Co. Ltd.

   

37,400

     

914

   

Mitsui Fudosan Logistics Park, Inc. REIT

   

51

     

165

   

Nippon Building Fund, Inc. REIT (c)

   

56

     

242

   

Nippon Prologis, Inc. REIT

   

118

     

227

   

Sumitomo Realty & Development Co. Ltd.

   

22,500

     

667

   
     

4,221

   
   

Shares

  Value
(000)
 

Netherlands (0.5%)

 

CTP NV

   

11,303

   

$

191

   

Singapore (1.3%)

 

CapitaLand Integrated Commercial Trust REIT

   

170,400

     

265

   

Frasers Centrepoint Trust REIT

   

149,500

     

256

   
     

521

   

Spain (0.8%)

 

Merlin Properties Socimi SA REIT

   

29,584

     

328

   

Sweden (1.6%)

 

Castellum AB (b)

   

26,453

     

376

   

Pandox AB

   

17,807

     

266

   
     

642

   

Switzerland (0.4%)

 

PSP Swiss Property AG (Registered)

   

1,119

     

156

   

United Kingdom (4.2%)

 

Impact Healthcare PLC REIT

   

120,375

     

138

   

LondonMetric Property PLC REIT

   

80,262

     

196

   

Segro PLC REIT

   

54,866

     

619

   

Sirius Real Estate Ltd. REIT

   

99,173

     

119

   

UNITE Group PLC REIT

   

30,570

     

406

   

Workspace Group PLC REIT

   

22,016

     

159

   
     

1,637

   

United States (63.7%)

 

Agree Realty Corp. REIT

   

7,963

     

501

   

Alexandria Real Estate Equities, Inc. REIT

   

5,472

     

694

   

American Homes 4 Rent, Class A REIT

   

29,415

     

1,058

   

American Tower Corp. REIT

   

1,772

     

382

   

Americold Realty Trust, Inc. REIT

   

15,531

     

470

   

AvalonBay Communities, Inc. REIT

   

5,849

     

1,095

   

CareTrust REIT, Inc.

   

17,571

     

393

   

Digital Realty Trust, Inc. REIT

   

8,879

     

1,195

   

EastGroup Properties, Inc. REIT

   

2,131

     

391

   

Equinix, Inc. REIT

   

2,664

     

2,146

   

Essex Property Trust, Inc. REIT

   

3,741

     

928

   

Extra Space Storage, Inc. REIT

   

8,292

     

1,329

   

Federal Realty Investment Trust REIT

   

4,714

     

486

   

Hilton Worldwide Holdings, Inc.

   

1,294

     

236

   

Host Hotels & Resorts, Inc. REIT

   

24,478

     

477

   

Iron Mountain, Inc. REIT

   

2,314

     

162

   

Kilroy Realty Corp. REIT

   

13,927

     

555

   

Kimco Realty Corp. REIT

   

32,777

     

698

   

Kite Realty Group Trust REIT

   

16,562

     

379

   

Mid-America Apartment Communities, Inc. REIT

   

4,250

     

571

   

Prologis, Inc. REIT

   

18,711

     

2,494

   

Public Storage REIT

   

4,415

     

1,347

   

Realty Income Corp. REIT

   

19,819

     

1,138

   

Rexford Industrial Realty, Inc. REIT

   

10,444

     

586

   

Simon Property Group, Inc. REIT

   

8,576

     

1,223

   

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

   

Shares

  Value
(000)
 

United States (cont'd)

 

Sun Communities, Inc. REIT

   

4,268

   

$

570

   

Urban Edge Properties REIT

   

13,804

     

253

   

Ventas, Inc. REIT

   

6,722

     

335

   

VICI Properties, Inc. REIT

   

30,065

     

958

   

Welltower, Inc. REIT

   

21,612

     

1,949

   
     

24,999

   

Total Common Stocks (Cost $30,555)

   

38,878

   

Short-Term Investment (1.1%)

 

Investment Company (1.1%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $417)
   

416,928

     

417

   
Total Investments (100.1%) (Cost $30,972)
Including $562 of Securities Loaned (d)(e)
   

39,295

   

Liabilities in Excess of Other Assets (–0.1%)

   

(45

)

 

Net Assets (100.0%)

 

$

39,250

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Consists of one or more classes of securities traded together as a unit; stocks with attached warrants.

(b)  Non-income producing security.

(c)  All or a portion of this security was on loan at December 31, 2023.

(d)  The approximate fair value and percentage of net assets, $12,882,000 and 32.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(e)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $32,074,000. The aggregate gross unrealized appreciation is approximately $8,973,000 and the aggregate gross unrealized depreciation is approximately $1,754,000, resulting in net unrealized appreciation of approximately $7,219,000.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Residential

   

16.7

%

 

Retail

   

15.2

   

Industrial

   

14.9

   

Diversified

   

11.9

   

Other*

   

11.1

   

Data Centers

   

8.5

   

Health Care

   

8.3

   

Self Storage

   

8.0

   

Office

   

5.4

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Real Estate Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $30,555)

 

$

38,878

   

Investment in Security of Affiliated Issuer, at Value (Cost $417)

   

417

   

Total Investments in Securities, at Value (Cost $30,972)

   

39,295

   

Foreign Currency, at Value (Cost $23)

   

23

   

Dividends Receivable

   

171

   

Tax Reclaim Receivable

   

81

   

Due from Adviser

   

15

   

Receivable from Affiliate

   

1

   

Receivable from Securities Lending Income

   

@

 

Receivable for Fund Shares Sold

   

@

 

Other Assets

   

70

   

Total Assets

   

39,656

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

285

   

Payable for Fund Shares Redeemed

   

34

   

Payable for Professional Fees

   

22

   

Payable for Sub Transfer Agency Fees — Class I

   

12

   

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Custodian Fees

   

7

   

Payable for Administration Fees

   

3

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

42

   

Total Liabilities

   

406

   

Net Assets

 

$

39,250

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

32,481

   

Total Distributable Earnings

   

6,769

   

Net Assets

 

$

39,250

   

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

37,042

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

8,450,717

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

4.38

   

CLASS A:

 

Net Assets

 

$

1,304

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

298,063

   

Net Asset Value, Redemption Price Per Share

 

$

4.37

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.24

   

Maximum Offering Price Per Share

 

$

4.61

   

CLASS L:

 

Net Assets

 

$

104

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

23,860

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

4.35

   

CLASS C:

 

Net Assets

 

$

71

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

17,238

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

4.14

   

CLASS R6:

 

Net Assets

 

$

720

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

164,414

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

4.38

   

CLASS IR:

 

Net Assets

 

$

9

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,991

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

4.37

   
(1)​ Including:
Securities on Loan, at Value:
 

$

562

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Real Estate Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers* (Net of $55 of Foreign Taxes Withheld)

 

$

2,024

   

Dividends from Security of Affiliated Issuer (Note G)

   

10

   

Income from Securities Loaned — Net

   

2

   

Total Investment Income

   

2,036

   

Expenses:

 

Advisory Fees (Note B)

   

298

   

Professional Fees

   

191

   

Registration Fees

   

84

   

Sub Transfer Agency Fees — Class I

   

30

   

Sub Transfer Agency Fees — Class A

   

1

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Administration Fees (Note C)

   

30

   

Transfer Agency Fees — Class I (Note E)

   

7

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

4

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Custodian Fees (Note F)

   

9

   

Shareholder Reporting Fees

   

9

   

Shareholder Services Fees — Class A (Note D)

   

4

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

2

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

1

   

Directors' Fees and Expenses

   

6

   

Pricing Fees

   

5

   

Other Expenses

   

18

   

Total Expenses

   

710

   

Waiver of Advisory Fees (Note B)

   

(298

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(17

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(4

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(31

)

 

Expenses Reimbursed by Adviser (Note B)

   

(1

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

349

   

Net Investment Income

   

1,687

   

Realized Loss:

 

Investments Sold

   

32

   

Foreign Currency Translation

   

(12

)

 

Net Realized Loss

   

20

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

2,893

   

Foreign Currency Translation

   

7

   

Net Change in Unrealized Appreciation (Depreciation)

   

2,900

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

2,920

   

Net Increase in Net Assets Resulting from Operations

 

$

4,607

   

*  Includes foreign tax reclaims for previously withheld taxes on dividends earned in certain European Union countries in the amount of approximately $708 (000).

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Real Estate Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

1,687

   

$

1,353

   

Net Realized Gain (Loss)

   

20

     

2,038

   

Net Change in Unrealized Appreciation (Depreciation)

   

2,900

     

(20,898

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

4,607

     

(17,507

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(1,900

)

   

(8,529

)

 

Class A

   

(66

)

   

(499

)

 

Class L

   

(5

)

   

(84

)

 

Class C

   

(3

)

   

(29

)

 

Class R6*

   

(38

)

   

(215

)

 

Class IR

   

(—

@)

   

(2

)

 

Total Dividends and Distributions to Shareholders

   

(2,012

)

   

(9,358

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

365

     

1,321

   

Distributions Reinvested

   

1,818

     

8,090

   

Redeemed

   

(3,191

)

   

(9,886

)

 

Class A:

 

Subscribed

   

21

     

88

   

Distributions Reinvested

   

66

     

498

   

Redeemed

   

(586

)

   

(923

)

 

Class L:

 

Exchanged

   

     

56

   

Distributions Reinvested

   

5

     

84

   

Redeemed

   

(250

)

   

(81

)

 

Class C:

 

Distributions Reinvested

   

3

     

29

   

Redeemed

   

(64

)

   

(346

)

 

Class R6:*

 

Subscribed

   

34

     

108

   

Distributions Reinvested

   

35

     

206

   

Redeemed

   

(241

)

   

(20,302

)

 

Class IR:

 

Distributions Reinvested

   

@

   

2

   

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(1,985

)

   

(21,056

)

 

Total Increase (Decrease) in Net Assets

   

610

     

(47,921

)

 

Net Assets:

 

Beginning of Period

   

38,640

     

86,561

   

End of Period

 

$

39,250

   

$

38,640

   

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

86

     

225

   

Shares Issued on Distributions Reinvested

   

421

     

1,973

   

Shares Redeemed

   

(749

)

   

(1,738

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

(242

)

   

460

   

Class A:

 

Shares Subscribed

   

5

     

14

   

Shares Issued on Distributions Reinvested

   

15

     

122

   

Shares Redeemed

   

(137

)

   

(187

)

 

Net Decrease in Class A Shares Outstanding

   

(117

)

   

(51

)

 

Class L:

 

Shares Exchanged

   

     

10

   

Shares Issued on Distributions Reinvested

   

1

     

21

   

Shares Redeemed

   

(65

)

   

(17

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(64

)

   

14

   

Class C:

 

Shares Issued on Distributions Reinvested

   

1

     

8

   

Shares Redeemed

   

(16

)

   

(58

)

 

Net Decrease in Class C Shares Outstanding

   

(15

)

   

(50

)

 

Class R6:*

 

Shares Subscribed

   

8

     

17

   

Shares Issued on Distributions Reinvested

   

8

     

50

   

Shares Redeemed

   

(57

)

   

(2,969

)

 

Net Decrease in Class R6 Shares Outstanding

   

(41

)

   

(2,902

)

 

Class IR:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

4.10

   

$

7.24

   

$

8.26

   

$

9.87

   

$

9.19

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.19

     

0.15

     

0.09

     

0.15

     

0.24

   

Net Realized and Unrealized Gain (Loss)

   

0.33

     

(2.04

)

   

1.79

     

(1.57

)

   

1.43

   

Total from Investment Operations

   

0.52

     

(1.89

)

   

1.88

     

(1.42

)

   

1.67

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.20

)

   

(0.08

)

   

(1.57

)

   

(0.11

)

   

(0.54

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.24

)

   

(1.25

)

   

(2.90

)

   

(0.19

)

   

(0.99

)

 

Net Asset Value, End of Period

 

$

4.38

   

$

4.10

   

$

7.24

   

$

8.26

   

$

9.87

   

Total Return(2)

   

12.68

%(3)

   

(26.03

)%

   

23.99

%

   

(14.33

)%

   

18.35

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

37,042

   

$

35,613

   

$

59,614

   

$

84,874

   

$

323,386

   

Ratio of Expenses Before Expense Limitation

   

1.83

%

   

1.72

%

   

1.12

%

   

1.20

%

   

1.05

%

 

Ratio of Expenses After Expense Limitation

   

0.90

%(4)(5)(6)

   

1.00

%(6)

   

0.94

%(6)

   

1.01

%(6)(7)

   

1.00

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(6)

   

0.93

%(6)

   

1.00

%(6)

   

1.00

%(6)

 

Ratio of Net Investment Income

   

4.50

%(5)(6)

   

2.52

%(6)

   

1.03

%(6)

   

1.86

%(6)

   

2.36

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.80% for Class I shares. Prior to December 11, 2023, the maximum ratio was 1.00% for Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.99

%

   

4.41

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

4.09

   

$

7.22

   

$

8.25

   

$

9.85

   

$

9.17

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.18

     

0.13

     

0.05

     

0.13

     

0.21

   

Net Realized and Unrealized Gain (Loss)

   

0.32

     

(2.02

)

   

1.79

     

(1.58

)

   

1.41

   

Total from Investment Operations

   

0.50

     

(1.89

)

   

1.84

     

(1.45

)

   

1.62

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.18

)

   

(0.07

)

   

(1.54

)

   

(0.07

)

   

(0.49

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.22

)

   

(1.24

)

   

(2.87

)

   

(0.15

)

   

(0.94

)

 

Net Asset Value, End of Period

 

$

4.37

   

$

4.09

   

$

7.22

   

$

8.25

   

$

9.85

   

Total Return(2)

   

12.28

%(3)

   

(26.10

)%

   

23.47

%

   

(14.65

)%

   

17.90

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,304

   

$

1,698

   

$

3,368

   

$

4,316

   

$

10,728

   

Ratio of Expenses Before Expense Limitation

   

2.34

%

   

1.74

%

   

2.05

%

   

1.90

%

   

1.37

%

 

Ratio of Expenses After Expense Limitation

   

1.26

%(4)(5)(6)

   

1.16

%(6)

   

1.36

%(6)(7)

   

1.36

%(6)(7)

   

1.35

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.15

%(6)

   

1.35

%(6)

   

1.35

%(6)

   

1.35

%(6)

 

Ratio of Net Investment Income

   

4.14

%(5)(6)

   

2.17

%(6)

   

0.57

%(6)

   

1.63

%(6)

   

2.00

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.15% for Class A shares. Prior to December 11, 2023, the maximum ratio was 1.35% for Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.33

%

   

4.07

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

4.03

   

$

7.14

   

$

8.18

   

$

9.75

   

$

9.09

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.15

     

0.10

     

0.01

     

0.08

     

0.16

   

Net Realized and Unrealized Gain (Loss)

   

0.33

     

(2.01

)

   

1.77

     

(1.56

)

   

1.40

   

Total from Investment Operations

   

0.48

     

(1.91

)

   

1.78

     

(1.48

)

   

1.56

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.12

)

   

(0.03

)

   

(1.49

)

   

(0.01

)

   

(0.45

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.16

)

   

(1.20

)

   

(2.82

)

   

(0.09

)

   

(0.90

)

 

Net Asset Value, End of Period

 

$

4.35

   

$

4.03

   

$

7.14

   

$

8.18

   

$

9.75

   

Total Return(2)

   

11.73

%(3)

   

(26.76

)%

   

22.94

%

   

(15.17

)%

   

17.37

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

104

   

$

352

   

$

521

   

$

522

   

$

1,419

   

Ratio of Expenses Before Expense Limitation

   

3.31

%

   

2.84

%

   

2.30

%

   

2.08

%

   

1.91

%

 

Ratio of Expenses After Expense Limitation

   

1.82

%(4)(5)(6)

   

1.85

%(6)

   

1.86

%(6)(7)

   

1.86

%(6)(7)

   

1.85

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.85

%(6)

   

1.85

%(6)

   

1.85

%(6)

   

1.85

%(6)

 

Ratio of Net Investment Income

   

3.58

%(5)(6)

   

1.71

%(6)

   

0.12

%(6)

   

1.07

%(6)

   

1.54

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.65% for Class L shares. Prior to December 11, 2023, the maximum ratio was 1.85% for Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.84

%

   

3.56

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

3.87

   

$

6.90

   

$

8.01

   

$

9.56

   

$

8.92

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.14

     

0.07

     

(0.00

)(2)

   

0.08

     

0.13

   

Net Realized and Unrealized Gain (Loss)

   

0.31

     

(1.93

)

   

1.71

     

(1.54

)

   

1.37

   

Total from Investment Operations

   

0.45

     

(1.86

)

   

1.71

     

(1.46

)

   

1.50

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

     

(1.49

)

   

(0.01

)

   

(0.41

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.18

)

   

(1.17

)

   

(2.82

)

   

(0.09

)

   

(0.86

)

 

Net Asset Value, End of Period

 

$

4.14

   

$

3.87

   

$

6.90

   

$

8.01

   

$

9.56

   

Total Return(3)

   

11.57

%(4)

   

(26.97

)%

   

22.54

%

   

(15.26

)%

   

16.98

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

71

   

$

126

   

$

569

   

$

225

   

$

397

   

Ratio of Expenses Before Expense Limitation

   

5.87

%

   

3.49

%

   

2.94

%

   

2.96

%

   

2.51

%

 

Ratio of Expenses After Expense Limitation

   

2.02

%(5)(6)(7)

   

2.10

%(7)

   

2.11

%(7)(8)

   

2.11

%(7)(8)

   

2.10

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.10

%(7)

   

2.10

%(7)

   

2.10

%(7)

   

2.10

%(7)

 

Ratio of Net Investment Income (Loss)

   

3.40

%(6)(7)

   

1.11

%(7)

   

(0.03

)%(7)

   

1.00

%(7)

   

1.26

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.90% for Class C shares. Prior to December 11, 2023, the maximum ratio was 2.10% for Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.08

%

   

3.34

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

4.09

   

$

7.23

   

$

8.25

   

$

9.87

   

$

9.19

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.19

     

0.14

     

0.08

     

0.17

     

0.25

   

Net Realized and Unrealized Gain (Loss)

   

0.34

     

(2.02

)

   

1.80

     

(1.59

)

   

1.43

   

Total from Investment Operations

   

0.53

     

(1.88

)

   

1.88

     

(1.42

)

   

1.68

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.20

)

   

(0.09

)

   

(1.57

)

   

(0.12

)

   

(0.55

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.24

)

   

(1.26

)

   

(2.90

)

   

(0.20

)

   

(1.00

)

 

Net Asset Value, End of Period

 

$

4.38

   

$

4.09

   

$

7.23

   

$

8.25

   

$

9.87

   

Total Return(3)

   

13.02

%(4)

   

(26.05

)%

   

24.02

%

   

(14.36

)%

   

18.43

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

720

   

$

843

   

$

22,479

   

$

218,100

   

$

350,363

   

Ratio of Expenses Before Expense Limitation

   

2.30

%

   

1.59

%

   

1.13

%

   

1.01

%

   

0.94

%

 

Ratio of Expenses After Expense Limitation

   

0.85

%(5)(6)(7)

   

0.94

%(7)

   

0.95

%(7)(8)

   

0.95

%(7)(8)

   

0.94

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.94

%(7)

   

0.94

%(7)

   

0.94

%(7)

   

0.94

%(7)

 

Ratio of Net Investment Income

   

4.55

%(6)(7)

   

2.21

%(7)

   

0.93

%(7)

   

2.21

%(7)

   

2.41

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.75% for Class R6 shares. Prior to December 11, 2023, the maximum ratio was 0.94% for Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.93

%

   

4.47

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Real Estate Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

4.09

   

$

7.23

   

$

8.25

   

$

9.87

   

$

9.19

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.19

     

0.15

     

0.04

     

0.18

     

0.25

   

Net Realized and Unrealized Gain (Loss)

   

0.33

     

(2.03

)

   

1.84

     

(1.60

)

   

1.43

   

Total from Investment Operations

   

0.52

     

(1.88

)

   

1.88

     

(1.42

)

   

1.68

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.20

)

   

(0.09

)

   

(1.57

)

   

(0.12

)

   

(0.55

)

 

Net Realized Gain

   

(0.04

)

   

(1.17

)

   

(1.33

)

   

(0.08

)

   

(0.45

)

 

Total Distributions

   

(0.24

)

   

(1.26

)

   

(2.90

)

   

(0.20

)

   

(1.00

)

 

Net Asset Value, End of Period

 

$

4.37

   

$

4.09

   

$

7.23

   

$

8.25

   

$

9.87

   

Total Return(2)

   

12.77

%(3)

   

(26.01

)%

   

24.08

%

   

(14.36

)%

   

18.44

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

9

   

$

8

   

$

10

   

$

8

   

$

10

   

Ratio of Expenses Before Expense Limitation

   

27.75

%

   

23.96

%

   

23.02

%

   

26.07

%

   

21.38

%

 

Ratio of Expenses After Expense Limitation

   

0.84

%(4)(5)(6)

   

0.94

%(6)

   

0.95

%(6)(7)

   

0.95

%(6)(7)

   

0.94

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.94

%(6)

   

0.94

%(6)

   

0.94

%(6)

   

0.94

%(6)

 

Ratio of Net Investment Income

   

4.54

%(5)(6)

   

2.52

%(6)

   

0.46

%(6)

   

2.37

%(6)

   

2.45

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

73

%

   

87

%

   

135

%

   

51

%

   

24

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.75% for Class IR shares. Prior to December 11, 2023, the maximum ratio was 0.94% for Class IR shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.93

%

   

4.45

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Real Estate Portfolio. The Fund seeks to provide current income and capital appreciation.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between

the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The Fund invests a significant portion of its assets in securities of real estate investment trusts ("REITs"). The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Fund.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market

participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Data Centers

 

$

3,341

   

$

   

$

   

$

3,341

   

Diversified

   

     

4,694

     

     

4,694

   

Health Care

   

2,929

     

334

     

     

3,263

   

Industrial

   

3,941

     

1,920

     

     

5,861

   

Industrial/Office Mixed

   

     

691

     

     

691

   

Lodging/Resorts

   

713

     

1,012

     

     

1,725

   

Office

   

1,249

     

861

     

     

2,110

   

Residential

   

4,967

     

1,588

     

     

6,555

   


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Retail

 

$

4,678

   

$

1,312

   

$

   

$

5,990

   

Self Storage

   

2,676

     

470

     

     

3,146

   

Specialty

   

1,120

     

     

     

1,120

   

Telecommunications REITs

   

382

     

     

     

382

   

Total Common Stocks

   

25,996

     

12,882

     

     

38,878

   

Short-Term Investment

 

Investment Company

   

417

     

     

     

417

   

Total Assets

 

$

26,413

   

$

12,882

   

$

   

$

39,295

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amount
Presented in
the Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

562

(a)

 

$

   

$

(562

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at period end.

(b) The Fund received non-cash collateral of approximately $588,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

7.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Fund owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $2
billion
  Over $2
billion
 
  0.80

%

   

0.75

%

 

Effective December 11, 2023, the Adviser provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $2
billion
  Over $2
billion
 
  0.65

%

   

0.60

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares, 0.94% for Class R6 shares and 0.94% for Class IR shares. Effective December 11, 2023, the Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses will not exceed 0.80% for Class I shares, 1.15% for Class A shares, 1.65% for Class L shares 1.90% for Class C shares, 0.75% for Class R6 shares and 0.75% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $298,000 of advisory fees were waived and approximately $32,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into Sub-Advisory Agreements with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Fund with advisory services subject to the overall supervision of the Adviser and the Company's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This

was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $27,662,000 and $29,803,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,045

   

$

6,768

   

$

7,396

   

$

10

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

417

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

1,710

   

$

302

   

$

6,952

   

$

2,406

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

186

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term capital losses of approximately $609,000 that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount

increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 71.3%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Real Estate Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Real Estate Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated and paid approximately $302,000 as a long-term capital gain distribution. The Fund designated approximately $518,000 of its distributions paid as qualified business income.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $232,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


41


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGREANN
6337790 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Global Sustain Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

8

   

Statement of Operations

   

10

   

Statements of Changes in Net Assets

   

11

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Federal Tax Notice

   

27

   

Important Notices

   

28

   

U.S. Customer Privacy Notice

   

29

   

Directors and Officers Information

   

32

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Global Sustain Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Global Sustain Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Global Sustain Portfolio Class I

 

$

1,000.00

   

$

1,062.50

   

$

1,020.97

   

$

4.37

   

$

4.28

     

0.84

%

 

Global Sustain Portfolio Class A

   

1,000.00

     

1,060.00

     

1,019.16

     

6.23

     

6.11

     

1.20

   

Global Sustain Portfolio Class L

   

1,000.00

     

1,057.50

     

1,016.69

     

8.76

     

8.59

     

1.69

   

Global Sustain Portfolio Class C

   

1,000.00

     

1,056.10

     

1,015.48

     

10.00

     

9.80

     

1.93

   

Global Sustain Portfolio Class R6

   

1,000.00

     

1,062.90

     

1,021.22

     

4.11

     

4.02

     

0.79

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Global Sustain Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 21.69%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI World Net Index (the "Index"), which returned 23.79%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  For the year, global equity markets (as measured by the Index) delivered an impressive +23.8%. Looking at sectors, information technology was the strongest performer in 2023, helped by its exposure to the artificial intelligence (AI) euphoria. The sector returned more than 50% in the year. Communication services and consumer discretionary were the other strong performers for the year (up +35% and +24%, respectively). The more cyclical sectors — notably real estate, industrials and financials — finished behind the Index for the year. The portfolio's key defensive sectors of health care and consumer staples lagged for much of 2023, finishing up only +4% and +2%, respectively, for the year, 20 percentage points behind the index. Energy finished up a modest +3% in 2023 after its spectacular 2022.

•  For the year, the U.S. (+26%) outperformed the Index by 3 percentage points. In euroland, Italy (+37%) and Spain (+32%) finished ahead of the index, while Germany (+23%) and France (+21%) were roughly in line. Switzerland (+16%) and the U.K. (+14%) were weaker. Japan (+20%) was stronger than its Asia counterparts, while Singapore (+5%) was weak and, amid a slowing Chinese economy, Hong Kong was the only country down double digits (–15% USD). (Country performance is shown in U.S. dollar terms, unless otherwise noted.)

•  For 2023 overall, the Fund's relative underperformance was due to stock selection, largely driven by information technology's very healthy 46% return which trailed the 58% offered by the Index, while financials also detracted. Sector allocation was positive for relative performance, mainly due to the overweight in information technology, while the avoidance of lower quality, more cyclical sectors, notably energy, also helped. This more than offset the negative relative performance from the overweight in health care, which ended the year 20% behind the Index. Another way of looking at allocation is that, of the "Magnificent Seven,"(i)​ the portfolio only owned Microsoft and Alphabet, leaving it with less than 10% combined versus the 17% weight the Seven had in the Index, and therefore detracting significantly from relative performance.

Management Strategies

•  As of the close of the period, the Index's current forward multiple did not look cheap, particularly as it is based on an arguably optimistic, double-digit earnings growth assumption for 2024 and 2025. This looks demanding given expected 2024 nominal gross domestic product growth in developed markets of 3%-4% and seems to imply that margins will have to rise further from already close to peak levels.(ii)​ The multiples on these potentially optimistic earnings also look high. The Index finished 2023 at 17.3x 12-month forward earnings, and the S&P 500 Index at virtually 20x.(iii)​ The overall setup strikes us as an unfavorable asymmetry, with upside limited due to the ambitious earnings estimates and high multiples, while there could be plenty of downside if there is a recession.

•  When it comes to the methodology behind the Fund's high quality portfolio, we are "double fussy" — concerned with the sustainability of both the earnings and the multiples. At period-end, our view was that the possibility of a downturn is not reflected in today's earnings expectations, nor in the current market multiple. Given the vulnerability of high earnings and high multiples in the event of an economic slowdown, we would argue that investing in a portfolio of high quality compounders makes sense.

(i)​  The "Magnificent Seven" are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

(ii)​  Source: Bloomberg L.P.

(iii)​  Source: FactSet. The S&P 500 Index measures the performance of the large-cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P Index is one of the most widely used benchmarks of U.S. equity performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Sustain Portfolio

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI World Net Index(1)​, the Lipper Global Large-Cap Growth Funds Index(2)​ and the Lipper Global Large-Cap Core Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(8)
 
Fund — Class I Shares
w/o sales charges(5)
   

21.69

%

   

11.54

%

   

9.16

%

   

10.12

%

 
Fund — Class A Shares
w/o sales charges(5)
   

21.19

     

11.14

     

8.78

     

9.75

   
Fund — Class A Shares
with maximum 5.25%
sales charges(5)
   

14.82

     

9.95

     

8.78

     

9.18

   
Fund — Class L Shares
w/o sales charges(5)
   

20.64

     

10.57

     

8.23

     

9.19

   
Fund — Class C Shares
w/o sales charges(7)
   

20.35

     

10.32

     

     

8.59

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(7)
   

19.35

     

10.32

     

     

8.59

   
Fund — Class R6 Shares
w/o sales charges(6)
   

21.75

     

11.59

     

9.21

     

9.91

   

MSCI World Net Index

   

23.79

     

12.80

     

8.60

     

9.64

   
Lipper Global Large-Cap
Growth Funds Index
   

26.51

     

11.79

     

8.65

     

9.66

   
Lipper Global Large-Cap
Core Funds Index
   

21.09

     

12.25

     

7.95

     

8.98

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI World Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI World Net Index currently consists of 23 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Global Sustain Portfolio

(2)​  The Lipper Global Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Global Large-Cap Growth Funds classification.

(3)​  The Lipper Global Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Global Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. The Fund's Lipper category changed from Global Large-Cap Core to Global Large-Cap Growth.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  Commenced operations on August 30, 2013.

(6)​  Commenced offering on September 13, 2013.

(7)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(8)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Global Sustain Portfolio

   

Shares

  Value
(000)
 

Common Stocks (98.0%)

 

Canada (3.3%)

 

Constellation Software, Inc.

   

1,423

   

$

3,528

   

France (1.5%)

 

L'Oreal SA

   

3,323

     

1,656

   

Germany (7.2%)

 

Deutsche Boerse AG

   

9,708

     

1,999

   

SAP SE

   

36,652

     

5,642

   
     

7,641

   

Hong Kong (2.4%)

 

AIA Group Ltd.

   

295,400

     

2,571

   

Netherlands (0.9%)

 

Universal Music Group NV

   

32,074

     

916

   

Sweden (1.4%)

 

Atlas Copco AB, Class A

   

88,773

     

1,530

   

Taiwan (2.7%)

 

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

27,485

     

2,858

   

United Kingdom (7.4%)

 

Experian PLC

   

30,697

     

1,252

   

Reckitt Benckiser Group PLC

   

46,848

     

3,233

   

RELX PLC (LSE)

   

84,779

     

3,363

   
     

7,848

   

United States (71.2%)

 

Abbott Laboratories

   

27,901

     

3,071

   

Accenture PLC, Class A

   

15,187

     

5,329

   

Alphabet, Inc., Class A (a)

   

23,067

     

3,222

   

Amphenol Corp., Class A

   

14,263

     

1,414

   

Aon PLC, Class A

   

8,656

     

2,519

   

Arthur J Gallagher & Co.

   

8,665

     

1,949

   

Automatic Data Processing, Inc.

   

9,134

     

2,128

   

Becton Dickinson & Co.

   

14,363

     

3,502

   

Broadridge Financial Solutions, Inc.

   

9,048

     

1,862

   

CDW Corp.

   

8,383

     

1,906

   

Coca-Cola Co.

   

36,886

     

2,174

   

Danaher Corp.

   

14,994

     

3,469

   

Equifax, Inc.

   

9,006

     

2,227

   

FactSet Research Systems, Inc.

   

1,466

     

699

   

Intercontinental Exchange, Inc.

   

30,495

     

3,916

   

IQVIA Holdings, Inc. (a)

   

15,201

     

3,517

   

Jack Henry & Associates, Inc.

   

3,549

     

580

   

Microsoft Corp.

   

17,836

     

6,707

   

Moody's Corp.

   

2,456

     

959

   

NIKE, Inc., Class B

   

4,805

     

522

   

Otis Worldwide Corp.

   

18,000

     

1,610

   

Procter & Gamble Co.

   

20,831

     

3,053

   

Revvity, Inc.

   

11,320

     

1,237

   

Roper Technologies, Inc.

   

4,380

     

2,388

   

Steris PLC

   

5,917

     

1,301

   

Texas Instruments, Inc.

   

16,157

     

2,754

   

Thermo Fisher Scientific, Inc.

   

9,493

     

5,039

   

Veralto Corp.

   

4,997

     

411

   

Visa, Inc., Class A

   

21,078

     

5,488

   
   

Shares

  Value
(000)
 

Zoetis, Inc.

   

4,712

   

$

930

   
     

75,883

   

Total Common Stocks (Cost $80,961)

   

104,431

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Canada (0.0%)‡

 
Constellation Software, Inc.
expires 3/31/40 (a)
(Cost $—)
   

1,639

     

9

   
   

Shares

     

Short-Term Investment (1.6%)

 

Investment Company (1.6%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $1,680)
   

1,680,098

     

1,680

   
Total Investments (99.6%)
(Cost $82,641) (b)(c)
   

106,120

   

Other Assets in Excess of Liabilities (0.4%)

   

387

   

Net Assets (100.0%)

 

$

106,507

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $22,162,000 and 20.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(c)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $84,365,000. The aggregate gross unrealized appreciation is approximately $24,097,000 and the aggregate gross unrealized depreciation is approximately $2,342,000, resulting in net unrealized appreciation of approximately $21,755,000.

ADR  American Depositary Receipt.

LSE  London Stock Exchange.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Software

   

17.2

%

 

Other*

   

16.9

   

Life Sciences Tools & Services

   

12.5

   

Professional Services

   

10.3

   

Health Care Equipment & Supplies

   

7.4

   

Capital Markets

   

7.2

   

Insurance

   

6.6

   

Household Products

   

5.9

   

Financial Services

   

5.7

   

Semiconductors & Semiconductor Equipment

   

5.3

   

Information Technology Services

   

5.0

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Sustain Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $80,961)

 

$

104,440

   

Investment in Security of Affiliated Issuer, at Value (Cost $1,680)

   

1,680

   

Total Investments in Securities, at Value (Cost $82,641)

   

106,120

   

Foreign Currency, at Value (Cost $396)

   

400

   

Dividends Receivable

   

43

   

Tax Reclaim Receivable

   

36

   

Receivable from Affiliate

   

7

   

Receivable for Fund Shares Sold

   

4

   

Other Assets

   

41

   

Total Assets

   

106,651

   

Liabilities:

 

Payable for Advisory Fees

   

75

   

Payable for Professional Fees

   

26

   

Payable for Sub Transfer Agency Fees — Class I

   

12

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

1

   

Payable for Administration Fees

   

7

   

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class L

   

1

   

Payable for Distribution and Shareholder Services Fees — Class C

   

3

   

Payable for Custodian Fees

   

4

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

12

   

Total Liabilities

   

144

   

Net Assets

 

$

106,507

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

88,973

   

Total Distributable Earnings

   

17,534

   

Net Assets

 

$

106,507

   

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Sustain Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

81,322

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

4,417,325

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.41

   

CLASS A:

 

Net Assets

 

$

5,775

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

315,004

   

Net Asset Value, Redemption Price Per Share

 

$

18.33

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.02

   

Maximum Offering Price Per Share

 

$

19.35

   

CLASS L:

 

Net Assets

 

$

1,421

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

79,694

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.83

   

CLASS C:

 

Net Assets

 

$

3,890

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

224,380

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

17.33

   

CLASS R6:

 

Net Assets

 

$

14,099

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

766,003

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

18.41

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Sustain Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $48 of Foreign Taxes Withheld)

 

$

1,222

   

Dividends from Security of Affiliated Issuer (Note G)

   

79

   

Total Investment Income

   

1,301

   

Expenses:

 

Advisory Fees (Note B)

   

668

   

Professional Fees

   

173

   

Sub Transfer Agency Fees — Class I

   

69

   

Sub Transfer Agency Fees — Class A

   

5

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

3

   

Administration Fees (Note C)

   

76

   

Registration Fees

   

71

   

Shareholder Services Fees — Class A (Note D)

   

14

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

10

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

42

   

Custodian Fees (Note F)

   

18

   

Transfer Agency Fees — Class I (Note E)

   

6

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Shareholder Reporting Fees

   

17

   

Directors' Fees and Expenses

   

7

   

Pricing Fees

   

3

   

Other Expenses

   

15

   

Total Expenses

   

1,209

   

Waiver of Advisory Fees (Note B)

   

(237

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(40

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(27

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(3

)

 

Net Expenses

   

897

   

Net Investment Income

   

404

   

Realized Gain (Loss):

 

Investments Sold

   

(2,168

)

 

Foreign Currency Translation

   

2

   

Net Realized Loss

   

(2,166

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

19,966

   

Foreign Currency Translation

   

5

   

Net Change in Unrealized Appreciation (Depreciation)

   

19,971

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

17,805

   

Net Increase in Net Assets Resulting from Operations

 

$

18,209

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Sustain Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

404

   

$

351

   

Net Realized Loss

   

(2,166

)

   

(3,537

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

19,971

     

(19,757

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

18,209

     

(22,943

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(379

)

   

(397

)

 

Class A

   

(6

)

   

(21

)

 

Class L

   

     

(4

)

 

Class C

   

     

(16

)

 

Class R6*

   

(72

)

   

(88

)

 

Total Dividends and Distributions to Shareholders

   

(457

)

   

(526

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

24,977

     

23,385

   

Distributions Reinvested

   

372

     

389

   

Redeemed

   

(13,229

)

   

(31,187

)

 

Class A:

 

Subscribed

   

721

     

1,281

   

Distributions Reinvested

   

6

     

21

   

Redeemed

   

(1,833

)

   

(4,153

)

 

Class L:

 

Distributions Reinvested

   

     

4

   

Redeemed

   

(81

)

   

(75

)

 

Class C:

 

Subscribed

   

171

     

893

   

Distributions Reinvested

   

     

16

   

Redeemed

   

(1,350

)

   

(992

)

 

Class R6:*

 

Subscribed

   

23

     

4

   

Distributions Reinvested

   

72

     

88

   

Redeemed

   

(1

)

   

(5

)

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

9,848

     

(10,331

)

 

Total Increase (Decrease) in Net Assets

   

27,600

     

(33,800

)

 

Net Assets:

 

Beginning of Period

   

78,907

     

112,707

   

End of Period

 

$

106,507

   

$

78,907

   

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Global Sustain Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

1,511

     

1,420

   

Shares Issued on Distributions Reinvested

   

21

     

26

   

Shares Redeemed

   

(798

)

   

(1,914

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

734

     

(468

)

 

Class A:

 

Shares Subscribed

   

43

     

77

   

Shares Issued on Distributions Reinvested

   

@

   

1

   

Shares Redeemed

   

(112

)

   

(257

)

 

Net Decrease in Class A Shares Outstanding

   

(69

)

   

(179

)

 

Class L:

 

Shares Issued on Distributions Reinvested

   

     

@

 

Shares Redeemed

   

(5

)

   

(5

)

 

Net Decrease in Class L Shares Outstanding

   

(5

)

   

(5

)

 

Class C:

 

Shares Subscribed

   

11

     

60

   

Shares Issued on Distributions Reinvested

   

     

1

   

Shares Redeemed

   

(84

)

   

(65

)

 

Net Decrease in Class C Shares Outstanding

   

(73

)

   

(4

)

 

Class R6:*

 

Shares Subscribed

   

1

     

@

 

Shares Issued on Distributions Reinvested

   

4

     

6

   

Shares Redeemed

   

(—

@)

   

(—

@)

 

Net Increase in Class R6 Shares Outstanding

   

5

     

6

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Sustain Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

15.20

   

$

19.30

   

$

16.57

   

$

14.66

   

$

11.58

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.08

     

0.08

     

0.09

     

0.08

     

0.09

   

Net Realized and Unrealized Gain (Loss)

   

3.22

     

(4.08

)

   

2.98

     

2.25

     

3.38

   

Total from Investment Operations

   

3.30

     

(4.00

)

   

3.07

     

2.33

     

3.47

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.09

)

   

(0.05

)

   

(0.07

)

   

(0.06

)

   

(0.08

)

 

Net Realized Gain

   

     

(0.05

)

   

(0.27

)

   

(0.36

)

   

(0.31

)

 

Total Distributions

   

(0.09

)

   

(0.10

)

   

(0.34

)

   

(0.42

)

   

(0.39

)

 

Net Asset Value, End of Period

 

$

18.41

   

$

15.20

   

$

19.30

   

$

16.57

   

$

14.66

   

Total Return(2)

   

21.69

%(3)

   

(20.69

)%

   

18.62

%

   

15.96

%

   

30.03

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

81,322

   

$

55,997

   

$

80,097

   

$

34,042

   

$

14,756

   

Ratio of Expenses Before Expense Limitation

   

1.20

%

   

1.24

%

   

1.17

%

   

1.45

%

   

1.92

%

 

Ratio of Expenses After Expense Limitation

   

0.87

%(4)(5)

   

0.90

%(5)

   

0.90

%(5)

   

0.90

%(5)

   

0.90

%(5)

 

Ratio of Net Investment Income

   

0.50

%(4)(5)

   

0.47

%(5)

   

0.51

%(5)

   

0.52

%(5)

   

0.68

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

34

%

   

26

%

   

11

%

   

20

%

   

14

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.90

%

   

0.47

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Sustain Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

15.14

   

$

19.21

   

$

16.51

   

$

14.62

   

$

11.56

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.02

     

0.02

     

0.03

     

0.03

     

0.05

   

Net Realized and Unrealized Gain (Loss)

   

3.19

     

(4.04

)

   

2.96

     

2.23

     

3.36

   

Total from Investment Operations

   

3.21

     

(4.02

)

   

2.99

     

2.26

     

3.41

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.02

)

   

     

(0.02

)

   

(0.01

)

   

(0.04

)

 

Net Realized Gain

   

     

(0.05

)

   

(0.27

)

   

(0.36

)

   

(0.31

)

 

Total Distributions

   

(0.02

)

   

(0.05

)

   

(0.29

)

   

(0.37

)

   

(0.35

)

 

Net Asset Value, End of Period

 

$

18.33

   

$

15.14

   

$

19.21

   

$

16.51

   

$

14.62

   

Total Return(2)

   

21.19

%(3)

   

(20.91

)%

   

18.20

%

   

15.53

%

   

29.53

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

5,775

   

$

5,816

   

$

10,812

   

$

4,839

   

$

2,949

   

Ratio of Expenses Before Expense Limitation

   

1.51

%

   

1.51

%

   

1.46

%

   

1.76

%

   

2.25

%

 

Ratio of Expenses After Expense Limitation

   

1.22

%(4)(5)

   

1.25

%(5)

   

1.22

%(5)

   

1.24

%(5)

   

1.25

%(5)

 

Ratio of Net Investment Income

   

0.16

%(4)(5)

   

0.13

%(5)

   

0.18

%(5)

   

0.17

%(5)

   

0.35

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

34

%

   

26

%

   

11

%

   

20

%

   

14

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.25

%

   

0.13

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Sustain Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.78

   

$

18.86

   

$

16.28

   

$

14.48

   

$

11.47

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.06

)

   

(0.06

)

   

(0.05

)

   

(0.05

)

   

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

3.11

     

(3.97

)

   

2.90

     

2.21

     

3.33

   

Total from Investment Operations

   

3.05

     

(4.03

)

   

2.85

     

2.16

     

3.32

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.05

)

   

(0.27

)

   

(0.36

)

   

(0.31

)

 

Net Asset Value, End of Period

 

$

17.83

   

$

14.78

   

$

18.86

   

$

16.28

   

$

14.48

   

Total Return(2)

   

20.64

%(3)

   

(21.35

)%

   

17.58

%

   

14.97

%

   

28.87

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,421

   

$

1,253

   

$

1,684

   

$

1,441

   

$

1,437

   

Ratio of Expenses Before Expense Limitation

   

2.07

%

   

2.05

%

   

2.08

%

   

2.32

%

   

2.77

%

 

Ratio of Expenses After Expense Limitation

   

1.72

%(4)(5)

   

1.75

%(5)

   

1.75

%(5)

   

1.75

%(5)

   

1.75

%(5)

 

Ratio of Net Investment Loss

   

(0.34

)%(4)(5)

   

(0.37

)%(5)

   

(0.27

)%(5)

   

(0.33

)%(5)

   

(0.09

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

34

%

   

26

%

   

11

%

   

20

%

   

14

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.75

%

   

(0.37

)%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Sustain Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.40

   

$

18.41

   

$

15.94

   

$

14.22

   

$

11.30

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.09

)

   

(0.09

)

   

(0.09

)

   

(0.08

)

   

(0.05

)

 

Net Realized and Unrealized Gain (Loss)

   

3.02

     

(3.87

)

   

2.83

     

2.16

     

3.28

   

Total from Investment Operations

   

2.93

     

(3.96

)

   

2.74

     

2.08

     

3.23

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.05

)

   

(0.27

)

   

(0.36

)

   

(0.31

)

 

Net Asset Value, End of Period

 

$

17.33

   

$

14.40

   

$

18.41

   

$

15.94

   

$

14.22

   

Total Return(2)

   

20.35

%(3)

   

(21.54

)%

   

17.33

%

   

14.68

%

   

28.63

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,890

   

$

4,279

   

$

5,551

   

$

3,594

   

$

2,872

   

Ratio of Expenses Before Expense Limitation

   

2.23

%

   

2.25

%

   

2.22

%

   

2.51

%

   

2.97

%

 

Ratio of Expenses After Expense Limitation

   

1.96

%(4)(5)

   

1.98

%(5)

   

1.97

%(5)

   

1.99

%(5)

   

1.98

%(5)

 

Ratio of Net Investment Loss

   

(0.60

)%(4)(5)

   

(0.61

)%(5)

   

(0.52

)%(5)

   

(0.56

)%(5)

   

(0.38

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

34

%

   

26

%

   

11

%

   

20

%

   

14

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.99

%

   

(0.63

)%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Global Sustain Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

15.20

   

$

19.29

   

$

16.57

   

$

14.66

   

$

11.58

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.09

     

0.09

     

0.11

     

0.09

     

0.11

   

Net Realized and Unrealized Gain (Loss)

   

3.21

     

(4.07

)

   

2.96

     

2.25

     

3.37

   

Total from Investment Operations

   

3.30

     

(3.98

)

   

3.07

     

2.34

     

3.48

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.09

)

   

(0.06

)

   

(0.08

)

   

(0.07

)

   

(0.09

)

 

Net Realized Gain

   

     

(0.05

)

   

(0.27

)

   

(0.36

)

   

(0.31

)

 

Total Distributions

   

(0.09

)

   

(0.11

)

   

(0.35

)

   

(0.43

)

   

(0.40

)

 

Net Asset Value, End of Period

 

$

18.41

   

$

15.20

   

$

19.29

   

$

16.57

   

$

14.66

   

Total Return(3)

   

21.75

%(4)

   

(20.60

)%

   

18.60

%

   

16.00

%

   

30.08

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

14,099

   

$

11,562

   

$

14,563

   

$

9,317

   

$

7,450

   

Ratio of Expenses Before Expense Limitation

   

1.12

%

   

1.14

%

   

1.12

%

   

1.41

%

   

1.88

%

 

Ratio of Expenses After Expense Limitation

   

0.82

%(5)(6)

   

0.85

%(6)

   

0.85

%(6)

   

0.85

%(6)

   

0.85

%(6)

 

Ratio of Net Investment Income

   

0.55

%(5)(6)

   

0.53

%(6)

   

0.60

%(6)

   

0.58

%(6)

   

0.79

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

34

%

   

26

%

   

11

%

   

20

%

   

14

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.85

%

   

0.52

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Global Sustain Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one

or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") (the "Sub-Adviser"), each a whollyowned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Beverages

 

$

2,174

   

$

   

$

   

$

2,174

   

Capital Markets

   

5,574

     

1,999

     

     

7,573

   
Commercial Services &
Supplies
   

411

     

     

     

411

   
Electronic Equipment,
Instruments &
Components
   

3,320

     

     

     

3,320

   

Entertainment

   

     

916

     

     

916

   

Financial Services

   

6,068

     

     

     

6,068

   
Health Care Equipment &
Supplies
   

7,874

     

     

     

7,874

   

Household Products

   

3,053

     

3,233

     

     

6,286

   
Information Technology
Services
   

5,329

     

     

     

5,329

   

Insurance

   

4,468

     

2,571

     

     

7,039

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Interactive Media &
Services
 

$

3,222

   

$

   

$

   

$

3,222

   
Life Sciences Tools &
Services
   

13,262

     

     

     

13,262

   

Machinery

   

1,610

     

1,530

     

     

3,140

   

Personal Care Products

   

     

1,656

     

     

1,656

   

Pharmaceuticals

   

930

     

     

     

930

   

Professional Services

   

6,217

     

4,615

     

     

10,832

   
Semiconductors &
Semiconductor
Equipment
   

5,612

     

     

     

5,612

   

Software

   

12,623

     

5,642

     

     

18,265

   
Textiles, Apparel &
Luxury Goods
   

522

     

     

     

522

   

Total Common Stocks

   

82,269

     

22,162

     

     

104,431

   

Warrants

   

     

9

     

     

9

   

Short-Term Investment

 

Investment Company

   

1,680

     

     

     

1,680

   

Total Assets

 

$

83,949

   

$

22,171

   

$

   

$

106,120

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S.

federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

5.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

6.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500
million
  Over $500
million
 
  0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.45% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I shares, 1.25% for Class A shares,

1.75% for Class L shares, 2.00% for Class C shares and 0.85% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $237,000 of advisory fees were waived and approximately $45,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $41,109,000 and $32,134,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $3,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,203

   

$

33,116

   

$

32,639

   

$

79

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

1,680

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

457

   

$

   

$

250

   

$

276

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

41

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $9,000 and $4,251,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 70.3%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Global Sustain Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Global Sustain Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 79.67% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $364,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


37


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGQANN
6337880 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Growth Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

7

   

Consolidated Statement of Assets and Liabilities

   

10

   

Consolidated Statement of Operations

   

12

   

Consolidated Statements of Changes in Net Assets

   

13

   

Consolidated Financial Highlights

   

15

   

Notes to Consolidated Financial Statements

   

21

   

Report of Independent Registered Public Accounting Firm

   

33

   

Liquidity Risk Management Program

   

34

   

Important Notices

   

35

   

U.S. Customer Privacy Notice

   

36

   

Directors and Officers Information

   

39

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Growth Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (Unaudited)

Growth Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Growth Portfolio Class I

 

$

1,000.00

   

$

1,135.30

   

$

1,022.89

   

$

2.48

   

$

2.35

     

0.46

%

 

Growth Portfolio Class A

   

1,000.00

     

1,133.80

     

1,021.53

     

3.93

     

3.72

     

0.73

   

Growth Portfolio Class L

   

1,000.00

     

1,131.10

     

1,019.00

     

6.61

     

6.26

     

1.23

   

Growth Portfolio Class C

   

1,000.00

     

1,129.50

     

1,017.69

     

8.00

     

7.58

     

1.49

   

Growth Portfolio Class R6

   

1,000.00

     

1,135.30

     

1,022.89

     

2.48

     

2.35

     

0.46

   

Growth Portfolio Class IR

   

1,000.00

     

1,135.10

     

1,022.94

     

2.42

     

2.29

     

0.45

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Growth Portfolio

The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of large capitalization companies.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 50.25%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the Russell 1000®​ Growth Index (the "Index"), which returned 42.68%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Surprised by the economy's resilience amid rising interest rates and persistently high (but falling) inflation, U.S. stocks performed well in 2023. The year saw its share of uncertainty, with recession fears dominating the start of the year, a regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, and multiple geopolitical flashpoints. However, by year-end, the U.S. Federal Reserve signaled it was likely finished lifting interest rates after pausing the hiking cycle halfway through the year. This triggered a stock market rally and retreat in long-term bond yields in the final two months of 2023. Additionally, excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform, adding meaningfully to the broader market's gain in the year.

•  Large-cap growth equities, as measured by the Index, advanced over the year. All sectors in the Index were positive, led by information technology, communication services and consumer discretionary. Energy, utilities and consumer staples posted the smallest gains in the Index.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our

conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period due to favorable stock selection and sector allocations.

•  Stock selection in industrials was the greatest contributor to relative performance. A leading global ridesharing services platform that has leveraged its network, on-demand workforce and technology to establish additional marketplace solutions addressing product delivery was the leading contributor in the sector and across the portfolio. The company reported strong fundamental results characterized by continued healthy revenue growth, profit margin expansion and greater traction with new product offerings.

•  Stock selection in financials was another main contributor to relative performance. A technology platform specializing in consumer buy-now-pay-later point of sale financing and payment processing was the largest contributor in the sector and fifth largest in the portfolio. The company reported results that came in ahead of expectations, driven primarily by strong credit execution, including better-than-expected provisioning, as the company continues to proactively manage loan performance in an uncertain and volatile macroeconomic environment.

•  Stock selection in consumer discretionary was advantageous to relative performance. A leading food delivery company in the United States was the greatest contributor in the sector and third greatest in the portfolio. The company reported better-than-expected results driven by accelerating sales growth, operational efficiencies and disciplined expense management.

•  Conversely, stock selection in health care was the greatest detractor from relative performance, with an average overweight also weighing on performance. One of the largest buyers of biopharmaceutical royalties and a leading funder of


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Growth Portfolio

innovation across academic institutions, non-profits, biotechnology and pharmaceutical companies was the greatest detractor in the sector and second greatest across the portfolio. The company reported solid results, but its shares remained pressured due to investors' ongoing concerns around clinical trial results for a few of its partners' new therapies and the impact to potential related royalties.

•  The information technology sector was another detractor from relative performance due to both stock selection and an average underweight in the sector. A leading provider of cloud-based software that helps small and medium-sized businesses with payments and financial-related operations was the top detractor in the sector and third greatest across the portfolio. Its shares languished due to investor concerns around weaker customer spend and the prospect of intensifying competition.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Growth Portfolio

Performance Compared to the Russell 1000®​ Growth Index(1)​ and the Lipper Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(10)
 
Fund — Class I Shares
w/o sales charges(4)
   

50.25

%

   

9.70

%

   

11.14

%

   

10.72

%

 
Fund — Class A Shares
w/o sales charges(5)
   

49.87

     

9.42

     

10.85

     

9.82

   
Fund — Class A Shares with
maximum 5.25% sales charges(5)
   

42.01

     

8.25

     

10.25

     

9.61

   
Fund — Class L Shares
w/o sales charges(6)
   

49.11

     

8.89

     

10.29

     

12.02

   
Fund — Class C Shares
w/o sales charges(8)
   

48.74

     

8.62

     

     

10.08

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(8)
   

47.74

     

8.62

     

     

10.08

   
Fund — Class R6 Shares
w/o sales charges(7)
   

50.31

     

9.80

     

11.24

     

12.52

   
Fund — Class IR Shares
w/o sales charges(9)
   

50.33

     

9.73

     

     

5.93

   

Russell 1000®​ Growth Index

   

42.68

     

19.50

     

14.86

     

10.47

   

Lipper Multi-Cap Growth Funds Index

   

35.17

     

14.56

     

11.24

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Russell 1000®​ Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000®​ Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000®​ Index is an index of approximately 1,000 of the largest U.S. companies based on a combination of market capitalization and current index membership. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on April 2, 1991.

(5)​  Commenced offering on January 2, 1996.

(6)​  Commenced offering on April 27, 2012.

(7)​  Commenced offering on September 13, 2013.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  Commenced offering on June 15, 2018.

(10)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Growth Portfolio

   

Shares

  Value
(000)
 

Common Stocks (93.7%)

 

Automobiles (5.0%)

 

Rivian Automotive, Inc., Class A (a)

   

579,734

   

$

13,601

   

Tesla, Inc. (a)

   

1,067,893

     

265,350

   
     

278,951

   

Biotechnology (1.1%)

 

Intellia Therapeutics, Inc. (a)

   

176,141

     

5,370

   

Moderna, Inc. (a)

   

45,229

     

4,498

   

ProKidney Corp. (a)(b)

   

2,896,576

     

5,156

   

Roivant Sciences Ltd. (a)

   

4,130,061

     

46,381

   
     

61,405

   

Broadline Retail (4.4%)

 

Global-e Online Ltd. (Israel) (a)

   

2,439,750

     

96,687

   

MercadoLibre, Inc. (a)

   

92,492

     

145,355

   
     

242,042

   

Capital Markets (1.0%)

 

Coinbase Global, Inc., Class A (a)

   

309,853

     

53,890

   

Chemicals (0.4%)

 

Ginkgo Bioworks Holdings, Inc. (a)(b)

   

11,540,010

     

19,503

   

Electronic Equipment, Instruments & Components (0.0%)

 
Magic Leap, Inc., Class A (a)(c)(d) (acquisition
cost — $18,812; acquired 12/22/15)
   

38,705

     

   

Entertainment (6.2%)

 

ROBLOX Corp., Class A (a)

   

7,540,488

     

344,751

   

Financial Services (8.7%)

 

Adyen NV (Netherlands) (a)

   

165,079

     

213,107

   

Affirm Holdings, Inc. (a)

   

5,453,599

     

267,990

   
     

481,097

   

Ground Transportation (7.5%)

 

Grab Holdings Ltd., Class A (Singapore) (a)

   

8,096,483

     

27,285

   

Uber Technologies, Inc. (a)

   

6,343,409

     

390,564

   
     

417,849

   

Health Care Providers & Services (2.3%)

 

Agilon Health, Inc. (a)

   

10,233,982

     

128,436

   

Health Care Technology (0.6%)

 

Doximity, Inc., Class A (a)

   

1,171,770

     

32,856

   

Hotels, Restaurants & Leisure (11.1%)

 

Airbnb, Inc., Class A (a)

   

1,829,305

     

249,042

   

DoorDash, Inc., Class A (a)

   

3,706,801

     

366,565

   
     

615,607

   

Information Technology Services (22.7%)

 

Cloudflare, Inc., Class A (a)

   

5,732,663

     

477,302

   

Shopify, Inc., Class A (Canada) (a)

   

4,974,947

     

387,548

   

Snowflake, Inc., Class A (a)

   

1,966,001

     

391,234

   
     

1,256,084

   

Leisure Products (0.6%)

 

Peloton Interactive, Inc., Class A (a)

   

5,011,953

     

30,523

   

Life Sciences Tools & Services (0.5%)

 

10X Genomics, Inc., Class A (a)

   

516,542

     

28,906

   
   

Shares

  Value
(000)
 

Media (5.5%)

 

Trade Desk, Inc., Class A (a)

   

4,240,339

   

$

305,135

   

Pharmaceuticals (4.2%)

 

Royalty Pharma PLC, Class A

   

8,224,744

     

231,033

   

Software (8.4%)

 

Aurora Innovation, Inc. (a)

   

18,720,874

     

81,810

   

Bill Holdings, Inc. (a)

   

2,407,269

     

196,409

   

Gitlab, Inc., Class A (a)

   

1,024,812

     

64,522

   

MicroStrategy, Inc., Class A (a)

   

47,478

     

29,988

   

Samsara, Inc., Class A (a)

   

2,796,118

     

93,335

   
     

466,064

   

Specialty Retail (3.5%)

 

Carvana Co. (a)

   

3,707,309

     

196,265

   

Total Common Stocks (Cost $4,657,769)

   

5,190,397

   

Preferred Stocks (2.6%)

 

Financial Services (0.2%)

 
Stripe, Inc., Series I (a)(c)(d) (acquisition
cost — $12,876; acquired 3/17/23)
   

639,525

     

13,059

   

Software (2.4%)

 
Databricks, Inc., Series H (a)(c)(d) (acquisition
cost — $136,746; acquired 8/31/21)
   

1,860,888

     

132,830

   

Total Preferred Stocks (Cost $149,622)

   

145,889

   

Investment Company (2.5%)

 
Grayscale Bitcoin Trust (a) (Cost $155,253)    

4,079,769

     

141,242

   

Short-Term Investments (1.7%)

 

Investment Company (1.4%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $76,935)
   

76,935,270

     

76,935

   

Securities held as Collateral on Loaned Securities (0.3%)

 

Investment Company (0.2%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

13,756,787

     

13,757

   
    Face
Amount
(000)
     

Repurchase Agreements (0.1%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $1,012; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00% due
5/15/24 - 11/15/49; valued at $1,032)
 

$

1,011

     

1,011

   
HSBC Securities USA, Inc., (5.33%, dated
12/29/23, due 1/2/24; proceeds $1,012;
fully collateralized by a U.S. Government
obligation; 0.00% due 8/15/27;
valued at $1,032)
   

1,012

     

1,012

   

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Growth Portfolio

    Face
Amount
(000)
  Value
(000)
 

Repurchase Agreements (cont'd)

 
Merrill Lynch & Co., Inc., (5.31%, dated
12/29/23, due 1/2/24; proceeds $1,012;
fully collateralized by a U.S. Government
obligation; 4.75% due 11/15/53;
valued at $1,032)
 

$

1,011

   

$

1,011

   
     

3,034

   
Total Securities held as Collateral on Loaned
Securities (Cost $16,791)
   

16,791

   

Total Short-Term Investments (Cost $93,726)

   

93,726

   
Total Investments Excluding Purchased
Options (100.5%) (Cost $5,056,370)
       

5,571,254

   
Total Purchased Options Outstanding (0.1%)
(Cost $15,448)
   

2,710

   
Total Investments (100.6%) (Cost $5,071,818)
Including $14,405 of Securities Loaned (e)(f)(g)
   

5,573,964

   

Liabilities in Excess of Other Assets (–0.6%)

   

(32,272

)

 

Net Assets (100.0%)

 

$

5,541,692

   

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at December 31, 2023 amounts to approximately $145,889,000 and represents 2.6% of net assets.

(d)  At December 31, 2023, the Fund held fair valued securities at approximately $145,889,000, representing 2.6% of net assets. These securities have been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(e)  The approximate fair value and percentage of net assets, $213,107,000 and 3.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(f)  Securities are available for collateral in connection with purchased options.

(g)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $5,358,396,000. The aggregate gross unrealized appreciation is approximately $1,431,122,000 and the aggregate gross unrealized depreciation is approximately $1,215,067,000, resulting in net unrealized appreciation of approximately $216,055,000.

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

 

Strike
Price

 

Expiration
Date

 

Number of
Contracts

 

Notional
Amount
(000)

 

Value
(000)

 

Premiums
Paid
(000)

 

Unrealized
Depreciation
(000)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.43

   

Jan-24

   

1,032,347,082

   

$

1,032,347

   

$

93

   

$

4,859

   

$

(4,766

)

 

Standard Chartered Bank

 

USD/CNH

 

CNH

7.57

   

May-24

   

1,232,952,555

     

1,232,953

     

1,292

     

5,216

     

(3,924

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.79

   

Aug-24

   

1,297,584,118

     

1,297,584

     

1,325

     

5,373

     

(4,048

)

 
                       

$

2,710

   

$

15,448

   

$

(12,738

)

 

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Growth Portfolio

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Information Technology Services

   

22.6

%

 

Other**

   

22.4

   

Hotels, Restaurants & Leisure

   

11.1

   

Software

   

10.8

   

Financial Services

   

8.9

   

Ground Transportation

   

7.5

   

Entertainment

   

6.2

   

Media

   

5.5

   

Automobiles

   

5.0

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Growth Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $4,981,126)

 

$

5,483,272

   

Investment in Security of Affiliated Issuer, at Value (Cost $90,692)

   

90,692

   

Total Investments in Securities, at Value (Cost $5,071,818)

   

5,573,964

   

Foreign Currency, at Value (Cost $2)

   

2

   

Receivable for Fund Shares Sold

   

2,258

   

Receivable for Investments Sold

   

1,966

   

Receivable from Affiliate

   

271

   

Dividends Receivable

   

85

   

Receivable from Securities Lending Income

   

19

   

Other Assets

   

478

   

Total Assets

   

5,579,043

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

16,791

   

Payable for Fund Shares Redeemed

   

10,567

   

Payable for Advisory Fees

   

5,137

   

Due to Broker

   

2,630

   

Payable for Sub Transfer Agency Fees — Class I

   

305

   

Payable for Sub Transfer Agency Fees — Class A

   

303

   

Payable for Sub Transfer Agency Fees — Class L

   

7

   

Payable for Sub Transfer Agency Fees — Class C

   

26

   

Payable for Shareholder Services Fees — Class A

   

396

   

Payable for Distribution and Shareholder Services Fees — Class L

   

38

   

Payable for Distribution and Shareholder Services Fees — Class C

   

147

   

Payable for Administration Fees

   

373

   

Payable for Custodian Fees

   

45

   

Payable for Directors' Fees and Expenses

   

37

   

Payable for Transfer Agency Fees — Class I

   

9

   

Payable for Transfer Agency Fees — Class A

   

19

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class R6

   

1

   

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Professional Fees

   

11

   

Other Liabilities

   

508

   

Total Liabilities

   

37,351

   

Net Assets

 

$

5,541,692

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

7,888,932

   

Total Accumulated Loss

   

(2,347,240

)

 

Net Assets

 

$

5,541,692

   

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Growth Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

1,587,293

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

41,317,317

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

38.42

   

CLASS A:

 

Net Assets

 

$

1,896,005

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

55,104,037

   

Net Asset Value, Redemption Price Per Share

 

$

34.41

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.91

   

Maximum Offering Price Per Share

 

$

36.32

   

CLASS L:

 

Net Assets

 

$

60,812

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,025,364

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

30.03

   

CLASS C:

 

Net Assets

 

$

174,107

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

6,012,214

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

28.96

   

CLASS R6:

 

Net Assets

 

$

1,823,436

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

46,622,865

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

39.11

   

CLASS IR:

 

Net Assets

 

$

39

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

995

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

38.98

   
(1)​ Including:
Securities on Loan, at Value:
 

$

14,405

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Growth Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $37 of Foreign Taxes Withheld)

 

$

6,560

   

Dividends from Security of Affiliated Issuer (Note G)

   

3,351

   

Income from Securities Loaned — Net

   

2,589

   

Total Investment Income

   

12,500

   

Expenses:

 

Advisory Fees (Note B)

   

21,108

   

Shareholder Services Fees — Class A (Note D)

   

4,314

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

402

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

1,632

   

Administration Fees (Note C)

   

4,139

   

Sub Transfer Agency Fees — Class I

   

614

   

Sub Transfer Agency Fees — Class A

   

733

   

Sub Transfer Agency Fees — Class L

   

12

   

Sub Transfer Agency Fees — Class C

   

84

   

Transfer Agency Fees — Class I (Note E)

   

111

   

Transfer Agency Fees — Class A (Note E)

   

236

   

Transfer Agency Fees — Class L (Note E)

   

14

   

Transfer Agency Fees — Class C (Note E)

   

11

   

Transfer Agency Fees — Class R6 (Note E)

   

15

   

Transfer Agency Fees — Class IR (Note E)

   

3

   

Professional Fees

   

287

   

Registration Fees

   

260

   

Shareholder Reporting Fees

   

189

   

Custodian Fees (Note F)

   

158

   

Directors' Fees and Expenses

   

90

   

Pricing Fees

   

4

   

Other Expenses

   

229

   

Total Expenses

   

34,645

   

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(1,287

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(131

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(3

)

 

Net Expenses

   

33,224

   

Net Investment Loss

   

(20,724

)

 

Realized Gain (Loss):

 

Investments Sold

   

(1,010,470

)

 

Foreign Currency Translation

   

23

   

Net Realized Loss

   

(1,010,447

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

3,120,485

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

3,120,485

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

2,110,038

   

Net Increase in Net Assets Resulting from Operations

 

$

2,089,314

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Growth Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(20,724

)

 

$

(43,384

)

 

Net Realized Loss

   

(1,010,447

)

   

(1,887,858

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

3,120,485

     

(7,187,849

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

2,089,314

     

(9,119,091

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

     

(221,010

)

 

Class A

   

     

(263,315

)

 

Class L

   

     

(8,671

)

 

Class C

   

     

(28,203

)

 

Class R6*

   

     

(203,477

)

 

Class IR

   

     

(76

)

 

Total Dividends and Distributions to Shareholders

   

     

(724,752

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

366,119

     

1,568,268

   

Distributions Reinvested

   

     

193,193

   

Redeemed

   

(881,458

)

   

(2,942,854

)

 

Class A:

 

Subscribed

   

79,489

     

324,563

   

Distributions Reinvested

   

     

255,925

   

Redeemed

   

(462,613

)

   

(1,054,118

)

 

Class L:

 

Exchanged

   

@

   

135

   

Distributions Reinvested

   

     

8,534

   

Redeemed

   

(6,786

)

   

(17,453

)

 

Class C:

 

Subscribed

   

10,399

     

41,416

   

Distributions Reinvested

   

     

25,964

   

Redeemed

   

(47,772

)

   

(120,670

)

 

Class R6:*

 

Subscribed

   

160,912

     

579,926

   

Distributions Reinvested

   

     

195,249

   

Redeemed

   

(420,262

)

   

(521,267

)

 

Class IR:

 

Subscribed

   

     

43,688

   

Distributions Reinvested

   

     

76

   

Redeemed

   

(8

)

   

(206,937

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(1,201,980

)

   

(1,626,362

)

 

Total Increase (Decrease) in Net Assets

   

887,334

     

(11,470,205

)

 

Net Assets:

 

Beginning of Period

   

4,654,358

     

16,124,563

   

End of Period

 

$

5,541,692

   

$

4,654,358

   

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Growth Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

11,924

     

38,417

   

Shares Issued on Distributions Reinvested

   

     

6,856

   

Shares Redeemed

   

(28,077

)

   

(71,730

)

 

Net Decrease in Class I Shares Outstanding

   

(16,153

)

   

(26,457

)

 

Class A:

 

Shares Subscribed

   

2,828

     

8,761

   

Shares Issued on Distributions Reinvested

   

     

10,112

   

Shares Redeemed

   

(16,397

)

   

(28,399

)

 

Net Decrease in Class A Shares Outstanding

   

(13,569

)

   

(9,526

)

 

Class L:

 

Shares Exchanged

   

@@

   

6

   

Shares Issued on Distributions Reinvested

   

     

384

   

Shares Redeemed

   

(274

)

   

(575

)

 

Net Decrease in Class L Shares Outstanding

   

(274

)

   

(185

)

 

Class C:

 

Shares Subscribed

   

428

     

1,224

   

Shares Issued on Distributions Reinvested

   

     

1,209

   

Shares Redeemed

   

(1,965

)

   

(3,705

)

 

Net Decrease in Class C Shares Outstanding

   

(1,537

)

   

(1,272

)

 

Class R6:*

 

Shares Subscribed

   

5,114

     

12,457

   

Shares Issued on Distributions Reinvested

   

     

6,810

   

Shares Redeemed

   

(12,821

)

   

(12,544

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(7,707

)

   

6,723

   

Class IR:

 

Shares Subscribed

   

     

853

   

Shares Issued on Distributions Reinvested

   

     

3

   

Shares Redeemed

   

(—

@@)

   

(5,098

)

 

Net Decrease in Class IR Shares Outstanding

   

(—

@@)

   

(4,242

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

25.58

   

$

74.29

   

$

91.47

   

$

46.33

   

$

41.75

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.09

)

   

(0.20

)

   

(0.50

)

   

(0.38

)

   

(0.19

)

 

Net Realized and Unrealized Gain (Loss)

   

12.93

     

(44.22

)

   

1.32

     

54.08

     

9.73

   

Total from Investment Operations

   

12.84

     

(44.42

)

   

0.82

     

53.70

     

9.54

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

38.42

   

$

25.58

   

$

74.29

   

$

91.47

   

$

46.33

   

Total Return(3)

   

50.25

%(4)

   

(60.34

)%

   

0.43

%

   

115.57

%

   

23.16

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,587,293

   

$

1,469,843

   

$

6,234,787

   

$

6,816,690

   

$

2,440,640

   

Ratio of Expenses Before Expense Limitation

   

0.56

%

   

0.64

%

   

0.56

%

   

N/A

     

0.59

%

 

Ratio of Expenses After Expense Limitation

   

0.53

%(5)(6)

   

0.64

%(6)

   

0.56

%(6)

   

0.54

%(6)

   

0.58

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.58

%(6)

 

Ratio of Net Investment Loss

   

(0.29

)%(5)(6)

   

(0.46

)%(6)

   

(0.51

)%(6)

   

(0.53

)%(6)

   

(0.38

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.56

%

   

(0.32

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

22.97

   

$

67.88

   

$

85.31

   

$

43.57

   

$

39.61

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.15

)

   

(0.27

)

   

(0.70

)

   

(0.51

)

   

(0.30

)

 

Net Realized and Unrealized Gain (Loss)

   

11.59

     

(40.35

)

   

1.27

     

50.81

     

9.22

   

Total from Investment Operations

   

11.44

     

(40.62

)

   

0.57

     

50.30

     

8.92

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

34.41

   

$

22.97

   

$

67.88

   

$

85.31

   

$

43.57

   

Total Return(3)

   

49.87

%(4)

   

(60.44

)%

   

0.16

%

   

115.09

%

   

22.81

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,896,005

   

$

1,577,172

   

$

5,307,929

   

$

5,465,808

   

$

2,399,450

   

Ratio of Expenses Before Expense Limitation

   

0.82

%

   

0.89

%

   

0.82

%

   

N/A

     

0.84

%

 

Ratio of Expenses After Expense Limitation

   

0.79

%(5)(6)

   

0.89

%(6)

   

0.82

%(6)

   

0.79

%(6)

   

0.83

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.83

%(6)

 

Ratio of Net Investment Loss

   

(0.55

)%(5)(6)

   

(0.71

)%(6)

   

(0.77

)%(6)

   

(0.77

)%(6)

   

(0.64

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.82

%

   

(0.58

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

20.14

   

$

61.05

   

$

78.85

   

$

40.77

   

$

37.51

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.26

)

   

(0.40

)

   

(1.03

)

   

(0.76

)

   

(0.50

)

 

Net Realized and Unrealized Gain (Loss)

   

10.15

     

(36.22

)

   

1.23

     

47.40

     

8.72

   

Total from Investment Operations

   

9.89

     

(36.62

)

   

0.20

     

46.64

     

8.22

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

30.03

   

$

20.14

   

$

61.05

   

$

78.85

   

$

40.77

   

Total Return(3)

   

49.11

%(4)

   

(60.63

)%

   

(0.30

)%

   

114.01

%

   

22.22

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

60,812

   

$

46,313

   

$

151,668

   

$

173,317

   

$

93,053

   

Ratio of Expenses Before Expense Limitation

   

1.31

%

   

1.36

%

   

1.28

%

   

N/A

     

1.33

%

 

Ratio of Expenses After Expense Limitation

   

1.28

%(5)(6)

   

1.36

%(6)

   

1.28

%(6)

   

1.29

%(6)

   

1.32

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.32

%(6)

 

Ratio of Net Investment Loss

   

(1.04

)%(5)(6)

   

(1.18

)%(6)

   

(1.24

)%(6)

   

(1.27

)%(6)

   

(1.12

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.31

%

   

(1.07

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.48

   

$

59.49

   

$

77.49

   

$

40.23

   

$

37.17

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.31

)

   

(0.48

)

   

(1.23

)

   

(0.93

)

   

(0.61

)

 

Net Realized and Unrealized Gain (Loss)

   

9.79

     

(35.24

)

   

1.23

     

46.75

     

8.63

   

Total from Investment Operations

   

9.48

     

(35.72

)

   

0.00

(3)

   

45.82

     

8.02

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

28.96

   

$

19.48

   

$

59.49

   

$

77.49

   

$

40.23

   

Total Return(4)

   

48.74

%(5)

   

(60.73

)%

   

(0.55

)%

   

113.48

%

   

21.91

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

174,107

   

$

147,014

   

$

524,748

   

$

514,190

   

$

166,303

   

Ratio of Expenses Before Expense Limitation

   

1.57

%

   

1.61

%

   

1.55

%

   

N/A

     

1.59

%

 

Ratio of Expenses After Expense Limitation

   

1.54

%(6)(7)

   

1.61

%(7)

   

1.55

%(7)

   

1.53

%(7)

   

1.58

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.58

%(7)

 

Ratio of Net Investment Loss

   

(1.30

)%(6)(7)

   

(1.43

)%(7)

   

(1.50

)%(7)

   

(1.51

)%(7)

   

(1.38

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.57

%

   

(1.33

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

26.03

   

$

75.32

   

$

92.42

   

$

46.73

   

$

42.04

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.08

)

   

(0.13

)

   

(0.41

)

   

(0.32

)

   

(0.15

)

 

Net Realized and Unrealized Gain (Loss)

   

13.16

     

(44.87

)

   

1.31

     

54.57

     

9.80

   

Total from Investment Operations

   

13.08

     

(45.00

)

   

0.90

     

54.25

     

9.65

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

39.11

   

$

26.03

   

$

75.32

   

$

92.42

   

$

46.73

   

Total Return(4)

   

50.31

%(5)

   

(60.28

)%

   

0.51

%

   

115.76

%

   

23.26

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,823,436

   

$

1,413,983

   

$

3,585,865

   

$

3,743,697

   

$

1,560,148

   

Ratio of Expenses Before Expense Limitation

   

0.51

%

   

0.50

%

   

0.46

%

   

N/A

     

0.50

%

 

Ratio of Expenses After Expense Limitation

   

0.48

%(6)(7)

   

0.50

%(7)

   

0.46

%(7)

   

0.47

%(7)

   

0.49

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.49

%(7)

 

Ratio of Net Investment Loss

   

(0.24

)%(6)(7)

   

(0.32

)%(7)

   

(0.41

)%(7)

   

(0.45

)%(7)

   

(0.29

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.51

%

   

(0.27

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Growth Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

25.94

   

$

75.32

   

$

92.41

   

$

46.73

   

$

42.04

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.08

)

   

(0.16

)

   

(0.41

)

   

(0.31

)

   

(0.15

)

 

Net Realized and Unrealized Gain (Loss)

   

13.12

     

(44.93

)

   

1.32

     

54.55

     

9.80

   

Total from Investment Operations

   

13.04

     

(45.09

)

   

0.91

     

54.24

     

9.65

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(4.29

)

   

(18.00

)

   

(8.56

)

   

(4.96

)

 

Net Asset Value, End of Period

 

$

38.98

   

$

25.94

   

$

75.32

   

$

92.41

   

$

46.73

   

Total Return(3)

   

50.33

%(4)

   

(60.41

)%

   

0.52

%

   

115.74

%

   

23.26

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

39

   

$

33

   

$

319,566

   

$

389,971

   

$

269,241

   

Ratio of Expenses Before Expense Limitation

   

7.94

%

   

0.49

%

   

0.46

%

   

N/A

     

0.50

%

 

Ratio of Expenses After Expense Limitation

   

0.48

%(5)(6)

   

0.49

%(6)

   

0.46

%(6)

   

0.47

%(6)

   

0.49

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.49

%(6)

 

Ratio of Net Investment Loss

   

(0.23

)%(5)(6)

   

(0.33

)%(6)

   

(0.41

)%(6)

   

(0.45

)%(6)

   

(0.30

)%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

29

%

   

40

%

   

59

%

   

60

%

   

87

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.51

%

   

(0.26

)%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Growth Portfolio. The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of large capitalization companies.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a whollyowned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Growth Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or

offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $147,791,000 or approximately 2.67% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which clarifies the guidance in ASC Topic No. 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and introduces new disclosures related to such equity security. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security's fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by ASU 2022-03). In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The new guidance is effective for public companies with annual reporting periods in fiscal years beginning after December 15, 2023, and interim periods in the following year, with early adoption permitted. An


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

investment company that holds equity securities that are subject to contractual sale restrictions executed before the date at which the investment company first adopts ASU 2022-03 shall continue to account for that equity security using the accounting policy applied before the adoption of ASU 2022-03 until the contractual sale restriction expires or is modified.

1.   Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these

circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/dealer or valued by a pricing service/vendor; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: FASB ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value

measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobiles

 

$

278,951

   

$

   

$

   

$

278,951

   

Biotechnology

   

61,405

     

     

     

61,405

   

Broadline Retail

   

242,042

     

     

     

242,042

   

Capital Markets

   

53,890

     

     

     

53,890

   

Chemicals

   

19,503

     

     

     

19,503

   
Electronic Equipment,
Instruments &
Components
   

     

     

   

 

Entertainment

   

344,751

     

     

     

344,751

   

Financial Services

   

267,990

     

213,107

     

     

481,097

   

Ground Transportation

   

417,849

     

     

     

417,849

   
Health Care
Providers &
Services
   

128,436

     

     

     

128,436

   
Health Care
Technology
   

32,856

     

     

     

32,856

   
Hotels, Restaurants &
Leisure
   

615,607

     

     

     

615,607

   
Information
Technology
Services
   

1,256,084

     

     

     

1,256,084

   

Leisure Products

   

30,523

     

     

     

30,523

   
Life Sciences Tools &
Services
   

28,906

     

     

     

28,906

   

Media

   

305,135

     

     

     

305,135

   

Pharmaceuticals

   

231,033

     

     

     

231,033

   

Software

   

466,064

     

     

     

466,064

   

Specialty Retail

   

196,265

     

     

     

196,265

   

Total Common Stocks

   

4,977,290

     

213,107

     

   

5,190,397

 

Preferred Stocks

 

Financial Services

   

     

     

13,059

     

13,059

   

Software

   

     

     

132,830

     

132,830

   

Total Preferred Stocks

   

     

     

145,889

     

145,889

   

Investment Company

   

141,242

     

     

     

141,242

   
Call Options
Purchased
   

     

2,710

     

     

2,710

   

Short-Term Investments

 
Investment
Company
   

90,692

     

     

     

90,692

   
Repurchase
Agreements
   

     

3,034

     

     

3,034

   
Total Short-Term
Investments
   

90,692

     

3,034

     

     

93,726

   

Total Assets

 

$

5,209,224

   

$

218,851

   

$

145,889

 

$

5,573,964

 

†  Includes a security valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

    Common
Stock
(000)
  Preferred
Stocks
(000)
 

Beginning Balance

 

$

 

$

102,367

   

Purchases

   

     

12,876

   

Sales

   

     

   

Transfers in

   

     

   

Transfers out

   

     

   

Corporate actions

   

     

   

Change in unrealized appreciation (depreciation)

   

     

30,646

   

Realized gains (losses)

   

     

   

Ending Balance

 

$

 

$

145,889

   
Net change in unrealized appreciation
(depreciation) from investments still
held as of December 31, 2023
 

$

   

$

30,646

   

†  Includes a security valued at zero.

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2023. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance. The Fund calculated the weighted averages of the unobservable inputs relative to each investment's fair value as of December 31, 2023:

    Fair Value at
December 31, 2023
(000)
  Valuation
Technique
  Unobservable
Input
 

Amount*

  Impact to
Valuation from an
Increase in Input**
 
Preferred Stocks
 

$

145,889
  Market Transaction
Method
  Transaction
Price
 

$

71.38

   

Increase

 
           

Discounted Cash Flow

  Weighted Average
Cost of Capital
   

17.5

%

 
Decrease
 
               

Perpetual Growth Rate

   

3.5

%

 

Increase

 
            Market Comparable
Companies
  Enterprise Value/
Revenue
   

9.0

x

 
Increase
 
                Discount for Lack of
Marketability
   

12.0

%

 
Decrease
 

*  Amount is indicative of the weighted average.

**  Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To

the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency

transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or

foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated
Statement of
Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

2,710

(a)

 

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(13,846

)(a)

 

(a) Amounts are included in Realized Loss on Investments Sold in the Consolidated Statement of Operations.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(7,712

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities
(000)
 

Purchased Options

 

$

2,710

(a)

 

$

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

(b) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a

counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Counterparty   Gross Asset
Derivatives
Presented in
Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  the Consolidated
Net Amount
(not less
than $0)
(000)
 

JPMorgan Chase Bank NA

 

$

1,418

   

$

   

$

(1,400

)

 

$

18

   

Standard Chartered Bank

   

1,292

     

     

(1,230

)

   

62

   

Total

 

$

2,710

   

$

   

$

(2,630

)

 

$

80

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

3,998,001,000

   

6.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Consolidated Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in the
Consolidated
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

14,405

(a)

 

$

   

$

(14,405

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received cash collateral of approximately $16,791,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Consolidated Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

16,791

   

$

   

$

   

$

   

$

16,791

   

Total Borrowings

 

$

16,791

   

$

   

$

   

$

   

$

16,791

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

16,791

   

7.  Restricted Securities: The Fund invests in unregistered or otherwise restricted securities. The term

"restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Consolidated Portfolio of Investments.

8.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

9.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Next $1
billion
  Next $1
billion
  Over $3
billion
 
  0.50

%

   

0.45

%

   

0.40

%

   

0.35

%

 

For the year ended December 31, 2023, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.41% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.80% for Class I shares, 1.15% for Class A shares, 1.65% for Class L shares, 1.90% for Class C shares, 0.73% for Class R6 shares and 0.73% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $3,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services

pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement,


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $35,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $1,485,786,000 and $2,726,082,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $131,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company/Issuer
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

113,959

   

$

1,402,758

   

$

1,426,025

   

$

3,351

   

ProKidney Corp.*

   

26,324

     

815

     

13,906

     

   

Total

 

$

140,283

   

$

1,403,573

   

$

1,439,931

   

$

3,351

   
Affiliated
Investment
Company/Issuer (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

90,692

   

ProKidney Corp.*

   

2,525

     

(10,602

)

   

5,156

   

Total

 

$

2,525

   

$

(10,602

)

 

$

95,848

   

* The security was deemed to no longer meet the criteria of an affiliated issuer at the reporting date.

During the year ended December 31, 2023, the Fund incurred approximately $1,000 in brokerage commissions with Morgan Stanley & Co. LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded noncontributory defined benefit pension plan covering certain independent Directors of the Fund who will have served as independent Directors for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. The Directors voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the year ended December 31, 2023, included in "Directors' Fees and Expenses" in the Consolidated Statement of Operations amounted to approximately $2,000. At December 31, 2023, the Fund had an accrued pension liability of approximately $37,000, which is reflected as "Payable for Directors' Fees and Expenses" in the Consolidated Statement of Assets and Liabilities.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for

tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

   

$

   

$

   

$

724,752

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

32,875

   

$

(32,875

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $1,231,437,000 and $1,313,284,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

Qualified
Late Year
Ordinary
Losses
(000)
  Post-
October
Capital
Losses
(000)
 
$

17,918

   

$

   


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 61.2%.

K. Market Risk and Risks Relating to Certain Financial Instruments:
Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user

preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Growth Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Growth Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since
August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since
February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since
August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since
January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since
July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since
August
1994 (Retired
December 31,
2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


41


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since
August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since
January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
  Chair of the
Board and
Director
  Chair of the
Board since
August 2020 and
Director since
August 2006
 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


42


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers

Name, Address and Birth Year of
Executive Officer
  Position(s) Held
with
Registrant
  Length of
Time Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
  President and
Principal
Executive
Officer
  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
  Chief
Compliance
Officer
  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
  Treasurer and
Principal
Financial Officer
  Treasurer
since
July 2003
and Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

  Since
June
1999
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

  Since
June
2017
 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


43


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


44


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWANN
6337914 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Inception Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

9

   

Consolidated Statement of Operations

   

11

   

Consolidated Statements of Changes in Net Assets

   

12

   

Consolidated Financial Highlights

   

14

   

Notes to Consolidated Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

31

   

Liquidity Risk Management Program

   

32

   

Important Notices

   

33

   

U.S. Customer Privacy Notice

   

34

   

Directors and Officers Information

   

37

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Inception Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Inception Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Inception Portfolio Class I

 

$

1,000.00

   

$

1,080.60

   

$

1,020.97

   

$

4.41

   

$

4.28

     

0.84

%

 

Inception Portfolio Class A

   

1,000.00

     

1,080.20

     

1,019.76

     

5.66

     

5.50

     

1.08

   

Inception Portfolio Class L

   

1,000.00

     

1,076.40

     

1,016.18

     

9.37

     

9.10

     

1.79

   

Inception Portfolio Class C

   

1,000.00

     

1,075.60

     

1,015.43

     

10.15

     

9.86

     

1.94

   

Inception Portfolio Class R6

   

1,000.00

     

1,081.40

     

1,020.82

     

4.56

     

4.43

     

0.87

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Inception Portfolio

The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of small capitalization companies.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 54.44%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the Russell 2000® Growth Index (the "Index"), which returned 18.66%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Surprised by the economy's resilience amid rising interest rates and persistently high (but falling) inflation, U.S. stocks performed well in 2023. The year saw its share of uncertainty, with recession fears dominating the start of the year, a regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, and multiple geopolitical flashpoints. However, by year-end, the U.S. Federal Reserve signaled it was likely finished lifting interest rates after pausing the hiking cycle halfway through the year. This triggered a stock market rally and retreat in long-term bond yields in the final two months of 2023. Additionally, excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform, adding meaningfully to the broader market's gain in the year.

•  Small-cap growth equities, as measured by the Index, advanced over the 12-month period. All sectors in the Index delivered positive performance except utilities. Consumer staples, information technology and industrials were the Index's largest gainers in the year.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period largely due to favorable stock selection; sector allocations contributed modestly.

•  Stock selection in information technology and financials were, by far, the largest contributors to relative performance. A technology platform specializing in consumer buy-now-pay-later point of sale financing and payment processing was the largest contributor both in the financials sector and in the portfolio overall. The company reported results that came in ahead of expectations, driven primarily by strong credit execution, including better-than-expected provisioning, as the company continues to proactively manage loan performance in an uncertain and volatile macroeconomic environment. A developer of internet-connected sensor systems was the top contributor in the information technology sector and second largest contributor in the portfolio. Its shares outperformed due to strong business execution and growing demand for its suite of solutions; the company reported better-than-expected results and raised its financial outlook.

•  Stock selection in consumer discretionary also added strongly to relative performance. A globally leading platform to enable and accelerate direct-to-consumer, cross-border ecommerce was the top contributor in the sector and fourth greatest across the portfolio. Its shares advanced as the company continued to deliver strong fundamental performance characterized by revenue and profitability growth that outpaced the overall ecommerce industry, and strong traction with new partnership initiatives. We believe that the company management's continued execution also buoyed investor confidence in the company's ability to further capitalize on the secular growth in direct-to-consumer, cross-border ecommerce.

•  Conversely, stock selection in health care detracted from relative performance. The largest detractor in the sector and third largest in the portfolio was a leading digital platform for U.S. medical professionals, providing its members with the tools to collaborate with colleagues, stay up to date with the latest medical news and research, and conduct virtual patient visits. The company reported


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Inception Portfolio

financial results which beat expectations; however, its shares underperformed as management lowered its financial outlook for the year due to weaker-than-expected advertising spend from its pharmaceuticals customers. In response, the company announced it is expanding its programmatic advertising offerings in order to better meet these customers' needs.

•  Stock selection in communication services was another detractor from relative performance. A self-service event management and ticketing platform was the greatest detractor in the sector and sixth largest in the portfolio. Despite reporting overall healthy results and continued improvements toward profitability, its shares were pressured due to broader macroeconomic concerns around consumers discretionary spending throughout the year.

•  An average sector underweight in industrials also weighed on relative performance.

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the Russell 2000®​ Growth Index(1) and the Lipper Small-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(9)
 
Fund — Class I Shares w/o
sales charges(4)
   

54.44

%

   

15.79

%

   

7.55

%

   

10.98

%

 
Fund — Class A Shares w/o
sales charges(5)
   

54.22

     

15.45

     

7.22

     

10.17

   
Fund — Class A Shares with
maximum 5.25% sales charges(5)
   

46.00

     

14.20

     

6.65

     

9.95

   
Fund — Class L Shares w/o
sales charges(6)
   

52.94

     

14.78

     

6.63

     

10.69

   
Fund — Class C Shares w/o
sales charges(8)
   

52.94

     

14.53

     

     

11.43

   
Fund — Class C Shares with
maximum 1.00% deferred sales
charges(8)
   

51.94

     

14.53

     

     

11.43

   
Fund — Class R6 Shares w/o
sales charges(7)
   

54.58

     

15.85

     

7.62

     

9.00

   

Russell 2000®​ Growth Index

   

18.66

     

9.22

     

7.16

     

7.79

   
Lipper Small-Cap Growth
Funds Index
   

18.36

     

11.65

     

8.54

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Russell 2000®​ Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000®​ Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000®​ Index is a subset of the Russell 3000®​ Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market capitalization and current index membership. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Small-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Small-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Small-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on November 1, 1989.

(5)​  Commenced offering on January 2, 1996.

(6)​  Commenced offering on November 11, 2011.

(7)​  Commenced offering on September 13, 2013.

(8)​  Commenced offering on May 31, 2017.

(9)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Inception Portfolio

   

Shares

  Value
(000)
 

Common Stocks (94.0%)

 

Automobile Components (0.1%)

 

XPEL, Inc. (a)

   

7,086

   

$

382

   

Beverages (1.0%)

 

Celsius Holdings, Inc. (a)

   

84,443

     

4,604

   

Biotechnology (3.3%)

 

Altimmune, Inc. (a)(b)

   

205,578

     

2,313

   

Arbutus Biopharma Corp. (a)

   

739,117

     

1,848

   

Beam Therapeutics, Inc. (a)

   

46,403

     

1,263

   

Intellia Therapeutics, Inc. (a)

   

65,823

     

2,007

   

ProKidney Corp. (a)(b)

   

232,330

     

413

   

Recursion Pharmaceuticals, Inc., Class A (a)(b)

   

135,390

     

1,335

   

Roivant Sciences Ltd. (a)

   

504,906

     

5,670

   
     

14,849

   

Broadline Retail (6.4%)

 

Global-e Online Ltd. (Israel) (a)

   

732,701

     

29,037

   

Chemicals (0.5%)

 

Ginkgo Bioworks Holdings, Inc. (a)(b)

   

1,506,056

     

2,545

   

Consumer Staples Distribution & Retail (0.2%)

 

Maplebear, Inc. (a)

   

48,380

     

1,135

   

Diversified Consumer Services (0.5%)

 

Duolingo, Inc. (a)

   

9,583

     

2,174

   

Financial Services (8.8%)

 

Affirm Holdings, Inc. (a)

   

793,195

     

38,977

   

Toast, Inc., Class A (a)

   

65,480

     

1,196

   
     

40,173

   

Ground Transportation (1.0%)

 

Grab Holdings Ltd., Class A (Singapore) (a)

   

1,401,471

     

4,723

   

Health Care Equipment & Supplies (0.4%)

 

Inspire Medical Systems, Inc. (a)

   

6,233

     

1,268

   

Outset Medical, Inc. (a)

   

84,778

     

459

   
     

1,727

   

Health Care Providers & Services (3.8%)

 

Agilon Health, Inc. (a)

   

1,275,181

     

16,004

   

Privia Health Group, Inc. (a)

   

48,467

     

1,116

   
     

17,120

   

Health Care Technology (2.9%)

 

Doximity, Inc., Class A (a)

   

427,211

     

11,979

   

Schrodinger, Inc. (a)

   

33,209

     

1,189

   
     

13,168

   

Hotels, Restaurants & Leisure (0.1%)

 

Cava Group, Inc. (a)(b)

   

12,346

     

531

   

Household Durables (2.0%)

 

Cricut, Inc., Class A (b)

   

322,996

     

2,128

   

Victoria PLC (United Kingdom) (a)

   

1,853,609

     

7,126

   
     

9,254

   

Information Technology Services (12.6%)

 

Cloudflare, Inc., Class A (a)

   

512,588

     

42,678

   

Fastly, Inc., Class A (a)

   

828,605

     

14,749

   
     

57,427

   
   

Shares

  Value
(000)
 

Interactive Media & Services (0.5%)

 

Eventbrite, Inc., Class A (a)

   

270,065

   

$

2,258

   

Leisure Products (5.3%)

 

Peloton Interactive, Inc., Class A (a)

   

3,960,497

     

24,119

   

Life Sciences Tools & Services (4.8%)

 

10X Genomics, Inc., Class A (a)

   

212,043

     

11,866

   

MaxCyte, Inc. (a)

   

1,001,026

     

4,705

   

SomaLogic, Inc. (a)

   

904,556

     

2,289

   

Standard BioTools, Inc. (a)(b)

   

1,289,309

     

2,849

   
     

21,709

   

Media (0.3%)

 

Cardlytics, Inc. N (a)

   

134,548

     

1,239

   

Metals & Mining (0.2%)

 

MP Materials Corp. (a)

   

46,636

     

926

   

Passenger Airlines (0.6%)

 

Joby Aviation, Inc. (a)

   

384,665

     

2,558

   

Personal Care Products (1.1%)

 

Oddity Tech Ltd., Class A (Israel) (a)

   

111,756

     

5,200

   

Pharmaceuticals (0.3%)

 

ATAI Life Sciences NV (a)(b)

   

570,330

     

804

   

GH Research PLC (a)

   

96,918

     

562

   
     

1,366

   

Real Estate Management & Development (1.1%)

 

Opendoor Technologies, Inc. (a)

   

562,275

     

2,519

   

Redfin Corp. (a)

   

253,752

     

2,619

   
     

5,138

   

Software (25.2%)

 

Aurora Innovation, Inc. (a)

   

2,201,663

     

9,621

   

Bill Holdings, Inc. (a)

   

201,162

     

16,413

   

Confluent, Inc., Class A (a)

   

93,530

     

2,188

   

Gitlab, Inc., Class A (a)

   

408,588

     

25,725

   

MicroStrategy, Inc., Class A (a)

   

11,647

     

7,356

   

Procore Technologies, Inc. (a)

   

317,765

     

21,996

   

Samsara, Inc., Class A (a)

   

935,439

     

31,225

   
     

114,524

   

Specialty Retail (7.4%)

 

Carvana Co. (a)

   

462,088

     

24,463

   

Restoration Hardware, Inc. (a)

   

8,159

     

2,378

   

Wayfair, Inc., Class A (a)

   

112,685

     

6,953

   
     

33,794

   

Tech Hardware, Storage & Peripherals (0.1%)

 

IonQ, Inc. N (a)(b)

   

26,535

     

329

   

Textiles, Apparel & Luxury Goods (3.5%)

 

Figs, Inc., Class A (a)

   

618,296

     

4,297

   

On Holding AG, Class A (Switzerland) (a)

   

424,195

     

11,441

   
     

15,738

   

Total Common Stocks (Cost $347,569)

   

427,747

   

The accompanying notes are an integral part of the consolidated financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Inception Portfolio

   

Shares

  Value
(000)
 

Preferred Stocks (1.9%)

 

Health Care Technology (1.1%)

 
Included Health, Inc., Series B (a)(c)(d)
(acquisition cost — $3,362;
acquired 7/3/14)
   

3,269,139

   

$

5,165

   

Software (0.8%)

 
Lookout, Inc., Series F (a)(c)(d)
(acquisition cost — $13,476;
acquired 6/17/14)
   

1,179,743

     

3,527

   

Total Preferred Stocks (Cost $16,838)

   

8,692

   

Investment Company (2.1%)

 
Grayscale Bitcoin Trust (a)
(Cost $6,797)
   

274,250

     

9,495

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Life Sciences Tools & Services (0.0%)‡

 
SomaLogic, Inc., expires 8/31/26 (a)
(Cost $204)
   

61,142

     

7

   
   

Shares

     

Short-Term Investments (4.4%)

 

Investment Company (3.0%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $13,535)
   

13,534,654

     

13,535

   

Securities held as Collateral on Loaned Securities (1.4%)

 

Investment Company (1.1%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

5,156,085

     

5,156

   
    Face
Amount
(000)
     

Repurchase Agreements (0.3%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $379; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00%
due 5/15/24 - 11/15/49;
valued at $387)
 

$

379

     

379

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24;
proceeds $379; fully collateralized by
a U.S. Government obligation; 0.00%
due 8/15/27; valued at $387)
   

379

     

379

   
    Face
Amount
(000)
  Value
(000)
 
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24;
proceeds $379; fully collateralized by
a U.S. Government obligation; 4.75%
due 11/15/53; valued at $387)
 

$

379

   

$

379

   
     

1,137

   
Total Securities held as Collateral on Loaned
Securities (Cost $6,293)
   

6,293

   

Total Short-Term Investments (Cost $19,828)

   

19,828

   
Total Investments Excluding Purchased
Options (102.4%) (Cost $391,236)
   

465,769

   
Total Purchased Options Outstanding (0.0%)‡
(Cost $1,245)
   

225

   
Total Investments (102.4%) (Cost $392,481)
Including $6,479 of Securities Loaned (e)(f)(g)
   

465,994

   

Liabilities in Excess of Other Assets (–2.4%)

   

(11,114

)

 

Net Assets (100.0%)

 

$

454,880

   

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at December 31, 2023 amounts to approximately $8,692,000 and represents 1.9% of net assets.

(d)  At December 31, 2023, the Fund held fair valued securities valued at $8,692,000, representing 1.9% of net assets. These securities have been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(e)  Securities are available for collateral in connection with purchased options.

(f)  The approximate fair value and percentage of net assets, $7,126,000 and 1.6%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(g)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $448,147,000. The aggregate gross unrealized appreciation is approximately $126,784,000 and the aggregate gross unrealized depreciation is approximately $106,588,000, resulting in net unrealized appreciation of approximately $20,196,000.

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Inception Portfolio

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

 

Strike
Price

 

Expiration
Date

 

Number of
Contracts

 

Notional
Amount
(000)

 

Value
(000)

 

Premiums
Paid
(000)

 

Unrealized
Depreciation
(000)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.43

   

Jan-24

   

76,565,662

   

$

76,566

   

$

7

   

$

360

   

$

(353

)

 

Standard Chartered Bank

 

USD/CNH

 

CNH

7.57

   

May-24

   

90,850,215

     

90,850

     

95

     

385

     

(290

)

 

JPMorgan Chase Bank NA

 

USD/CNH

 

CNH

7.79

   

Aug-24

   

120,919,525

     

120,920

     

123

     

500

     

(377

)

 
                       

$

225

   

$

1,245

   

$

(1,020

)

 

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Other**

   

34.1

%

 

Software

   

25.7

   

Information Technology Services

   

12.5

   

Financial Services

   

8.7

   

Specialty Retail

   

7.4

   

Broadline Retail

   

6.3

   

Leisure Products

   

5.3

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Inception Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $373,790)

 

$

447,303

   

Investment in Security of Affiliated Issuer, at Value (Cost $18,691)

   

18,691

   

Total Investments in Securities, at Value (Cost $392,481)

   

465,994

   

Foreign Currency, at Value (Cost $2)

   

2

   

Receivable for Investments Sold

   

296

   

Receivable for Fund Shares Sold

   

267

   

Receivable from Securities Lending Income

   

49

   

Receivable from Affiliate

   

39

   

Other Assets

   

85

   

Total Assets

   

466,732

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

6,293

   

Payable for Investments Purchased

   

3,046

   

Payable for Fund Shares Redeemed

   

886

   

Payable for Advisory Fees

   

683

   

Due to Broker

   

420

   

Payable for Sub Transfer Agency Fees — Class I

   

273

   

Payable for Sub Transfer Agency Fees — Class A

   

92

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

2

   

Payable for Shareholder Services Fees — Class A

   

36

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

9

   

Payable for Administration Fees

   

29

   

Payable for Custodian Fees

   

7

   

Payable for Transfer Agency Fees — Class I

   

2

   

Payable for Transfer Agency Fees — Class A

   

2

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

1

   

Payable for Professional Fees

   

4

   

Other Liabilities

   

67

   

Total Liabilities

   

11,852

   

Net Assets

 

$

454,880

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

1,380,536

   

Total Accumulated Loss

   

(925,656

)

 

Net Assets

 

$

454,880

   

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Inception Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

201,414

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

16,315,982

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.34

   

CLASS A:

 

Net Assets

 

$

181,264

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

22,051,822

   

Net Asset Value, Redemption Price Per Share

 

$

8.22

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.46

   

Maximum Offering Price Per Share

 

$

8.68

   

CLASS L:

 

Net Assets

 

$

656

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

96,978

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

6.76

   

CLASS C:

 

Net Assets

 

$

11,076

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,468,691

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

7.54

   

CLASS R6:

 

Net Assets

 

$

60,470

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

4,842,111

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.49

   
(1)​ Including:
Securities on Loan, at Value:
 

$

6,479

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Inception Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Income from Securities Loaned — Net

 

$

1,477

   

Dividends from Securities of Unaffiliated Issuers

   

990

   

Dividends from Security of Affiliated Issuer (Note G)

   

399

   

Total Investment Income

   

2,866

   

Expenses:

 

Advisory Fees (Note B)

   

3,759

   

Shareholder Services Fees — Class A (Note D)

   

413

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

5

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

95

   

Administration Fees (Note C)

   

327

   

Professional Fees

   

185

   

Registration Fees

   

95

   

Transfer Agency Fees — Class I (Note E)

   

24

   

Transfer Agency Fees — Class A (Note E)

   

14

   

Transfer Agency Fees — Class L (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

4

   

Transfer Agency Fees — Class R6 (Note E)

   

8

   

Shareholder Reporting Fees

   

50

   

Custodian Fees (Note F)

   

18

   

Directors' Fees and Expenses

   

12

   

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

7

   

Pricing Fees

   

5

   

Other Expenses

   

36

   

Total Expenses

   

5,061

   

Waiver of Advisory Fees (Note B)

   

(687

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(109

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(15

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(8

)

 

Net Expenses

   

4,239

   

Net Investment Loss

   

(1,373

)

 

Realized Loss:

 

Investments Sold

   

(106,304

)

 

Foreign Currency Translation

   

(1

)

 

Net Realized Loss

   

(106,305

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

269,680

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

269,680

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

163,375

   

Net Increase in Net Assets Resulting from Operations

 

$

162,002

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Inception Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(1,373

)

 

$

(3,557

)

 

Net Realized Loss

   

(106,305

)

   

(802,970

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

269,680

     

98,748

   

Net Increase (Decrease) in Net Assets Resulting from Operations

   

162,002

     

(707,779

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

     

(643

)

 

Class A

   

     

(184

)

 

Class L

   

     

(1

)

 

Class C

   

     

(13

)

 

Class R6*

   

     

(203

)

 

Total Dividends and Distributions to Shareholders

   

     

(1,044

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

95,724

     

176,259

   

Distributions Reinvested

   

     

642

   

Redeemed

   

(126,212

)

   

(394,432

)

 

Class A:

 

Subscribed

   

67,668

     

36,648

   

Distributions Reinvested

   

     

184

   

Redeemed

   

(79,946

)

   

(117,782

)

 

Class L:

 

Exchanged

   

7

     

@

 

Distributions Reinvested

   

     

1

   

Redeemed

   

(236

)

   

(169

)

 

Class C:

 

Subscribed

   

1,755

     

2,486

   

Distributions Reinvested

   

     

13

   

Redeemed

   

(3,167

)

   

(8,655

)

 

Class R6:*

 

Subscribed

   

13,339

     

21,787

   

Distributions Reinvested

   

     

203

   

Redeemed

   

(14,989

)

   

(38,374

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(46,057

)

   

(321,189

)

 

Redemption Fees

   

37

     

43

   

Total Increase (Decrease) in Net Assets

   

115,982

     

(1,029,969

)

 

Net Assets:

 

Beginning of Period

   

338,898

     

1,368,867

   

End of Period

 

$

454,880

   

$

338,898

   

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Inception Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

8,900

     

13,574

   

Shares Issued on Distributions Reinvested

   

     

74

   

Shares Redeemed

   

(12,362

)

   

(31,525

)

 

Net Decrease in Class I Shares Outstanding

   

(3,462

)

   

(17,877

)

 

Class A:

 

Shares Subscribed

   

8,832

     

4,353

   

Shares Issued on Distributions Reinvested

   

     

32

   

Shares Redeemed

   

(11,628

)

   

(13,627

)

 

Net Decrease in Class A Shares Outstanding

   

(2,796

)

   

(9,242

)

 

Class L:

 

Shares Exchanged

   

1

     

@@

 

Shares Issued on Distributions Reinvested

   

     

@@

 

Shares Redeemed

   

(45

)

   

(29

)

 

Net Decrease in Class L Shares Outstanding

   

(44

)

   

(29

)

 

Class C:

 

Shares Subscribed

   

265

     

306

   

Shares Issued on Distributions Reinvested

   

     

2

   

Shares Redeemed

   

(517

)

   

(1,118

)

 

Net Decrease in Class C Shares Outstanding

   

(252

)

   

(810

)

 

Class R6:*

 

Shares Subscribed

   

1,351

     

1,643

   

Shares Issued on Distributions Reinvested

   

     

23

   

Shares Redeemed

   

(1,373

)

   

(3,903

)

 

Net Decrease in Class R6 Shares Outstanding

   

(22

)

   

(2,237

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Inception Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

7.99

   

$

19.75

   

$

25.48

   

$

11.19

   

$

9.62

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

(0.02

)

   

(0.05

)

   

(0.15

)

   

(0.10

)

   

0.01

   

Net Realized and Unrealized Gain (Loss)

   

4.37

     

(11.68

)

   

(0.74

)

   

16.84

     

3.50

   

Total from Investment Operations

   

4.35

     

(11.73

)

   

(0.89

)

   

16.74

     

3.51

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

(0.02

)

   

(0.11

)

   

     

   

Net Realized Gain

   

     

(0.01

)

   

(4.76

)

   

(2.45

)

   

(1.94

)

 

Total Distributions

   

     

(0.03

)

   

(4.87

)

   

(2.45

)

   

(1.94

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.03

     

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

12.34

   

$

7.99

   

$

19.75

   

$

25.48

   

$

11.19

   

Total Return(4)

   

54.44

%(5)

   

(59.42

)%

   

(3.33

)%

   

150.57

%

   

37.11

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

201,414

   

$

157,990

   

$

743,854

   

$

464,639

   

$

59,092

   

Ratio of Expenses Before Expense Limitation

   

1.11

%

   

1.41

%

   

1.12

%

   

1.18

%

   

1.21

%

 

Ratio of Expenses After Expense Limitation

   

0.91

%(6)(7)

   

1.00

%(7)

   

1.00

%(7)

   

0.99

%(7)

   

0.99

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(7)

   

N/A

     

0.99

%(7)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

(0.21

)%(6)(7)

   

(0.43

)%(7)

   

(0.49

)%(7)

   

(0.54

)%(7)

   

0.09

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

72

%

   

100

%

   

111

%

   

132

%

   

99

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.94

%

   

(0.24

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Inception Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

5.33

   

$

13.20

   

$

18.68

   

$

8.51

   

$

7.68

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.03

)

   

(0.06

)

   

(0.19

)

   

(0.10

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

2.92

     

(7.80

)

   

(0.53

)

   

12.72

     

2.79

   

Total from Investment Operations

   

2.89

     

(7.86

)

   

(0.72

)

   

12.62

     

2.77

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.03

)

   

     

   

Net Realized Gain

   

     

(0.01

)

   

(4.76

)

   

(2.45

)

   

(1.94

)

 

Total Distributions

   

     

(0.01

)

   

(4.79

)

   

(2.45

)

   

(1.94

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.03

     

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

8.22

   

$

5.33

   

$

13.20

   

$

18.68

   

$

8.51

   

Total Return(4)

   

54.22

%(5)

   

(59.57

)%

   

(3.70

)%

   

149.86

%

   

36.71

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

181,264

   

$

132,493

   

$

450,058

   

$

229,641

   

$

45,097

   

Ratio of Expenses Before Expense Limitation

   

1.36

%

   

1.62

%

   

1.40

%

   

1.44

%

   

1.52

%

 

Ratio of Expenses After Expense Limitation

   

1.16

%(6)(7)

   

1.35

%(7)

   

1.33

%(7)

   

1.25

%(7)

   

1.29

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.35

%(7)

   

N/A

     

1.25

%(7)

   

N/A

   

Ratio of Net Investment Loss

   

(0.46

)%(6)(7)

   

(0.77

)%(7)

   

(0.85

)%(7)

   

(0.80

)%(7)

   

(0.23

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

72

%

   

100

%

   

111

%

   

132

%

   

99

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.19

%

   

(0.49

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Inception Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

4.42

   

$

10.99

   

$

16.45

   

$

7.65

   

$

7.10

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.06

)

   

(0.08

)

   

(0.27

)

   

(0.16

)

   

(0.07

)

 

Net Realized and Unrealized Gain (Loss)

   

2.40

     

(6.48

)

   

(0.45

)

   

11.41

     

2.56

   

Total from Investment Operations

   

2.34

     

(6.56

)

   

(0.72

)

   

11.25

     

2.49

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

(4.76

)

   

(2.45

)

   

(1.94

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.02

     

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

6.76

   

$

4.42

   

$

10.99

   

$

16.45

   

$

7.65

   

Total Return

   

52.94

%(4)(5)

   

(59.76

)%(4)

   

(4.17

)%(4)

   

148.82

%(6)

   

35.91

%(4)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

656

   

$

623

   

$

1,874

   

$

2,543

   

$

1,218

   

Ratio of Expenses Before Expense Limitation

   

2.55

%

   

2.32

%

   

1.95

%

   

2.10

%

   

2.15

%

 

Ratio of Expenses After Expense Limitation

   

1.82

%(7)(8)

   

1.85

%(8)

   

1.85

%(8)

   

1.84

%(8)

   

1.84

%(8)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.85

%(8)

   

N/A

     

1.84

%(8)

   

N/A

   

Ratio of Net Investment Loss

   

(1.12

)%(7)(8)

   

(1.28

)%(8)

   

(1.36

)%(8)

   

(1.43

)%(8)

   

(0.78

)%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

72

%

   

100

%

   

111

%

   

132

%

   

99

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(6)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Investment Overview.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.85

%

   

(1.15

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Inception Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

4.93

   

$

12.31

   

$

17.85

   

$

8.24

   

$

7.55

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.08

)

   

(0.11

)

   

(0.33

)

   

(0.22

)

   

(0.10

)

 

Net Realized and Unrealized Gain (Loss)

   

2.69

     

(7.26

)

   

(0.47

)

   

12.28

     

2.73

   

Total from Investment Operations

   

2.61

     

(7.37

)

   

(0.80

)

   

12.06

     

2.63

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

(4.76

)

   

(2.45

)

   

(1.94

)

 

Redemption Fees

   

0.00

(3)

   

(0.01

)

   

0.02

     

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

7.54

   

$

4.93

   

$

12.31

   

$

17.85

   

$

8.24

   

Total Return(4)

   

52.94

%(5)

   

(59.90

)%

   

(4.37

)%

   

147.97

%

   

35.48

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

11,076

   

$

8,490

   

$

31,148

   

$

12,494

   

$

688

   

Ratio of Expenses Before Expense Limitation

   

2.22

%

   

2.33

%

   

2.12

%

   

2.26

%

   

2.75

%

 

Ratio of Expenses After Expense Limitation

   

2.02

%(6)(7)

   

2.10

%(7)

   

2.05

%(7)

   

2.07

%(7)

   

2.09

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.10

%(7)

   

N/A

     

2.07

%(7)

   

N/A

   

Ratio of Net Investment Loss

   

(1.31

)%(6)(7)

   

(1.53

)%(7)

   

(1.55

)%(7)

   

(1.61

)%(7)

   

(0.99

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

72

%

   

100

%

   

111

%

   

132

%

   

99

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.05

%

   

(1.34

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Inception Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

8.08

   

$

19.99

   

$

25.73

   

$

11.29

   

$

9.69

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

(0.02

)

   

(0.04

)

   

(0.14

)

   

(0.08

)

   

0.01

   

Net Realized and Unrealized Gain (Loss)

   

4.43

     

(11.83

)

   

(0.74

)

   

16.97

     

3.53

   

Total from Investment Operations

   

4.41

     

(11.87

)

   

(0.88

)

   

16.89

     

3.54

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

(0.03

)

   

(0.13

)

   

     

   

Net Realized Gain

   

     

(0.01

)

   

(4.76

)

   

(2.45

)

   

(1.94

)

 

Total Distributions

   

     

(0.04

)

   

(4.89

)

   

(2.45

)

   

(1.94

)

 

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.03

     

0.00

(4)

   

0.00

(4)

 

Net Asset Value, End of Period

 

$

12.49

   

$

8.08

   

$

19.99

   

$

25.73

   

$

11.29

   

Total Return(5)

   

54.58

%(6)

   

(59.39

)%

   

(3.29

)%

   

150.79

%

   

37.04

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

60,470

   

$

39,302

   

$

141,933

   

$

154,023

   

$

64,712

   

Ratio of Expenses Before Expense Limitation

   

1.11

%

   

1.15

%

   

1.00

%

   

1.11

%

   

1.15

%

 

Ratio of Expenses After Expense Limitation

   

0.90

%(7)(8)

   

0.93

%(8)

   

0.93

%(8)

   

0.92

%(8)

   

0.92

%(8)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.93

%(8)

   

N/A

     

0.92

%(8)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

(0.20

)%(7)(8)

   

(0.37

)%(8)

   

(0.44

)%(8)

   

(0.49

)%(8)

   

0.12

%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

72

%

   

100

%

   

111

%

   

132

%

   

99

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.93

%

   

(0.23

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these Consolidated financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Inception Portfolio. The Fund seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of small capitalization companies.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Inception Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements

include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $10,112,000 or approximately 2.22% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which clarifies the guidance in ASC Topic No. 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and introduces new disclosures related to such equity security. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security's fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by ASU 2022-03). In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The new guidance is effective for public companies with annual reporting periods in fiscal years beginning after December 15, 2023, and interim periods in the following year, with early adoption permitted. An investment company that holds equity securities that are subject to contractual sale restrictions executed before the date at which


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

the investment company first adopts ASU 2022-03 shall continue to account for that equity security using the accounting policy applied before the adoption of ASU 2022-03 until the contractual sale restriction expires or is modified.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained

from reputable brokers/dealers; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/dealer or valued by a pricing service/vendor; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: FASB ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobile Components

 

$

382

   

$

   

$

   

$

382

   

Beverages

   

4,604

     

     

     

4,604

   

Biotechnology

   

14,849

     

     

     

14,849

   

Broadline Retail

   

29,037

     

     

     

29,037

   

Chemicals

   

2,545

     

     

     

2,545

   
Consumer Staples
Distribution & Retail
   

1,135

     

     

     

1,135

   
Diversified Consumer
Services
   

2,174

     

     

     

2,174

   

Financial Services

   

40,173

     

     

     

40,173

   

Ground Transportation

   

4,723

     

     

     

4,723

   
Health Care Equipment &
Supplies
   

1,727

     

     

     

1,727

   
Health Care Providers &
Services
   

17,120

     

     

     

17,120

   

Health Care Technology

   

13,168

     

     

     

13,168

   
Hotels, Restaurants &
Leisure
   

531

     

     

     

531

   

Household Durables

   

2,128

     

7,126

     

     

9,254

   
Information Technology
Services
   

57,427

     

     

     

57,427

   
Interactive Media &
Services
   

2,258

     

     

     

2,258

   

Leisure Products

   

24,119

     

     

     

24,119

   
Life Sciences Tools &
Services
   

21,709

     

     

     

21,709

   

Media

   

1,239

     

     

     

1,239

   

Metals & Mining

   

926

     

     

     

926

   

Passenger Airlines

   

2,558

     

     

     

2,558

   

Personal Care Products

   

5,200

     

     

     

5,200

   

Pharmaceuticals

   

1,366

     

     

     

1,366

   
Real Estate Management &
Development
   

5,138

     

     

     

5,138

   

Software

   

114,524

     

     

     

114,524

   

Specialty Retail

   

33,794

     

     

     

33,794

   
Tech Hardware, Storage &
Peripherals
   

329

     

     

     

329

   
Textiles, Apparel & Luxury
Goods
   

15,738

     

     

     

15,738

   

Total Common Stocks

   

420,621

     

7,126

     

     

427,747

   

Preferred Stocks

 

Health Care Technology

   

     

     

5,165

     

5,165

   

Software

   

     

     

3,527

     

3,527

   

Total Preferred Stocks

   

     

     

8,692

     

8,692

   

Investment Company

   

9,495

     

     

     

9,495

   

Warrants

   

7

     

     

     

7

   

Call Options Purchased

   

     

225

     

     

225

   

Short-Term Investments

 

Investment Company

   

18,691

     

     

     

18,691

   

Repurchase Agreements

   

     

1,137

     

     

1,137

   
Total Short-Term
Investments
   

18,691

     

1,137

     

     

19,828

   

Total Assets

 

$

448,814

   

$

8,488

   

$

8,692

   

$

465,994

   


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

    Preferred
Stocks
(000)
 

Beginning Balance

 

$

11,920

   

Purchases

   

   

Sales

   

   

Transfers in

   

   

Transfers out

   

   

Corporate actions

   

   

Change in unrealized appreciation (depreciation)

   

(3,228

)

 

Realized gains (losses)

   

   

Ending Balance

 

$

8,692

   
Net change in unrealized appreciation (depreciation) from
investments still held as of December 31, 2023
 

$

(3,228

)

 

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2023. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance. The Fund calculated the weighted averages of the unobservable inputs relative to each investment's fair value as of December 31, 2023:

    Fair Value at
December 31, 2023
(000)
  Valuation
Technique
  Unobservable
Input
  Range/ Weighted
Average
  Impact to
Valuation from an
Increase in Input*
 

Preferred Stocks

 

$

8,692

   

Discounted Cash Flow

  Weighted Average
Cost of Capital
   

13.5%-16.5%/15.3%

   

Decrease

 
           

Perpetual Growth Rate

   

3.0%-4.0%/3.5%

   

Increase

 
        Market Comparable
Companies
  Enterprise Value/
Revenue
 
0.9x-15.5x/4.1x
 

Increase

 
            Discount for Lack of
Marketability
 
15.0%-18.0%/16.8%
 

Decrease

 
        Comparable
Transactions
  Enterprise Value/
Revenue
 
1.7x-15.2x/5.8x
 

Increase

 

*  Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price

plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange

rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency ex-change risk in the normal course of pursuing its investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are

purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated Statement
of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

225

(a)

 

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(1,078

)(a)

 

(a) Amounts are included in Realized Loss on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(628

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives(a)

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

225

   

$

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

(b) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented in the
Consolidated
Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received(b)
(000)
  Net Amount
(not less
than $0)
(000)
 
JP Morgan Chase
Bank NA
 

$

130

   

$

   

$

(130

)

 

$

0

   

Standard Chartered Bank

   

95

     

     

(95

)

   

0

   

Total

 

$

225

   

$

   

$

(225

)

 

$

0

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

(b) In some instances, the actual collateral received may be more than the amount shown here due to overcollateralization.

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

312,134,000

   

6.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Consolidated Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Gross Asset
Amount
Presented in
the Consolidated
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

6,479

(a)

 

$

   

$

(6,479

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received cash collateral of approximately $6,293,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Consolidated Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $912,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Consolidated Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 Days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

6,293

   

$

   

$

   

$

   

$

6,293

   

Total Borrowings

 

$

6,293

   

$

   

$

   

$

   

$

6,293

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

6,293

   

7.  Restricted Securities: The Fund invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Consolidated Portfolio of Investments.

8.  Redemption Fees: The Fund will assess a 2% redemption fee, on Class I shares, Class A shares, Class L shares, Class C shares and Class R6 shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Consolidated Statements of Changes in Net Assets.

9.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

10.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

11.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
bilion
  Next $500
million
  Next $500
million
  Over $2
billion
 
  0.92

%

   

0.85

%

   

0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.75% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.93% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $687,000 of advisory fees were waived and approximately $11,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the

Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $3,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $290,362,000 and $343,550,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned

securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $15,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

23,844

   

$

213,965

   

$

219,118

   

$

399

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

18,691

   

During the year ended December 31, 2023, the Fund incurred approximately $2,000 in brokerage commissions with Morgan Stanley & Co. LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

   

$

   

$

936

   

$

108

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains

(losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

2,858

   

$

(2,858

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $477,764,000 and $465,858,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

Qualified Late
Year Ordinary
Losses
(000)
  Post-October
Capital Losses
(000)
 
$

1,024

   

$

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 73.0%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products

or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Inception Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Inception Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


41


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


42


(This page has been left blank intentionally.)


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISCGANN
6337963 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

International Advantage Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

8

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

13

   

Notes to Consolidated Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

27

   

Liquidity Risk Management Program

   

28

   

Federal Tax Notice

   

29

   

Important Notices

   

30

   

U.S. Customer Privacy Notice

   

31

   

Directors and Officers Information

   

34

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in International Advantage Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

International Advantage Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

International Advantage Portfolio Class I

 

$

1,000.00

   

$

974.50

   

$

1,020.42

   

$

4.73

   

$

4.84

     

0.95

%

 

International Advantage Portfolio Class A

   

1,000.00

     

973.30

     

1,019.06

     

6.07

     

6.21

     

1.22

   

International Advantage Portfolio Class L

   

1,000.00

     

970.50

     

1,016.13

     

8.94

     

9.15

     

1.80

   

International Advantage Portfolio Class C

   

1,000.00

     

969.90

     

1,015.58

     

9.48

     

9.70

     

1.91

   

International Advantage Portfolio Class R6

   

1,000.00

     

975.20

     

1,020.97

     

4.18

     

4.28

     

0.84

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

International Advantage Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 18.38%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World ex USA Net Index (the "Index"), which returned 15.62%.

Factors Affecting Performance

•  International equities rallied during the 12-month period ended December 31, 2023. The move was driven by signs of moderating inflation and optimism that interest rates may have peaked with central banks expected to lower interest rates in 2024.

•  Our team remained focused on assessing company prospects over a longer-term period of five to ten years, and owning a portfolio of high quality companies with diverse business drivers not tied to a particular market environment.

•  The team manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Our longer-term focus results in lower turnover than many of our peers. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process. For the 12-month period, the Fund outperformed the Index due to favorable stock selection and sector allocation.

•  The Fund's relative outperformance was primarily driven by stock selection in consumer discretionary, a sector underweight allocation to information technology and stock selection in communication services.

•  Negatively contributing to relative performance was a stock selection in financials and consumer staples and a sector overweight allocation to consumer discretionary.

Management Strategies

•  There were no changes to our bottom-up investment process during the period. The Fund seeks long-term capital appreciation by investing primarily in international high quality established

companies that the investment team believes are undervalued at the time of purchase. To achieve its objective, the investment team typically favors companies it believes have sustainable competitive advantages that can be monetized through growth. The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental and social externalities and governance (also referred to as ESG).

•  At the close of the period ended December 31, 2023, consumer discretionary represented the largest sector weight in the Fund, followed by information technology and financials. Our bottom-up investment process resulted in sector overweight positions in consumer discretionary, information technology and industrials, and underweight positions in materials, energy, financials, health care, consumer staples, real estate, utilities and communication services. The Fund had no energy, materials and real estate holdings at the end of the reporting period.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Advantage Portfolio

Performance Compared to the MSCI All Country World ex USA Net Index(1) and the Lipper International Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(7)
 
Fund — Class I Shares
w/o sales charges(4)
   

18.38

%

   

8.61

%

   

9.16

%

   

9.46

%

 
Fund — Class A Shares
w/o sales charges(4)
   

18.07

     

8.30

     

8.83

     

9.13

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

11.85

     

7.14

     

8.24

     

8.68

   
Fund — Class L Shares
w/o sales charges(4)
   

17.35

     

7.69

     

8.24

     

8.55

   
Fund — Class C Shares
w/o sales charges(5)
   

17.20

     

7.53

     

     

7.78

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(5)
   

16.20

     

7.53

     

     

7.78

   
Fund — Class R6 Shares
w/o sales charges(6)
   

18.54

     

8.72

     

     

4.66

   
MSCI All Country World ex USA
Net Index
   

15.62

     

7.08

     

3.83

     

4.22

   
Lipper International Multi-Cap
Growth Funds Index
   

16.58

     

6.96

     

3.73

     

4.53

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World ex USA Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the United States. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper International Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper International Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on December 28, 2010.

(5)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(6)​  Commenced offering on June 15, 2018.

(7)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

International Advantage Portfolio

   

Shares

  Value
(000)
 

Common Stocks (97.6%)

 

Canada (14.2%)

 

Brookfield Corp.

   

2,326,934

   

$

93,357

   

Brookfield Infrastructure Partners LP

   

2,350,903

     

74,030

   

Canada Goose Holdings, Inc. (See Note G) (a)(b)

   

3,980,698

     

47,171

   

Canadian Pacific Kansas City Ltd.

   

1,471,488

     

116,426

   

Shopify, Inc., Class A (b)

   

1,610,277

     

125,441

   
     

456,425

   

Denmark (7.6%)

 

DSV AS

   

1,397,589

     

245,566

   

France (10.9%)

 

Hermes International

   

114,293

     

242,931

   

LVMH Moet Hennessy Louis Vuitton SE

   

88,333

     

71,774

   

Pernod Ricard SA

   

204,982

     

36,225

   
     

350,930

   

Hong Kong (2.5%)

 

AIA Group Ltd.

   

9,214,500

     

80,193

   

India (7.6%)

 

HDFC Bank Ltd.

   

9,660,327

     

197,805

   

Titan Co. Ltd.

   

1,080,910

     

47,708

   
     

245,513

   

Italy (7.6%)

 

Davide Campari-Milano NV

   

4,267,982

     

48,197

   

Moncler SpA

   

3,205,712

     

197,374

   
     

245,571

   

Japan (4.9%)

 

Keyence Corp.

   

356,200

     

156,499

   

Netherlands (8.9%)

 

Adyen NV (b)

   

73,631

     

95,053

   
ASML Holding NV    

251,118

     

189,566

   
     

284,619

   

Sweden (3.4%)

 

Evolution AB

   

815,007

     

97,076

   

Vitrolife AB

   

671,873

     

12,974

   
     

110,050

   

Switzerland (10.7%)

 
Chocoladefabriken Lindt & Spruengli AG
(Registered)
   

451

     

54,715

   

Cie Financiere Richemont SA, Class A (Registered)

   

262,808

     

36,300

   

Kuehne & Nagel International AG (Registered)

   

279,480

     

96,448

   

Straumann Holding AG (Registered)

   

967,239

     

156,308

   
     

343,771

   

Taiwan (3.5%)

 
Taiwan Semiconductor Manufacturing
Co. Ltd. ADR
   

1,087,083

     

113,056

   
   

Shares

  Value
(000)
 

United Kingdom (5.6%)

 

Diageo PLC

   

881,358

   

$

31,989

   

London Stock Exchange Group PLC

   

727,930

     

86,050

   

Rightmove PLC

   

8,415,200

     

61,860

   
     

179,899

   

United States (10.2%)

 

Birkenstock Holding PLC (a)(b)

   

1,029,537

     

50,169

   

MercadoLibre, Inc. (b)

   

115,474

     

181,472

   

Spotify Technology SA (b)

   

509,196

     

95,683

   
     

327,324

   

Total Common Stocks (Cost $2,300,667)

   

3,139,416

   

Short-Term Investments (3.4%)

 

Investment Company (2.1%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $68,632)
   

68,631,602

     

68,632

   

Securities held as Collateral on Loaned Securities (1.3%)

 

Investment Company (1.0%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

32,700,954

     

32,701

   
    Face
Amount
(000)
     

Repurchase Agreements (0.3%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $2,406; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00% due
5/15/24 - 11/15/49;
valued at $2,453)
 

$

2,404

     

2,404

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24;
proceeds $2,406; fully collateralized
by a U.S. Government obligation; 0.00%
due 8/15/27; valued at $2,453)
   

2,405

     

2,405

   
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24;
proceeds $2,406; fully collateralized by
a U.S. Government obligation; 4.75%
due 11/15/53; valued at $2,453)
   

2,404

     

2,404

   
     

7,213

   
Total Securities held as Collateral on Loaned
Securities (Cost $39,914)
   

39,914

   

Total Short-Term Investments (Cost $108,546)

   

108,546

   
Total Investments (101.0%) (Cost $2,409,213)
Including $56,140 of Securities Loaned (c)(d)
   

3,247,962

   

Liabilities in Excess of Other Assets (–1.0%)

   

(32,666

)

 

Net Assets (100.0%)

 

$

3,215,296

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

The accompanying notes are an integral part of the consolidated financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

International Advantage Portfolio

(a)  All or a portion of this security was on loan at December 31, 2023.

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $2,242,611,000 and 69.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $2,445,652,000. The aggregate gross unrealized appreciation is approximately $941,799,000 and the aggregate gross unrealized depreciation is approximately $146,865,000, resulting in net unrealized appreciation of approximately $794,934,000.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Other**

   

43.8

%

 

Textiles, Apparel & Luxury Goods

   

21.6

   

Semiconductors & Semiconductor Equipment

   

9.4

   

Air Freight & Logistics

   

7.7

   

Banks

   

6.2

   

Broadline Retail

   

5.7

   

Capital Markets

   

5.6

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Advantage Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $2,212,685)

 

$

3,099,458

   

Investments in Securities of Affiliated Issuers, at Value (Cost $196,528)

   

148,504

   

Total Investments in Securities, at Value (Cost $2,409,213)

   

3,247,962

   

Foreign Currency, at Value (Cost $1,643)

   

1,648

   

Cash

   

983

   

Receivable for Investments Sold

   

24,023

   

Tax Reclaim Receivable

   

4,471

   

Receivable for Fund Shares Sold

   

2,685

   

Receivable from Affiliate

   

668

   

Dividends Receivable

   

590

   

Receivable from Securities Lending Income

   

155

   

Other Assets

   

161

   

Total Assets

   

3,283,346

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

39,914

   

Payable for Investments Purchased

   

9,057

   

Deferred Capital Gain Country Tax

   

7,626

   

Payable for Advisory Fees

   

5,788

   

Payable for Fund Shares Redeemed

   

4,187

   

Payable for Sub Transfer Agency Fees — Class I

   

672

   

Payable for Sub Transfer Agency Fees — Class A

   

104

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

4

   

Payable for Administration Fees

   

214

   

Payable for Custodian Fees

   

127

   

Payable for Shareholder Services Fees — Class A

   

79

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

16

   

Payable for Professional Fees

   

31

   

Payable for Transfer Agency Fees — Class I

   

16

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

1

   

Other Liabilities

   

213

   

Total Liabilities

   

68,050

   

Net Assets

 

$

3,215,296

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

3,118,760

   

Total Distributable Earnings

   

96,536

   

Net Assets

 

$

3,215,296

   

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Advantage Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

2,625,192

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

116,767,609

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

22.48

   

CLASS A:

 

Net Assets

 

$

375,712

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

17,164,709

   

Net Asset Value, Redemption Price Per Share

 

$

21.89

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.21

   

Maximum Offering Price Per Share

 

$

23.10

   

CLASS L:

 

Net Assets

 

$

421

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

20,357

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

20.70

   

CLASS C:

 

Net Assets

 

$

19,092

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

939,878

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

20.31

   

CLASS R6:

 

Net Assets

 

$

194,879

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

8,635,750

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

22.57

   
(1)​ Including:
Securities on Loan, at Value:
 

$

56,140

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Advantage Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $4,575 of Foreign Taxes Withheld)

 

$

32,685

   

Dividends from Security of Affiliated Issuer (Note G)

   

6,947

   

Income from Securities Loaned — Net

   

511

   

Total Investment Income

   

40,143

   

Expenses:

 

Advisory Fees (Note B)

   

25,346

   

Sub Transfer Agency Fees — Class I

   

2,748

   

Sub Transfer Agency Fees — Class A

   

547

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

13

   

Administration Fees (Note C)

   

2,650

   

Shareholder Services Fees — Class A (Note D)

   

1,055

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

3

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

216

   

Custodian Fees (Note F)

   

471

   

Registration Fees

   

224

   

Transfer Agency Fees — Class I (Note E)

   

186

   

Transfer Agency Fees — Class A (Note E)

   

12

   

Transfer Agency Fees — Class L (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

4

   

Transfer Agency Fees — Class R6 (Note E)

   

8

   

Professional Fees

   

202

   

Shareholder Reporting Fees

   

184

   

Directors' Fees and Expenses

   

57

   

Pricing Fees

   

2

   

Other Expenses

   

297

   

Total Expenses

   

34,227

   

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(634

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(271

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Net Expenses

   

33,320

   

Net Investment Income

   

6,823

   

Realized Loss:

 

Investments Sold (Net of $1,282 of Capital Gain Country Tax)

   

(263,265

)

 

Investments in Affiliates

   

(12,417

)

 

Foreign Currency Translation

   

(388

)

 

Net Realized Loss

   

(276,070

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $880)

   

800,053

   

Investments in Affiliates

   

(14,091

)

 

Foreign Currency Translation

   

321

   

Net Change in Unrealized Appreciation (Depreciation)

   

786,283

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

510,213

   

Net Increase in Net Assets Resulting from Operations

 

$

517,036

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Advantage Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

6,823

   

$

(1,761

)

 

Net Realized Loss

   

(276,070

)

   

(507,276

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

786,283

     

(1,807,638

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

517,036

     

(2,316,675

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(1,347

)

   

(106,371

)

 

Class A

   

     

(18,096

)

 

Class L

   

     

(19

)

 

Class C

   

     

(1,097

)

 

Class R6*

   

(306

)

   

(5,293

)

 

Total Dividends and Distributions to Shareholders

   

(1,653

)

   

(130,876

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

700,852

     

1,559,230

   

Distributions Reinvested

   

1,319

     

101,013

   

Redeemed

   

(893,543

)

   

(2,650,303

)

 

Class A:

 

Subscribed

   

131,644

     

663,938

   

Distributions Reinvested

   

     

18,093

   

Redeemed

   

(207,529

)

   

(772,431

)

 

Class L:

 

Exchanged

   

     

221

   

Distributions Reinvested

   

     

19

   

Redeemed

   

(52

)

   

(20

)

 

Class C:

 

Subscribed

   

993

     

2,926

   

Distributions Reinvested

   

     

1,087

   

Redeemed

   

(6,747

)

   

(8,977

)

 

Class R6:*

 

Subscribed

   

99,191

     

71,870

   

Distributions Reinvested

   

223

     

3,476

   

Redeemed

   

(47,200

)

   

(135,096

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(220,849

)

   

(1,144,954

)

 

Redemption Fees

   

     

9

   

Total Increase (Decrease) in Net Assets

   

294,534

     

(3,592,496

)

 

Net Assets:

 

Beginning of Period

   

2,920,762

     

6,513,258

   

End of Period

 

$

3,215,296

   

$

2,920,762

   

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Advantage Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

32,920

     

68,230

   

Shares Issued on Distributions Reinvested

   

59

     

5,283

   

Shares Redeemed

   

(41,998

)

   

(126,582

)

 

Net Decrease in Class I Shares Outstanding

   

(9,019

)

   

(53,069

)

 

Class A:

 

Shares Subscribed

   

6,446

     

32,799

   

Shares Issued on Distributions Reinvested

   

     

970

   

Shares Redeemed

   

(10,212

)

   

(38,999

)

 

Net Decrease in Class A Shares Outstanding

   

(3,766

)

   

(5,230

)

 

Class L:

 

Shares Exchanged

   

     

13

   

Shares Issued on Distributions Reinvested

   

     

1

   

Shares Redeemed

   

(2

)

   

(1

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(2

)

   

13

   

Class C:

 

Shares Subscribed

   

51

     

132

   

Shares Issued on Distributions Reinvested

   

     

62

   

Shares Redeemed

   

(349

)

   

(487

)

 

Net Decrease in Class C Shares Outstanding

   

(298

)

   

(293

)

 

Class R6:*

 

Shares Subscribed

   

4,554

     

2,832

   

Shares Issued on Distributions Reinvested

   

10

     

181

   

Shares Redeemed

   

(2,238

)

   

(5,708

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

2,326

     

(2,695

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Advantage Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.00

   

$

30.30

   

$

27.05

   

$

20.45

   

$

15.74

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.05

     

0.00

(3)

   

(0.08

)

   

(0.07

)

   

0.06

   

Net Realized and Unrealized Gain (Loss)

   

3.44

     

(10.43

)

   

3.63

     

6.68

     

4.67

   

Total from Investment Operations

   

3.49

     

(10.43

)

   

3.55

     

6.61

     

4.73

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.01

)

   

     

     

(0.01

)

   

(0.00

)(3)

 

Net Realized Gain

   

     

(0.87

)

   

(0.30

)

   

     

(0.02

)

 

Total Distributions

   

(0.01

)

   

(0.87

)

   

(0.30

)

   

(0.01

)

   

(0.02

)

 

Redemption Fees

   

     

0.00

(3)

   

0.00

(3)

   

     

0.00

(3)

 

Net Asset Value, End of Period

 

$

22.48

   

$

19.00

   

$

30.30

   

$

27.05

   

$

20.45

   

Total Return(4)

   

18.38

%(5)

   

(34.46

)%

   

13.16

%

   

32.33

%

   

30.09

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

2,625,192

   

$

2,390,415

   

$

5,419,831

   

$

3,841,122

   

$

1,900,219

   

Ratio of Expenses Before Expense Limitation

   

1.00

%

   

1.01

%

   

0.97

%

   

N/A

     

1.03

%

 

Ratio of Expenses After Expense Limitation

   

0.97

%(6)(7)

   

1.01

%(7)

   

0.97

%(7)

   

0.98

%(7)

   

0.98

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

0.98

%(7)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

0.24

%(6)(7)

   

0.00

%(7)

   

(0.28

)%(7)

   

(0.31

)%(7)

   

0.32

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

32

%

   

19

%

   

22

%

   

18

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.99

%

   

0.22

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Advantage Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

18.54

   

$

29.69

   

$

26.58

   

$

20.16

   

$

15.56

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

(0.01

)

   

(0.06

)

   

(0.17

)

   

(0.13

)

   

0.01

   

Net Realized and Unrealized Gain (Loss)

   

3.36

     

(10.22

)

   

3.58

     

6.56

     

4.61

   

Total from Investment Operations

   

3.35

     

(10.28

)

   

3.41

     

6.43

     

4.62

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

     

(0.01

)

   

   

Net Realized Gain

   

     

(0.87

)

   

(0.30

)

   

     

(0.02

)

 

Total Distributions

   

     

(0.87

)

   

(0.30

)

   

(0.01

)

   

(0.02

)

 

Redemption Fees

   

     

0.00

(3)

   

0.00

(3)

   

     

0.00

(3)

 

Net Asset Value, End of Period

 

$

21.89

   

$

18.54

   

$

29.69

   

$

26.58

   

$

20.16

   

Total Return(4)

   

18.07

%(5)

   

(34.66

)%

   

12.87

%

   

31.90

%

   

29.72

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

375,712

   

$

388,125

   

$

776,662

   

$

589,317

   

$

379,237

   

Ratio of Expenses Before Expense Limitation

   

1.27

%

   

1.30

%

   

1.26

%

   

N/A

     

1.30

%

 

Ratio of Expenses After Expense Limitation

   

1.25

%(6)(7)

   

1.30

%(7)

   

1.26

%(7)

   

1.27

%(7)

   

1.28

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.27

%(7)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

(0.03

)%(6)(7)

   

(0.27

)%(7)

   

(0.57

)%(7)

   

(0.60

)%(7)

   

0.04

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

32

%

   

19

%

   

22

%

   

18

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.26

%

   

(0.04

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Advantage Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

17.64

   

$

28.46

   

$

25.64

   

$

19.56

   

$

15.18

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.12

)

   

(0.18

)

   

(0.32

)

   

(0.24

)

   

(0.09

)

 

Net Realized and Unrealized Gain (Loss)

   

3.18

     

(9.77

)

   

3.44

     

6.33

     

4.49

   

Total from Investment Operations

   

3.06

     

(9.95

)

   

3.12

     

6.09

     

4.40

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

     

(0.01

)

   

   

Net Realized Gain

   

     

(0.87

)

   

(0.30

)

   

     

(0.02

)

 

Total Distributions

   

     

(0.87

)

   

(0.30

)

   

(0.01

)

   

(0.02

)

 

Redemption Fees

   

     

0.00

(3)

   

0.00

(3)

   

     

0.00

(3)

 

Net Asset Value, End of Period

 

$

20.70

   

$

17.64

   

$

28.46

   

$

25.64

   

$

19.56

   

Total Return(4)

   

17.35

%(5)

   

(35.00

)%

   

12.21

%

   

31.14

%

   

29.01

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

421

   

$

403

   

$

279

   

$

350

   

$

226

   

Ratio of Expenses Before Expense Limitation

   

2.26

%

   

2.55

%

   

2.29

%

   

2.48

%

   

2.59

%

 

Ratio of Expenses After Expense Limitation

   

1.82

%(6)(7)

   

1.85

%(7)

   

1.85

%(7)

   

1.84

%(7)

   

1.83

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.84

%(7)

   

N/A

   

Ratio of Net Investment Loss

   

(0.61

)%(6)(7)

   

(0.93

)%(7)

   

(1.16

)%(7)

   

(1.17

)%(7)

   

(0.48

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

32

%

   

19

%

   

22

%

   

18

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.84

%

   

(0.63

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Advantage Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

17.33

   

$

28.03

   

$

25.29

   

$

19.31

   

$

15.02

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.14

)

   

(0.20

)

   

(0.35

)

   

(0.26

)

   

(0.12

)

 

Net Realized and Unrealized Gain (Loss)

   

3.12

     

(9.63

)

   

3.39

     

6.25

     

4.43

   

Total from Investment Operations

   

2.98

     

(9.83

)

   

3.04

     

5.99

     

4.31

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

     

(0.01

)

   

   

Net Realized Gain

   

     

(0.87

)

   

(0.30

)

   

     

(0.02

)

 

Total Distributions

   

     

(0.87

)

   

(0.30

)

   

(0.01

)

   

(0.02

)

 

Redemption Fees

   

     

0.00

(3)

   

0.00

(3)

   

     

0.00

(3)

 

Net Asset Value, End of Period

 

$

20.31

   

$

17.33

   

$

28.03

   

$

25.29

   

$

19.31

   

Total Return(4)

   

17.20

%(5)

   

(35.11

)%

   

12.06

%

   

31.03

%

   

28.72

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

19,092

   

$

21,455

   

$

42,922

   

$

24,926

   

$

18,180

   

Ratio of Expenses Before Expense Limitation

   

1.97

%

   

2.01

%

   

1.96

%

   

N/A

     

2.03

%

 

Ratio of Expenses After Expense Limitation

   

1.94

%(6)(7)

   

2.01

%(7)

   

1.96

%(7)

   

1.97

%(7)

   

2.01

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

1.97

%(7)

   

N/A

   

Ratio of Net Investment Loss

   

(0.73

)%(6)(7)

   

(1.02

)%(7)

   

(1.27

)%(7)

   

(1.29

)%(7)

   

(0.69

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

32

%

   

19

%

   

22

%

   

18

%

   

15

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.96

%

   

(0.75

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Advantage Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

19.08

   

$

30.38

   

$

27.09

   

$

20.46

   

$

15.75

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

0.07

     

     

(0.06

)

   

(0.06

)

   

0.05

   

Net Realized and Unrealized Gain (Loss)

   

3.46

     

(10.43

)

   

3.65

     

6.70

     

4.69

   

Total from Investment Operations

   

3.53

     

(10.43

)

   

3.59

     

6.64

     

4.74

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.04

)

   

     

     

(0.01

)

   

(0.01

)

 

Net Realized Gain

   

     

(0.87

)

   

(0.30

)

   

     

(0.02

)

 

Total Distributions

   

(0.04

)

   

(0.87

)

   

(0.30

)

   

(0.01

)

   

(0.03

)

 

Redemption Fees

   

     

0.00

(4)

   

0.00

(4)

   

     

0.00

(4)

 

Net Asset Value, End of Period

 

$

22.57

   

$

19.08

   

$

30.38

   

$

27.09

   

$

20.46

   

Total Return(5)

   

18.54

%(6)

   

(34.40

)%

   

13.29

%

   

32.46

%

   

30.14

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

194,879

   

$

120,364

   

$

273,564

   

$

98,182

   

$

774

   

Ratio of Expenses Before Expense Limitation

   

0.89

%

   

0.89

%

   

0.87

%

   

N/A

     

3.28

%

 

Ratio of Expenses After Expense Limitation

   

0.86

%(7)(8)

   

0.89

%(8)

   

0.87

%(8)

   

0.89

%(8)

   

0.93

%(8)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

0.89

%(8)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

0.35

%(7)(8)

   

0.01

%(8)

   

(0.19

)%(8)

   

(0.26

)%(8)

   

0.24

%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.00

%(9)

   

0.00

%(9)

   

0.01

%

   

0.02

%

 

Portfolio Turnover Rate

   

32

%

   

19

%

   

22

%

   

18

%

   

15

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.88

%

   

0.33

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the International Advantage Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, International Advantage Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the

Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented 0% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular

trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 
Air Freight &
Logistics
 

$

   

$

245,566

   

$

   

$

245,566

   

Banks

   

     

197,805

     

     

197,805

   

Beverages

   

     

116,411

     

     

116,411

   

Biotechnology

   

     

12,974

     

     

12,974

   

Broadline Retail

   

181,472

     

     

     

181,472

   

Capital Markets

   

93,357

     

86,050

     

     

179,407

   
Electronic
Equipment,
Instruments &
Components
   

     

156,499

     

     

156,499

   

Entertainment

   

95,683

     

     

     

95,683

   

Financial Services

   

     

95,053

     

     

95,053

   

Food Products

   

     

54,715

     

     

54,715

   
Ground
Transportation
   

116,426

     

     

     

116,426

   

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Health Care
Equipment &
Supplies
 

$

   

$

156,308

   

$

   

$

156,308

   
Hotels,
Restaurants &
Leisure
   

     

97,076

     

     

97,076

   
Information
Technology
Services
   

125,441

     

     

     

125,441

   

Insurance

   

     

80,193

     

     

80,193

   
Interactive Media &
Services
   

     

61,860

     

     

61,860

   

Marine Transportation

   

     

96,448

     

     

96,448

   

Multi-Utilities

   

74,030

     

     

     

74,030

   
Semiconductors &
Semiconductor
Equipment
   

113,056

     

189,566

     

     

302,622

   
Textiles, Apparel &
Luxury Goods
   

97,340

     

596,087

     

     

693,427

   
Total Common
Stocks
   

896,805

     

2,242,611

     

     

3,139,416

   
Short-Term
Investments
 
Investment
Company
   

101,333

     

     

     

101,333

   
Repurchase
Agreements
   

     

7,213

     

     

7,213

   
Total Short-Term
Investments
   

101,333

     

7,213

     

     

108,546

   

Total Assets

 

$

998,138

   

$

2,249,824

   

$

   

$

3,247,962

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes

recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Consolidated Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented
in the
Consolidated
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

56,140

(a)

 

$

   

$

(56,140

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received cash collateral of approximately $39,914,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Consolidated Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $18,886,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Consolidated Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 Days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

39,914

   

$

   

$

   

$

   

$

39,914

   

Total Borrowings

 

$

39,914

   

$

   

$

   

$

   

$

39,914

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

39,914

   

6.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

7.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.76% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.95% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $2,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $19,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $1,018,005,000 and $1,253,271,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023,

advisory fees paid were reduced by approximately $271,000 relating to the Fund's investment in the Liquidity Fund.

The Fund may invest in affiliated entities, deemed to be affiliates as a result of the Fund owning five percent or more of the entity's voting securities.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company/Issuer
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

28,591

   

$

1,078,213

   

$

1,005,471

   

$

6,947

   
Canada Goose
Holdings, Inc.
   

77,258

     

5,768

     

9,347

     

   

Total

 

$

105,849

   

$

1,083,981

   

$

1,014,818

   

$

6,947

   

Affiliated
Investment
Company/Issuer (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

101,333

   
Canada Goose
Holdings, Inc.
   

(12,417

)

   

(14,091

)

   

47,171

   

Total

 

$

(12,417

)

 

$

(14,091

)

 

$

148,504

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

1,653

   

$

0

   

$

   

$

130,876

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a prior year tax return adjustment, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

(479

)

 

$

479

   

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

3,517

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $54,799,000 and $642,664,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 66.4%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

(also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and

global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of International Advantage Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of International Advantage Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023 When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $7,460,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $5,806,000 and has derived net income from sources within foreign countries amounting to approximately $37,204,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


39


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(This page has been left blank intentionally.)


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIAANN
6338258 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

International Equity Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

14

   

Notes to Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

26

   

Liquidity Risk Management Program

   

27

   

Federal Tax Notice

   

28

   

Important Notices

   

29

   

U.S. Customer Privacy Notice

   

30

   

Directors and Officers Information

   

33

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in International Equity Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

International Equity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

International Equity Portfolio Class I

 

$

1,000.00

   

$

1,019.60

   

$

1,020.52

   

$

4.73

   

$

4.74

     

0.93

%

 

International Equity Portfolio Class A

   

1,000.00

     

1,017.30

     

1,018.70

     

6.56

     

6.56

     

1.29

   

International Equity Portfolio Class L

   

1,000.00

     

1,014.90

     

1,016.23

     

9.04

     

9.05

     

1.78

   

International Equity Portfolio Class C

   

1,000.00

     

1,013.60

     

1,014.97

     

10.30

     

10.31

     

2.03

   

International Equity Portfolio Class R6

   

1,000.00

     

1,019.90

     

1,020.72

     

4.53

     

4.53

     

0.89

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

International Equity Portfolio

The Fund seeks long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 16.91%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI EAFE Index (the "Index"), which returned 18.24%.

Factors Affecting Performance

•  The Index delivered an impressive +18.2% in 2023. All sectors finished positive in 2023, with information technology leading. Helped by its exposure to the artificial intelligence (AI) euphoria, the sector returned a remarkable +36% in the year. Industrials was the other notable performer in the year, finishing up +28%. The defensive consumer staples and health care sectors lagged for much of 2023, finishing the year up a mere +4% and +9%, respectively, 10 percentage points or so behind the Index. Energy ended the year up +12% after its stellar 2022.

•  Geographically, EAFE was 8 percentage points behind the U.S. (+26%) in the year as the "Magnificent Seven"(i)​ drove returns in the U.S. equity market. Euroland was strong, with Germany, Italy, Spain and France finishing ahead for 2023. Elsewhere in Europe, Switzerland and the U.K. both managed to finish the year slightly ahead of the Index. Performance among major markets in Asia was more mixed. Hong Kong finished as the weakest performing market in the year, down –15% given the concerns about the Chinese economy. Singapore also finished the year behind the Index, while Japan held up better and finished ahead for the year, up 20%. (Country performance is shown in U.S. dollar terms, unless otherwise noted.)

•  For 2023, the Fund's relative underperformance was due to stock selection, largely driven by weakness in financials and, to a lesser extent, industrials. While not enough to compensate, the portfolio did benefit from relative strength in information technology and communication services. Conversely, sector allocation was positive relative to the Index thanks to the overweight to information technology, which more than offset the drag from the overweight to consumer staples.

Management Strategies

•  As of the close the period, the MSCI World Index's(ii)​ current forward multiple did not look cheap, particularly as it is based on an arguably optimistic, double-digit earnings growth assumption for 2024 and 2025. This looks demanding given expected 2024 nominal gross domestic product growth in developed markets of 3%-4% and seems to imply that margins will have to rise further from already close to peak levels.(iii)​ The multiples on these potentially optimistic earnings also look high. The MSCI World finished 2023 at 17.3x 12-month forward earnings, and the S&P 500 Index at virtually 20x.(iv)​ The overall setup strikes us as an unfavorable asymmetry, with upside limited due to the ambitious earnings estimates and high multiples, while there could be plenty of downside if there is a recession.

•  There are only two ways of losing money in equities, the earnings going away and the multiple going away. In terms of the former, we estimate that 60% of the portfolio is currently invested in compounders as of period-end, which should provide some earnings robustness if there is indeed a downturn. We do have the ability to invest in attractive value opportunities alongside the compounders and have made some modest tentative initial moves in the reporting period in the commodity sectors, but we did not see a wide enough margin of relative safety in the value areas at

(i)​  The "Magnificent Seven" are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

(ii)​  The MSCI World Net Index is a free float adjusted market capitalization weighted index that is designed to measure the global equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. The index is unmanaged and does not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor.

(iii)​  Source: Bloomberg L.P.

(iv)​  Source: FactSet. The S&P 500 Index measures the performance of the large-cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P Index is one of the most widely used benchmarks of U.S. equity performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Equity Portfolio

that time to make a more significant shift. As for the valuation risk, focusing on the EAFE (Europe, Australasia and Far East) market does help, with the Index's 13.3x forward price-to-earnings (P/E) multiple at a near record 33% discount to the U.S. multiple of 19.8x.(iv)​ There is still a 25% discount if the Magnificent Seven are excluded from the U.S. figure.(iv)​ In addition, the portfolio looks attractively valued relative to the Index given its quality. It trades on a 15% premium in P/E terms, but this premium virtually disappears to 1% in free cash flow terms, and this for a portfolio with returns on capital that are 35% higher than the Index and gross margins that are 27% better, even before considering the stronger growth prospects, with 12% annualized earnings growth expected over the next two years, as against 7% for the Index.(iv)

•  Our argument is that "nobody knows anything" about the macro and geopolitical outturn for 2024, but that the market seems unnervingly confident, given earnings forecasts and multiples. Our proposed solution is to invest in a quality-biased portfolio at a defensible valuation.

* Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

(iv)​  Source: FactSet. The S&P 500 Index measures the performance of the large-cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P Index is one of the most widely used benchmarks of U.S. equity performance.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Equity Portfolio

Performance Compared to the MSCI EAFE Index(1)​ and the Lipper International Large-Cap Core Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(9)
 
Fund — Class I Shares
w/o sales charges(4)
   

16.91

%

   

6.99

%

   

3.40

%

   

7.64

%

 
Fund — Class A Shares
w/o sales charges(5)
   

16.38

     

6.70

     

3.07

     

6.62

   
Fund — Class A Shares with
maximum 5.25% sales charges(5)
   

10.27

     

5.56

     

2.52

     

6.42

   
Fund — Class L Shares
w/o sales charges(6)
   

15.80

     

6.09

     

2.53

     

5.16

   
Fund — Class C Shares
w/o sales charges(8)
   

15.56

     

5.82

     

     

2.47

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(8)
   

14.56

     

5.82

     

     

2.47

   
Fund — Class R6 Shares
w/o sales charges(7)
   

16.96

     

7.02

     

3.44

     

4.06

   

MSCI EAFE Net Index

   

18.24

     

8.16

     

4.28

     

4.71

   
Lipper International
Large-Cap Core Funds Index
   

16.82

     

7.51

     

3.72

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the international equity market performance of developed markets, excluding the U.S. & Canada. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The MSCI EAFE Index currently consists of 21 developed market country indices. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper International Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper International Large-Cap Core Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on August 4, 1989.

(5)​  Commenced offering on January 2, 1996.

(6)​  Commenced offering on June 14, 2012.

(7)​  Commenced offering on September 13, 2013.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

International Equity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (97.7%)

 

Australia (1.2%)

 

Aristocrat Leisure Ltd.

   

565,174

   

$

15,703

   

Belgium (1.1%)

 

KBC Group NV

   

239,000

     

15,511

   

Canada (6.9%)

 

Barrick Gold Corp. (LSE)

   

1,966,603

     

35,531

   

Constellation Software, Inc.

   

17,863

     

44,289

   

Tourmaline Oil Corp.

   

309,868

     

13,935

   
     

93,755

   

China (0.5%)

 

Minth Group Ltd. (a)

   

3,280,000

     

6,634

   

Denmark (3.7%)

 

Carlsberg AS Series B

   

239,471

     

30,050

   

Tryg AS

   

958,614

     

20,861

   
     

50,911

   

Finland (1.9%)

 

Kone OYJ, Class B

   

520,833

     

26,053

   

France (13.4%)

 

AXA SA

   

655,074

     

21,392

   

L'Oreal SA

   

32,509

     

16,206

   

Legrand SA

   

277,963

     

28,946

   

LVMH Moet Hennessy Louis Vuitton SE

   

25,274

     

20,536

   

Pernod Ricard SA

   

138,030

     

24,393

   

Safran SA

   

156,543

     

27,600

   

Sanofi

   

214,014

     

21,267

   

Thales SA

   

149,896

     

22,196

   
     

182,536

   

Germany (14.2%)

 

adidas AG

   

26,377

     

5,360

   

Deutsche Boerse AG

   

116,396

     

23,970

   

Deutsche Post AG (Registered)

   

491,151

     

24,310

   

Infineon Technologies AG

   

524,182

     

21,891

   

Knorr-Bremse AG

   

248,961

     

16,079

   

Merck KGaA

   

80,527

     

12,821

   

MTU Aero Engines AG

   

49,576

     

10,681

   

QIAGEN NV (b)

   

790,104

     

34,351

   

SAP SE

   

286,924

     

44,164

   
     

193,627

   

Hong Kong (1.9%)

 

AIA Group Ltd. (a)

   

3,055,600

     

26,593

   

Italy (1.7%)

 

Moncler SpA

   

366,319

     

22,554

   

Japan (3.0%)

 

Hoya Corp.

   

122,300

     

15,231

   

Keyence Corp.

   

16,800

     

7,381

   

Shiseido Co. Ltd.

   

249,700

     

7,527

   

SMC Corp.

   

19,100

     

10,217

   
     

40,356

   
   

Shares

  Value
(000)
 

Korea, Republic of (3.1%)

 

Samsung Electronics Co. Ltd.

   

511,634

   

$

31,054

   

SK Hynix, Inc.

   

107,832

     

11,769

   
     

42,823

   

Netherlands (5.2%)

 

Heineken NV

   

416,784

     

42,345

   

Universal Music Group NV

   

1,028,793

     

29,369

   
     

71,714

   

Singapore (1.7%)

 

DBS Group Holdings Ltd.

   

908,400

     

22,972

   

Sweden (8.1%)

 

Atlas Copco AB, Class A

   

1,023,057

     

17,628

   

Boliden AB (b)

   

338,453

     

10,594

   

Epiroc AB, Class A

   

861,854

     

17,348

   

Evolution AB

   

122,311

     

14,569

   

Hexagon AB, Class B

   

2,307,597

     

27,717

   

Svenska Handelsbanken AB, Class A

   

2,078,335

     

22,586

   
     

110,442

   

Switzerland (5.2%)

 

Alcon, Inc.

   

102,118

     

7,989

   

Novartis AG (Registered)

   

154,616

     

15,618

   

Partners Group Holding AG

   

3,153

     

4,559

   

Roche Holding AG (Genusschein)

   

89,733

     

26,085

   

UBS Group AG (Registered) (b)

   

563,466

     

17,502

   
     

71,753

   

Taiwan (2.7%)

 
Taiwan Semiconductor Manufacturing Co.
Ltd. ADR
   

358,914

     

37,327

   

United Kingdom (22.2%)

 

Anglo American PLC

   

479,237

     

11,994

   

Associated British Foods PLC

   

605,120

     

18,238

   

AstraZeneca PLC

   

219,994

     

29,675

   
BP PLC    

2,273,625

     

13,478

   

British American Tobacco PLC

   

802,429

     

23,478

   

Experian PLC

   

418,966

     

17,092

   

Halma PLC

   

878,343

     

25,539

   

Hiscox Ltd.

   

1,386,274

     

18,627

   

Legal & General Group PLC

   

3,702,630

     

11,833

   

Prudential PLC

   

1,737,005

     

19,598

   

Reckitt Benckiser Group PLC

   

430,138

     

29,681

   

RELX PLC (Euronext NV)

   

461,351

     

18,279

   

RELX PLC (LSE)

   

406,641

     

16,133

   

Rightmove PLC

   

1,635,326

     

12,021

   

Shell PLC

   

1,175,682

     

38,485

   
     

304,151

   

Total Common Stocks (Cost $940,086)

   

1,335,415

   

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

International Equity Portfolio

    No. of
Warrants
  Value
(000)
 

Warrants (0.0%)‡

 

Canada (0.0%)‡

 
Constellation Software, Inc.
expires 3/31/40 (b) (Cost $—)
   

18,454

   

$

96

   
   

Shares

     

Short-Term Investment (1.8%)

 

Investment Company (1.8%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G) (c)(d)
(Cost $24,332)
   

24,331,922

     

24,332

   

Total Investments (99.5%) (Cost $964,418) (c)(d)

   

1,359,843

   

Other Assets in Excess of Liabilities (0.5%)

   

7,304

   

Net Assets (100.0%)

 

$

1,367,147

   

‡  Amount is less than 0.05%.

(a)  Security trades on the Hong Kong exchange.

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $1,204,333,000 and 88.1%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $983,489,000. The aggregate gross unrealized appreciation is approximately $412,975,000 and the aggregate gross unrealized depreciation is approximately $36,576,000, resulting in net unrealized appreciation of approximately $376,399,000.

ADR  American Depositary Receipt.

Euronext NV  Euronext Amsterdam Stock Market.

LSE  London Stock Exchange.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

58.2

%

 

Insurance

   

8.8

   

Pharmaceuticals

   

7.8

   

Beverages

   

7.1

   

Software

   

6.5

   

Machinery

   

6.5

   

Semiconductors & Semiconductor Equipment

   

5.1

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Equity Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $940,086)

 

$

1,335,511

   

Investment in Security of Affiliated Issuer, at Value (Cost $24,332)

   

24,332

   

Total Investments in Securities, at Value (Cost $964,418)

   

1,359,843

   

Foreign Currency, at Value (Cost $3,074)

   

3,101

   

Tax Reclaim Receivable

   

5,514

   

Dividends Receivable

   

1,248

   

Receivable for Fund Shares Sold

   

309

   

Receivable from Affiliate

   

88

   

Other Assets

   

156

   

Total Assets

   

1,370,259

   

Liabilities:

 

Payable for Advisory Fees

   

2,344

   

Payable for Fund Shares Redeemed

   

236

   

Payable for Sub Transfer Agency Fees — Class I

   

203

   

Payable for Sub Transfer Agency Fees — Class A

   

9

   

Payable for Sub Transfer Agency Fees — Class L

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Administration Fees

   

92

   

Payable for Custodian Fees

   

45

   

Payable for Professional Fees

   

23

   

Payable for Shareholder Services Fees — Class A

   

9

   

Payable for Distribution and Shareholder Services Fees — Class L

   

2

   

Payable for Distribution and Shareholder Services Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class I

   

3

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

143

   

Total Liabilities

   

3,112

   

Net Assets

 

$

1,367,147

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

996,218

   

Total Distributable Earnings

   

370,929

   

Net Assets

 

$

1,367,147

   

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Equity Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

1,078,331

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

79,411,428

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

13.58

   

CLASS A:

 

Net Assets

 

$

43,492

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

3,169,654

   

Net Asset Value, Redemption Price Per Share

 

$

13.72

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.76

   

Maximum Offering Price Per Share

 

$

14.48

   

CLASS L:

 

Net Assets

 

$

3,843

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

288,905

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

13.30

   

CLASS C:

 

Net Assets

 

$

1,109

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

85,412

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.98

   

CLASS R6:

 

Net Assets

 

$

240,372

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

17,718,905

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

13.57

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Equity Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $3,633 of Foreign Taxes Withheld)

 

$

34,150

   

Dividends from Security of Affiliated Issuer (Note G)

   

1,009

   

Total Investment Income

   

35,159

   

Expenses:

 

Advisory Fees (Note B)

   

10,945

   

Sub Transfer Agency Fees — Class I

   

699

   

Sub Transfer Agency Fees — Class A

   

422

   

Sub Transfer Agency Fees — Class L

   

2

   

Sub Transfer Agency Fees — Class C

   

1

   

Administration Fees (Note C)

   

1,094

   

Shareholder Services Fees — Class A (Note D)

   

545

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

29

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

11

   

Professional Fees

   

243

   

Custodian Fees (Note F)

   

171

   

Registration Fees

   

89

   

Shareholder Reporting Fees

   

48

   

Transfer Agency Fees — Class I (Note E)

   

23

   

Transfer Agency Fees — Class A (Note E)

   

9

   

Transfer Agency Fees — Class L (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

4

   

Directors' Fees and Expenses

   

27

   

Pricing Fees

   

5

   

Other Expenses

   

139

   

Total Expenses

   

14,513

   

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(366

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(126

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(4

)

 

Waiver of Advisory Fees (Note B)

   

(311

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(106

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(40

)

 

Net Expenses

   

13,556

   

Net Investment Income

   

21,603

   

Realized Gain (Loss):

 

Investments Sold

   

25,871

   

Foreign Currency Translation

   

(142

)

 

Net Realized Gain

   

25,729

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

164,421

   

Foreign Currency Translation

   

344

   

Net Change in Unrealized Appreciation (Depreciation)

   

164,765

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

190,494

   

Net Increase in Net Assets Resulting from Operations

 

$

212,097

   

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Equity Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

21,603

   

$

26,245

   

Net Realized Gain

   

25,729

     

47,953

   

Net Change in Unrealized Appreciation (Depreciation)

   

164,765

     

(376,669

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

212,097

     

(302,471

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(46,352

)

   

(53,459

)

 

Class A

   

(1,036

)

   

(24,782

)

 

Class L

   

(134

)

   

(236

)

 

Class C

   

(37

)

   

(41

)

 

Class R6*

   

(10,417

)

   

(17,483

)

 

Total Dividends and Distributions to Shareholders

   

(57,976

)

   

(96,001

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

347,460

     

115,376

   

Distributions Reinvested

   

46,225

     

52,242

   

Redeemed

   

(145,138

)

   

(686,551

)

 

Class A:

 

Subscribed

   

1,776

     

433,632

   

Distributions Reinvested

   

1,009

     

24,701

   

Redeemed

   

(326,077

)

   

(144,154

)

 

Class L:

 

Exchanged

   

     

116

   

Distributions Reinvested

   

133

     

234

   

Redeemed

   

(287

)

   

(1,120

)

 

Class C:

 

Subscribed

   

90

     

639

   

Distributions Reinvested

   

37

     

41

   

Redeemed

   

(239

)

   

(317

)

 

Class R6:*

 

Subscribed

   

25,604

     

18,642

   

Distributions Reinvested

   

9,991

     

16,920

   

Redeemed

   

(69,924

)

   

(159,747

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(109,340

)

   

(329,346

)

 

Total Increase (Decrease) in Net Assets

   

44,781

     

(727,818

)

 

Net Assets:

 

Beginning of Period

   

1,322,366

     

2,050,184

   

End of Period

 

$

1,367,147

   

$

1,322,366

   

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Equity Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

25,814

     

8,805

   

Shares Issued on Distributions Reinvested

   

3,489

     

4,321

   

Shares Redeemed

   

(10,954

)

   

(52,679

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

18,349

     

(39,553

)

 

Class A:

 

Shares Subscribed

   

135

     

33,633

   

Shares Issued on Distributions Reinvested

   

75

     

2,055

   

Shares Redeemed

   

(24,428

)

   

(12,173

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(24,218

)

   

23,515

   

Class L:

 

Shares Exchanged

   

     

9

   

Shares Issued on Distributions Reinvested

   

10

     

20

   

Shares Redeemed

   

(22

)

   

(90

)

 

Net Decrease in Class L Shares Outstanding

   

(12

)

   

(61

)

 

Class C:

 

Shares Subscribed

   

7

     

53

   

Shares Issued on Distributions Reinvested

   

3

     

4

   

Shares Redeemed

   

(19

)

   

(26

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

(9

)

   

31

   

Class R6:*

 

Shares Subscribed

   

1,911

     

1,465

   

Shares Issued on Distributions Reinvested

   

755

     

1,401

   

Shares Redeemed

   

(5,170

)

   

(12,447

)

 

Net Decrease in Class R6 Shares Outstanding

   

(2,504

)

   

(9,581

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Equity Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

12.14

   

$

15.22

   

$

16.20

   

$

14.74

   

$

13.49

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.22

     

0.23

     

0.29

     

0.18

     

0.28

   

Net Realized and Unrealized Gain (Loss)

   

1.82

     

(2.40

)

   

0.34

     

1.50

     

2.47

   

Total from Investment Operations

   

2.04

     

(2.17

)

   

0.63

     

1.68

     

2.75

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.31

)

   

(0.13

)

   

(0.33

)

   

(0.22

)

   

(0.32

)

 

Net Realized Gain

   

(0.29

)

   

(0.78

)

   

(1.28

)

   

     

(1.18

)

 

Total Distributions

   

(0.60

)

   

(0.91

)

   

(1.61

)

   

(0.22

)

   

(1.50

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

13.58

   

$

12.14

   

$

15.22

   

$

16.20

   

$

14.74

   

Total Return(3)

   

16.91

%(4)

   

(14.18

)%

   

4.19

%

   

11.42

%

   

20.37

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,078,331

   

$

741,596

   

$

1,531,709

   

$

1,658,464

   

$

1,539,709

   

Ratio of Expenses Before Expense Limitation

   

1.02

%

   

1.03

%

   

1.01

%

   

1.00

%

   

1.00

%

 

Ratio of Expenses After Expense Limitation

   

0.94

%(5)(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

   

0.95

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.95

%(6)

 

Ratio of Net Investment Income

   

1.63

%(5)(6)

   

1.76

%(6)

   

1.70

%(6)

   

1.28

%(6)

   

1.86

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

28

%

   

36

%

   

20

%

   

20

%

   

20

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.95

%

   

1.62

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Equity Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

12.08

   

$

15.17

   

$

16.15

   

$

14.67

   

$

13.42

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.17

     

0.06

     

0.25

     

0.11

     

0.24

   

Net Realized and Unrealized Gain (Loss)

   

1.80

     

(2.25

)

   

0.36

     

1.50

     

2.46

   

Total from Investment Operations

   

1.97

     

(2.19

)

   

0.61

     

1.61

     

2.70

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.04

)

   

(0.12

)

   

(0.31

)

   

(0.13

)

   

(0.27

)

 

Net Realized Gain

   

(0.29

)

   

(0.78

)

   

(1.28

)

   

     

(1.18

)

 

Total Distributions

   

(0.33

)

   

(0.90

)

   

(1.59

)

   

(0.13

)

   

(1.45

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

13.72

   

$

12.08

   

$

15.17

   

$

16.15

   

$

14.67

   

Total Return(3)

   

16.38

%(4)

   

(14.37

)%

   

4.07

%

   

11.00

%

   

20.11

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

43,492

   

$

330,721

   

$

58,739

   

$

60,346

   

$

212,578

   

Ratio of Expenses Before Expense Limitation

   

1.38

%

   

1.26

%

   

1.07

%

   

1.43

%

   

1.25

%

 

Ratio of Expenses After Expense Limitation

   

1.30

%(5)

   

1.23

%(5)

   

1.07

%(5)

   

1.30

%(5)

   

1.25

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.25

%(5)

 

Ratio of Net Investment Income

   

1.28

%(5)

   

0.50

%(5)

   

1.57

%(5)

   

0.80

%(5)

   

1.62

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

28

%

   

36

%

   

20

%

   

20

%

   

20

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Equity Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.91

   

$

14.93

   

$

15.91

   

$

14.50

   

$

13.28

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.10

     

0.10

     

0.14

     

0.06

     

0.15

   

Net Realized and Unrealized Gain (Loss)

   

1.77

     

(2.33

)

   

0.35

     

1.45

     

2.44

   

Total from Investment Operations

   

1.87

     

(2.23

)

   

0.49

     

1.51

     

2.59

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.19

)

   

(0.01

)

   

(0.19

)

   

(0.10

)

   

(0.19

)

 

Net Realized Gain

   

(0.29

)

   

(0.78

)

   

(1.28

)

   

     

(1.18

)

 

Total Distributions

   

(0.48

)

   

(0.79

)

   

(1.47

)

   

(0.10

)

   

(1.37

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

13.30

   

$

11.91

   

$

14.93

   

$

15.91

   

$

14.50

   

Total Return(3)

   

15.80

%(4)

   

(14.86

)%

   

3.34

%

   

10.40

%

   

19.48

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,843

   

$

3,579

   

$

5,394

   

$

5,513

   

$

5,888

   

Ratio of Expenses Before Expense Limitation

   

1.84

%

   

1.85

%

   

1.79

%

   

1.83

%

   

1.79

%

 

Ratio of Expenses After Expense Limitation

   

1.79

%(5)(6)

   

1.80

%(6)

   

1.79

%(6)

   

1.80

%(6)

   

1.78

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

1.78

%(6)

 

Ratio of Net Investment Income

   

0.78

%(5)(6)

   

0.77

%(6)

   

0.88

%(6)

   

0.41

%(6)

   

1.06

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

28

%

   

36

%

   

20

%

   

20

%

   

20

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.80

%

   

0.77

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Equity Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

11.63

   

$

14.63

   

$

15.64

   

$

14.26

   

$

13.08

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.07

     

0.06

     

0.09

     

0.02

     

0.10

   

Net Realized and Unrealized Gain (Loss)

   

1.73

     

(2.28

)

   

0.34

     

1.43

     

2.41

   

Total from Investment Operations

   

1.80

     

(2.22

)

   

0.43

     

1.45

     

2.51

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.16

)

   

     

(0.16

)

   

(0.07

)

   

(0.15

)

 

Net Realized Gain

   

(0.29

)

   

(0.78

)

   

(1.28

)

   

     

(1.18

)

 

Total Distributions

   

(0.45

)

   

(0.78

)

   

(1.44

)

   

(0.07

)

   

(1.33

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

12.98

   

$

11.63

   

$

14.63

   

$

15.64

   

$

14.26

   

Total Return(3)

   

15.56

%(4)

   

(15.12

)%

   

3.02

%

   

10.17

%

   

19.18

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,109

   

$

1,098

   

$

929

   

$

776

   

$

674

   

Ratio of Expenses Before Expense Limitation

   

2.32

%

   

2.28

%

   

2.33

%

   

2.41

%

   

2.35

%

 

Ratio of Expenses After Expense Limitation

   

2.04

%(5)(6)

   

2.05

%(6)

   

2.05

%(6)

   

2.05

%(6)

   

2.05

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

2.05

%(6)

 

Ratio of Net Investment Income

   

0.53

%(5)(6)

   

0.48

%(6)

   

0.58

%(6)

   

0.15

%(6)

   

0.73

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

28

%

   

36

%

   

20

%

   

20

%

   

20

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.05

%

   

0.52

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Equity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

12.13

   

$

15.21

   

$

16.19

   

$

14.74

   

$

13.48

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.22

     

0.22

     

0.30

     

0.18

     

0.29

   

Net Realized and Unrealized Gain (Loss)

   

1.82

     

(2.38

)

   

0.33

     

1.50

     

2.48

   

Total from Investment Operations

   

2.04

     

(2.16

)

   

0.63

     

1.68

     

2.77

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.31

)

   

(0.14

)

   

(0.33

)

   

(0.23

)

   

(0.33

)

 

Net Realized Gain

   

(0.29

)

   

(0.78

)

   

(1.28

)

   

     

(1.18

)

 

Total Distributions

   

(0.60

)

   

(0.92

)

   

(1.61

)

   

(0.23

)

   

(1.51

)

 

Redemption Fees

   

     

     

     

     

0.00

(3)

 

Net Asset Value, End of Period

 

$

13.57

   

$

12.13

   

$

15.21

   

$

16.19

   

$

14.74

   

Total Return(4)

   

16.96

%(5)

   

(14.14

)%

   

4.24

%

   

11.39

%

   

20.42

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

240,372

   

$

245,372

   

$

453,413

   

$

468,152

   

$

456,618

   

Ratio of Expenses Before Expense Limitation

   

0.93

%

   

0.92

%

   

0.91

%

   

0.91

%

   

0.91

%

 

Ratio of Expenses After Expense Limitation

   

0.90

%(6)(7)

   

0.92

%(7)

   

0.91

%(7)

   

0.91

%(7)

   

0.91

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

N/A

     

N/A

     

0.91

%(7)

 

Ratio of Net Investment Income

   

1.67

%(6)(7)

   

1.67

%(7)

   

1.76

%(7)

   

1.31

%(7)

   

1.94

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

28

%

   

36

%

   

20

%

   

20

%

   

20

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.91

%

   

1.66

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the International Equity Portfolio. The Fund seeks long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded

on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/ vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

   

$

60,477

   

$

   

$

60,477

   

Air Freight & Logistics

   

     

24,310

     

     

24,310

   

Automobile Components

   

     

6,634

     

     

6,634

   

Banks

   

     

61,069

     

     

61,069

   

Beverages

   

     

96,788

     

     

96,788

   

Capital Markets

   

     

46,031

     

     

46,031

   

Electrical Equipment

   

     

28,946

     

     

28,946

   
Electronic Equipment,
Instruments &
Components
   

     

60,637

     

     

60,637

   

Entertainment

   

     

29,369

     

     

29,369

   

Food Products

   

     

18,238

     

     

18,238

   
Health Care Equipment &
Supplies
   

     

23,220

     

     

23,220

   


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Hotels, Restaurants &
Leisure
 

$

   

$

30,272

   

$

   

$

30,272

   

Household Products

   

     

29,681

     

     

29,681

   

Insurance

   

     

118,904

     

     

118,904

   
Interactive Media &
Services
   

     

12,021

     

     

12,021

   
Life Sciences Tools &
Services
   

     

34,351

     

     

34,351

   

Machinery

   

     

87,325

     

     

87,325

   

Metals & Mining

   

35,531

     

22,588

     

     

58,119

   
Oil, Gas & Consumable
Fuels
   

13,935

     

51,963

     

     

65,898

   

Personal Care Products

   

     

23,733

     

     

23,733

   

Pharmaceuticals

   

     

105,466

     

     

105,466

   

Professional Services

   

     

51,504

     

     

51,504

   
Semiconductors &
Semiconductor
Equipment
   

37,327

     

33,660

     

     

70,987

   

Software

   

44,289

     

44,164

     

     

88,453

   
Tech Hardware,
Storage & Peripherals
   

     

31,054

     

     

31,054

   
Textiles, Apparel & Luxury
Goods
   

     

48,450

     

     

48,450

   

Tobacco

   

     

23,478

     

     

23,478

   

Total Common Stocks

   

131,082

     

1,204,333

     

     

1,335,415

   

Warrants

   

     

96

     

     

96

   

Short-Term Investment

 

Investment Company

   

24,332

     

     

     

24,332

   

Total Assets

 

$

155,414

   

$

1,204,429

   

$

   

$

1,359,843

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at

period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result,


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

5.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

6.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the average daily net assets as follows:

First $3
billion
  Over $3
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.77% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.95% for Class I shares, 1.30% for Class A shares, 1.80% for Class L shares, 2.05% for Class C shares and 0.91% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $311,000 of advisory fees were waived and approximately $500,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $3,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities

and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $373,173,000 and $530,234,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $40,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
At Cost
(000)
  Proceeds
From Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

8,572

   

$

316,544

   

$

300,784

   

$

1,009

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

24,332

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

40,051

   

$

17,925

   

$

19,173

   

$

76,828

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a distribution in excess of current earnings, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

2,050

   

$

(2,050

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

Qualified
Late Year
Ordinary
Losses
(000)
  Post-
October
Capital
Losses
(000)
 
$

   

$

5,365

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 72.8%.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of International Equity Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of International Equity Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year end December 31, 2023.

The Fund designated and paid approximately $17,925,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $33,392,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $3,633,000 and has derived net income from sources within foreign countries amounting to approximately $37,119,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Director and Officer Information (unaudited)

Independent Directors

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since
August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since
February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since
August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Director and Officer Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Director and Officer Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since
January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since
July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since
August
1994 (Retired
December 31,
2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Director and Officer Information (unaudited) (cont'd)

Independent Directors (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since
August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since
January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
  Chair of the
Board and
Director
  Chair of the
Board since
August 2020 and
Director since
August 2006
 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Director and Officer Information (unaudited) (cont'd)

Executive Officers

Name, Address and Birth Year of
Executive Officer
  Position(s) Held
with
Registrant
  Length of
Time Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
  President and
Principal
Executive
Officer
  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
  Chief
Compliance
Officer
  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
  Treasurer and
Principal
Financial Officer
  Treasurer
since
July 2003
and Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

  Since
June
1999
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

  Since
June
2017
 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


38


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIEANN
6338335 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

International Opportunity Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

8

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

13

   

Notes to Consolidated Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

28

   

Liquidity Risk Management Program

   

29

   

Federal Tax Notice

   

30

   

Important Notices

   

31

   

U.S. Customer Privacy Notice

   

32

   

Directors and Officers Information

   

35

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in International Opportunity Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

International Opportunity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

International Opportunity Portfolio Class I

 

$

1,000.00

   

$

1,002.10

   

$

1,021.07

   

$

4.14

   

$

4.18

     

0.82

%

 

International Opportunity Portfolio Class A

   

1,000.00

     

1,000.00

     

1,019.26

     

5.95

     

6.01

     

1.18

   

International Opportunity Portfolio Class L

   

1,000.00

     

996.80

     

1,016.18

     

9.01

     

9.10

     

1.79

   

International Opportunity Portfolio Class C

   

1,000.00

     

996.20

     

1,015.63

     

9.56

     

9.65

     

1.90

   

International Opportunity Portfolio Class R6

   

1,000.00

     

1,001.70

     

1,020.67

     

4.54

     

4.58

     

0.90

   

International Opportunity Portfolio Class IR

   

1,000.00

     

1,001.70

     

1,020.72

     

4.49

     

4.53

     

0.89

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

International Opportunity Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 21.11%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World ex USA Net Index (the "Index"), which returned 15.62%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  International equities rallied during the 12-month period ended December 31, 2023. The move was driven by signs of moderating inflation and optimism that interest rates may have peaked with central banks expected to lower interest rates in 2024.

•  Our team remained focused on assessing company prospects over a longer-term period of five to ten years, and owning a portfolio of high quality companies with diverse business drivers not tied to a particular market environment.

•  The team manages focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. Our longer-term focus results in lower turnover than many of our peers. The value added or detracted in any period of time will typically result from stock selection, given our philosophy and process. For the 12-month period, the Fund outperformed the Index due to favorable stock selection and sector allocation.

•  The Fund's relative outperformance was primarily driven by stock selection in the communication services, consumer discretionary and information technology sectors.

•  Negatively contributing to relative performance was stock selection in industrials and financials and a sector overweight allocation to consumer discretionary.

Management Strategies

•  There were no changes to our bottom-up investment process during the period. The Fund seeks long-term capital appreciation by investing primarily in international high quality established companies that the investment team believes are undervalued at the time of purchase. To achieve its objective, the investment team typically favors companies it believes have sustainable competitive advantages that can be monetized through growth. The investment process integrates analysis of sustainability with respect to disruptive change, financial strength, environmental and social externalities and governance (also referred to as ESG).

•  At the close of the period ended December 31, 2023, consumer discretionary represented the largest sector weight in the Fund, followed by financials and information technology. Our bottom-up investment process resulted in sector overweight positions in consumer discretionary, information technology, communication services and financials, and underweight positions in health care, materials, energy, consumer staples, industrials, utilities, and real estate. The Fund had no energy, materials, utilities and real estate holdings at the end of the reporting period.

* Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Opportunity Portfolio

Performance Compared to the MSCI All Country World ex USA Net Index(1)​ and the Lipper International Multi-Cap Growth Funds Index(2)

  Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(8)
 
Fund — Class I Shares
w/o sales charges(4)
   

21.11

%

   

6.30

%

   

7.65

%

   

8.69

%

 
Fund — Class A Shares
w/o sales charges(4)
   

20.74

     

5.97

     

7.30

     

8.35

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

14.42

     

4.83

     

6.72

     

7.93

   
Fund — Class L Shares
w/o sales charges(4)
   

20.02

     

5.38

     

6.72

     

7.78

   
Fund — Class C Shares
w/o sales charges(6)
   

19.83

     

5.21

     

     

5.95

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(6)
   

18.83

     

5.21

     

     

5.95

   
Fund — Class R6 Shares
w/o sales charges(5)
   

21.11

     

6.37

     

7.70

     

8.56

   
Fund — Class IR Shares
w/o sales charges(7)
   

21.09

     

6.38

     

     

1.14

   
MSCI All Country World
ex USA Net Index
   

15.62

     

7.08

     

3.83

     

4.58

   
Lipper International Multi-Cap
Growth Funds Index
   

16.58

     

6.96

     

3.73

     

5.05

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World ex USA Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the United States. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to nonresident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper International Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper International Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on March 31, 2010.

(5)​  Commenced offering on September 13, 2013.

(6)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(7)​  Commenced offering on June 15, 2018.

(8)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

International Opportunity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.1%)

 

Argentina (2.0%)

 

Globant SA (a)

   

92,035

   

$

21,902

   

Brazil (2.6%)

 

NU Holdings Ltd., Class A (a)

   

3,332,323

     

27,758

   

Canada (5.6%)

 

Canada Goose Holdings, Inc. (a)(b)

   

676,532

     

8,017

   

Shopify, Inc., Class A (a)

   

668,553

     

52,080

   
     

60,097

   

China (11.9%)

 

Kweichow Moutai Co. Ltd., Class A

   

124,631

     

30,338

   

Meituan, Class B (a)(c)

   

4,125,520

     

43,313

   

Tencent Holdings Ltd. (c)

   

386,900

     

14,607

   

Trip.com Group Ltd. ADR (a)

   

1,097,961

     

39,538

   
     

127,796

   

Denmark (6.7%)

 

DSV AS

   

413,505

     

72,656

   

France (4.7%)

 

Hermes International

   

23,864

     

50,723

   

India (13.9%)

 

Axis Bank Ltd.

   

1,620,032

     

21,440

   

HDFC Bank Ltd.

   

3,249,587

     

66,539

   

ICICI Bank Ltd. ADR

   

1,645,107

     

39,219

   

Titan Co. Ltd.

   

517,741

     

22,852

   
     

150,050

   

Italy (4.8%)

 

Moncler SpA

   

833,742

     

51,333

   

Japan (3.3%)

 

Keyence Corp.

   

80,000

     

35,149

   

Korea, Republic of (9.3%)

 

Coupang, Inc. (a)

   

3,092,168

     

50,062

   

KakaoBank Corp. (a)

   

1,167,589

     

25,710

   

NAVER Corp.

   

141,068

     

24,408

   
     

100,180

   

Netherlands (6.6%)

 

Adyen NV (a)

   

24,619

     

31,782

   
ASML Holding NV    

52,480

     

39,616

   
     

71,398

   

Singapore (2.5%)

 

Grab Holdings Ltd., Class A (a)

   

7,939,264

     

26,755

   

Sweden (4.1%)

 

Evolution AB

   

330,524

     

39,369

   

Vitrolife AB

   

222,258

     

4,292

   
     

43,661

   

Switzerland (2.4%)

 

On Holding AG, Class A (a)

   

953,287

     

25,710

   

Taiwan (3.0%)

 

Taiwan Semiconductor Manufacturing Co. Ltd.

   

1,692,000

     

32,438

   
   

Shares

  Value
(000)
 

United Kingdom (2.5%)

 

Deliveroo PLC (a)

   

6,285,654

   

$

10,224

   

London Stock Exchange Group PLC

   

146,097

     

17,270

   
     

27,494

   

United States (13.2%)

 

Birkenstock Holding PLC (a)

   

321,299

     

15,657

   

MercadoLibre, Inc. (a)

   

53,015

     

83,315

   

Spotify Technology SA (a)

   

228,890

     

43,011

   
     

141,983

   

Total Common Stocks (Cost $836,362)

   

1,067,083

   

Short-Term Investments (1.6%)

 

Investment Company (1.3%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $13,831)
   

13,830,662

     

13,831

   

Securities held as Collateral on Loaned Securities (0.3%)

 

Investment Company (0.2%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

2,475,917

     

2,476

   
    Face
Amount
(000)
     

Repurchase Agreements (0.1%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $182; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00% due
5/15/24 - 11/15/49; valued at $186)
 

$

182

     

182

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24; proceeds
$182; fully collateralized by a U.S.
Government obligation; 0.00%
due 8/15/27; valued at $186)
   

182

     

182

   
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24; proceeds
$182; fully collateralized by a U.S.
Government obligation; 4.75%
due 11/15/53; valued at $186)
   

182

     

182

   
     

546

   
Total Securities held as Collateral on Loaned
Securities (Cost $3,022)
   

3,022

   

Total Short-Term Investments (Cost $16,853)

   

16,853

   
Total Investments (100.7%) (Cost $853,215)
Including $2,865 of Securities Loaned (d)(e)
   

1,083,936

   

Liabilities in Excess of Other Assets (–0.7%)

   

(7,028

)

 

Net Assets (100.0%)

 

$

1,076,908

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

The accompanying notes are an integral part of the consolidated financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

International Opportunity Portfolio

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  Security trades on the Hong Kong exchange.

(d)  The approximate fair value and percentage of net assets, $634,059,000 and 58.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(e)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $899,076,000. The aggregate gross unrealized appreciation is approximately $315,440,000 and the aggregate gross unrealized depreciation is approximately $132,552,000, resulting in net unrealized appreciation of approximately $182,888,000.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Other**

   

22.4

%

 

Banks

   

16.7

   

Textiles, Apparel & Luxury Goods

   

16.1

   

Broadline Retail

   

12.3

   

Hotels, Restaurants & Leisure

   

12.3

   

Information Technology Services

   

6.8

   

Air Freight & Logistics

   

6.7

   

Semiconductors & Semiconductor Equipment

   

6.7

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Opportunity Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $836,908)

 

$

1,067,629

   

Investment in Security of Affiliated Issuer, at Value (Cost $16,307)

   

16,307

   

Total Investments in Securities, at Value (Cost $853,215)

   

1,083,936

   

Foreign Currency, at Value (Cost $160)

   

160

   

Cash

   

2

   

Receivable for Investments Sold

   

3,594

   

Tax Reclaim Receivable

   

516

   

Receivable for Fund Shares Sold

   

264

   

Dividends Receivable

   

133

   

Receivable from Affiliate

   

128

   

Receivable from Securities Lending Income

   

7

   

Other Assets

   

132

   

Total Assets

   

1,088,872

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

3,022

   

Payable for Fund Shares Redeemed

   

2,185

   

Payable for Advisory Fees

   

2,079

   

Payable for Investments Purchased

   

2,069

   

Deferred Capital Gain Country Tax

   

1,962

   

Payable for Sub Transfer Agency Fees — Class I

   

203

   

Payable for Sub Transfer Agency Fees — Class A

   

57

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

4

   

Payable for Custodian Fees

   

90

   

Payable for Administration Fees

   

73

   

Payable for Shareholder Services Fees — Class A

   

44

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

21

   

Payable for Professional Fees

   

19

   

Payable for Transfer Agency Fees — Class I

   

5

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Transfer Agency Fees — Class IR

   

@

 

Other Liabilities

   

129

   

Total Liabilities

   

11,964

   

Net Assets

 

$

1,076,908

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

1,403,544

   

Total Accumulated Loss

   

(326,636

)

 

Net Assets

 

$

1,076,908

   

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Opportunity Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

682,842

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

28,477,410

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

23.98

   

CLASS A:

 

Net Assets

 

$

204,639

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

8,832,603

   

Net Asset Value, Redemption Price Per Share

 

$

23.17

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.28

   

Maximum Offering Price Per Share

 

$

24.45

   

CLASS L:

 

Net Assets

 

$

205

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

9,454

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

21.64

   

CLASS C:

 

Net Assets

 

$

24,887

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,173,117

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

21.21

   

CLASS R6:

 

Net Assets

 

$

34,160

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,417,433

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

24.10

   

CLASS IR:

 

Net Assets

 

$

130,175

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,400,012

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

24.11

   
(1)​ Including:
Securities on Loan, at Value:
 

$

2,865

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Opportunity Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $1,084 of Foreign Taxes Withheld)

 

$

7,009

   

Dividends from Security of Affiliated Issuer (Note G)

   

1,129

   

Income from Securities Loaned — Net

   

189

   

Total Investment Income

   

8,327

   

Expenses:

 

Advisory Fees (Note B)

   

9,401

   

Administration Fees (Note C)

   

949

   

Shareholder Services Fees — Class A (Note D)

   

562

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

1

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

285

   

Custodian Fees (Note F)

   

251

   

Professional Fees

   

197

   

Sub Transfer Agency Fees — Class A

   

141

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

11

   

Registration Fees

   

115

   

Shareholder Reporting Fees

   

61

   

Transfer Agency Fees — Class I (Note E)

   

13

   

Transfer Agency Fees — Class A (Note E)

   

12

   

Transfer Agency Fees — Class L (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

5

   

Transfer Agency Fees — Class R6 (Note E)

   

21

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Directors' Fees and Expenses

   

25

   

Pricing Fees

   

3

   

Other Expenses

   

140

   

Total Expenses

   

12,198

   

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(297

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(45

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(18

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(1

)

 

Net Expenses

   

11,835

   

Net Investment Loss

   

(3,508

)

 

Realized Loss:

 

Investments Sold (Net of $1,298 of Capital Gain Country Tax)

   

(93,460

)

 

Foreign Currency Translation

   

(186

)

 

Net Realized Loss

   

(93,646

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Decrease in Deferred Capital Gain Country Tax of $330)

   

326,084

   

Foreign Currency Translation

   

28

   

Net Change in Unrealized Appreciation (Depreciation)

   

326,112

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

232,466

   

Net Increase in Net Assets Resulting from Operations

 

$

228,958

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Opportunity Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Loss

 

$

(3,508

)

 

$

(9,903

)

 

Net Realized Loss

   

(93,646

)

   

(500,788

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

326,112

     

(1,207,415

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

228,958

     

(1,718,106

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

     

(61,623

)

 

Class A

   

     

(19,963

)

 

Class L

   

     

(16

)

 

Class C

   

     

(2,906

)

 

Class R6*

   

     

(11,293

)

 

Class IR

   

     

(10,104

)

 

Total Dividends and Distributions to Shareholders

   

     

(105,905

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

159,442

     

437,070

   

Distributions Reinvested

   

     

60,304

   

Redeemed

   

(278,543

)

   

(1,746,169

)

 

Class A:

 

Subscribed

   

27,984

     

37,062

   

Distributions Reinvested

   

     

19,946

   

Redeemed

   

(85,941

)

   

(199,584

)

 

Class L:

 

Exchanged

   

     

29

   

Distributions Reinvested

   

     

16

   

Redeemed

   

     

(110

)

 

Class C:

 

Subscribed

   

829

     

1,603

   

Distributions Reinvested

   

     

2,878

   

Redeemed

   

(10,009

)

   

(26,545

)

 

Class R6:*

 

Subscribed

   

8,578

     

135,382

   

Distributions Reinvested

   

     

11,293

   

Redeemed

   

(132,028

)

   

(41,180

)

 

Class IR:

 

Subscribed

   

     

60,000

   

Distributions Reinvested

   

     

10,104

   

Redeemed

   

(14,000

)

   

   

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(323,688

)

   

(1,237,901

)

 

Redemption Fees

   

14

     

85

   

Total Decrease in Net Assets

   

(94,716

)

   

(3,061,827

)

 

Net Assets:

 

Beginning of Period

   

1,171,624

     

4,233,451

   

End of Period

 

$

1,076,908

   

$

1,171,624

   

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Opportunity Portfolio

Consolidated Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

7,063

     

16,359

   

Shares Issued on Distributions Reinvested

   

     

3,029

   

Shares Redeemed

   

(12,350

)

   

(69,659

)

 

Net Decrease in Class I Shares Outstanding

   

(5,287

)

   

(50,271

)

 

Class A:

 

Shares Subscribed

   

1,264

     

1,453

   

Shares Issued on Distributions Reinvested

   

     

1,033

   

Shares Redeemed

   

(3,916

)

   

(8,026

)

 

Net Decrease in Class A Shares Outstanding

   

(2,652

)

   

(5,540

)

 

Class L:

 

Shares Exchanged

   

     

1

   

Shares Issued on Distributions Reinvested

   

     

1

   

Shares Redeemed

   

     

(5

)

 

Net Decrease in Class L Shares Outstanding

   

     

(3

)

 

Class C:

 

Shares Subscribed

   

41

     

68

   

Shares Issued on Distributions Reinvested

   

     

162

   

Shares Redeemed

   

(493

)

   

(1,214

)

 

Net Decrease in Class C Shares Outstanding

   

(452

)

   

(984

)

 

Class R6:

 

Shares Subscribed

   

378

     

4,557

   

Shares Issued on Distributions Reinvested

   

     

564

   

Shares Redeemed

   

(5,678

)

   

(1,817

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(5,300

)

   

3,304

   

Class IR:

 

Shares Subscribed

   

     

1,850

   

Shares Issued on Distributions Reinvested

   

     

505

   

Shares Redeemed

   

(624

)

   

   

Net Increase (Decrease) in Class IR Shares Outstanding

   

(624

)

   

2,355

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.80

   

$

38.44

   

$

41.46

   

$

26.73

   

$

19.77

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.05

)

   

(0.10

)

   

(0.30

)

   

(0.22

)

   

(0.04

)

 

Net Realized and Unrealized Gain (Loss)

   

4.23

     

(16.71

)

   

(1.90

)

   

15.05

     

7.00

   

Total from Investment Operations

   

4.18

     

(16.81

)

   

(2.20

)

   

14.83

     

6.96

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

23.98

   

$

19.80

   

$

38.44

   

$

41.46

   

$

26.73

   

Total Return(4)

   

21.11

%(5)

   

(43.76

)%

   

(5.24

)%

   

55.49

%

   

35.20

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

682,842

   

$

668,597

   

$

3,229,961

   

$

3,152,320

   

$

1,284,678

   

Ratio of Expenses Before Expense Limitation

   

0.94

%

   

1.11

%

   

0.99

%

   

0.98

%

   

1.03

%

 

Ratio of Expenses After Expense Limitation

   

0.91

%(6)(7)

   

1.00

%(7)

   

0.99

%(7)

   

0.97

%(7)

   

0.99

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.00

%(7)

   

0.99

%(7)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.21

)%(6)(7)

   

(0.39

)%(7)

   

(0.70

)%(7)

   

(0.70

)%(7)

   

(0.15

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.94

%

   

(0.24

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.19

   

$

37.49

   

$

40.57

   

$

26.23

   

$

19.46

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.12

)

   

(0.19

)

   

(0.41

)

   

(0.30

)

   

(0.10

)

 

Net Realized and Unrealized Gain (Loss)

   

4.10

     

(16.28

)

   

(1.85

)

   

14.74

     

6.87

   

Total from Investment Operations

   

3.98

     

(16.47

)

   

(2.26

)

   

14.44

     

6.77

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

23.17

   

$

19.19

   

$

37.49

   

$

40.57

   

$

26.23

   

Total Return(4)

   

20.74

%(5)

   

(43.96

)%

   

(5.50

)%

   

55.06

%

   

34.79

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

204,639

   

$

220,442

   

$

638,203

   

$

683,897

   

$

336,109

   

Ratio of Expenses Before Expense Limitation

   

1.26

%

   

1.35

%

   

1.28

%

   

1.26

%

   

1.30

%

 

Ratio of Expenses After Expense Limitation

   

1.23

%(6)(7)

   

1.35

%(7)

   

1.28

%(7)

   

1.25

%(7)

   

1.29

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.35

%(7)

   

1.28

%(7)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.53

)%(6)(7)

   

(0.78

)%(7)

   

(0.99

)%(7)

   

(0.96

)%(7)

   

(0.44

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.26

%

   

(0.56

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

18.04

   

$

35.60

   

$

38.79

   

$

25.23

   

$

18.82

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.23

)

   

(0.29

)

   

(0.62

)

   

(0.44

)

   

(0.23

)

 

Net Realized and Unrealized Gain (Loss)

   

3.83

     

(15.44

)

   

(1.75

)

   

14.10

     

6.64

   

Total from Investment Operations

   

3.60

     

(15.73

)

   

(2.37

)

   

13.66

     

6.41

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

21.64

   

$

18.04

   

$

35.60

   

$

38.79

   

$

25.23

   

Total Return(4)

   

20.02

%(5)

   

(44.24

)%

   

(6.04

)%

   

54.15

%

   

34.06

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

205

   

$

171

   

$

448

   

$

533

   

$

512

   

Ratio of Expenses Before Expense Limitation

   

3.03

%

   

2.62

%

   

2.15

%

   

2.14

%

   

2.19

%

 

Ratio of Expenses After Expense Limitation

   

1.82

%(6)(7)

   

1.85

%(7)

   

1.85

%(7)

   

1.84

%(7)

   

1.84

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.85

%(7)

   

1.85

%(7)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(1.10

)%(6)(7)

   

(1.25

)%(7)

   

(1.56

)%(7)

   

(1.54

)%(7)

   

(0.99

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.85

%

   

(1.13

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

17.71

   

$

35.08

   

$

38.29

   

$

24.94

   

$

18.63

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.25

)

   

(0.34

)

   

(0.66

)

   

(0.48

)

   

(0.26

)

 

Net Realized and Unrealized Gain (Loss)

   

3.75

     

(15.20

)

   

(1.73

)

   

13.93

     

6.57

   

Total from Investment Operations

   

3.50

     

(15.54

)

   

(2.39

)

   

13.45

     

6.31

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

21.21

   

$

17.71

   

$

35.08

   

$

38.29

   

$

24.94

   

Total Return(4)

   

19.83

%(5)

   

(44.36

)%

   

(6.17

)%

   

53.94

%

   

33.87

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

24,887

   

$

28,775

   

$

91,503

   

$

90,845

   

$

53,257

   

Ratio of Expenses Before Expense Limitation

   

1.99

%

   

2.07

%

   

1.98

%

   

1.98

%

   

2.03

%

 

Ratio of Expenses After Expense Limitation

   

1.97

%(6)(7)

   

2.06

%(7)

   

1.98

%(7)

   

1.97

%(7)

   

2.02

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.06

%(7)

   

1.98

%(7)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(1.26

)%(6)(7)

   

(1.47

)%(7)

   

(1.69

)%(7)

   

(1.68

)%(7)

   

(1.17

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.99

%

   

(1.28

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

19.90

   

$

38.58

   

$

41.56

   

$

26.77

   

$

19.79

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.05

)

   

(0.09

)

   

(0.25

)

   

(0.18

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

4.25

     

(16.76

)

   

(1.91

)

   

15.07

     

7.00

   

Total from Investment Operations

   

4.20

     

(16.85

)

   

(2.16

)

   

14.89

     

6.98

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

   

0.00

(4)

 

Net Asset Value, End of Period

 

$

24.10

   

$

19.90

   

$

38.58

   

$

41.56

   

$

26.77

   

Total Return(5)

   

21.11

%(6)

   

(43.70

)%

   

(5.13

)%

   

55.63

%

   

35.27

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

34,160

   

$

133,702

   

$

131,721

   

$

101,008

   

$

50,083

   

Ratio of Expenses Before Expense Limitation

   

0.96

%

   

0.94

%

   

0.90

%

   

0.90

%

   

0.98

%

 

Ratio of Expenses After Expense Limitation

   

0.92

%(7)(8)

   

0.92

%(8)

   

0.88

%(8)

   

0.88

%(8)

   

0.91

%(8)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.92

%(8)

   

0.88

%(8)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.22

)%(7)(8)

   

(0.35

)%(8)

   

(0.59

)%(8)

   

(0.59

)%(8)

   

(0.07

)%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.94

%

   

(0.24

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

International Opportunity Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

19.91

   

$

38.60

   

$

41.58

   

$

26.78

   

$

19.79

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.05

)

   

(0.09

)

   

(0.25

)

   

(0.19

)

   

(0.02

)

 

Net Realized and Unrealized Gain (Loss)

   

4.25

     

(16.77

)

   

(1.91

)

   

15.09

     

7.01

   

Total from Investment Operations

   

4.20

     

(16.86

)

   

(2.16

)

   

14.90

     

6.99

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(1.83

)

   

(0.82

)

   

(0.10

)

   

   

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

24.11

   

$

19.91

   

$

38.60

   

$

41.58

   

$

26.78

   

Total Return(4)

   

21.09

%(5)

   

(43.70

)%

   

(5.13

)%

   

55.64

%

   

35.32

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

130,175

   

$

119,937

   

$

141,615

   

$

149,281

   

$

110,401

   

Ratio of Expenses Before Expense Limitation

   

0.94

%

   

0.92

%

   

0.88

%

   

0.89

%

   

0.93

%

 

Ratio of Expenses After Expense Limitation

   

0.91

%(6)(7)

   

0.92

%(7)

   

0.88

%(7)

   

0.88

%(7)

   

0.91

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.92

%(7)

   

0.88

%(7)

   

N/A

     

N/A

   

Ratio of Net Investment Loss

   

(0.21

)%(6)(7)

   

(0.36

)%(7)

   

(0.59

)%(7)

   

(0.60

)%(7)

   

(0.07

)%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

20

%

   

18

%

   

36

%

   

25

%

   

20

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.94

%

   

(0.24

)%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the International Opportunity Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, International Opportunity Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the

Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented 0% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-thecounter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Air Freight & Logistics

 

$

   

$

72,656

   

$

   

$

72,656

   

Banks

   

66,977

     

113,689

     

     

180,666

   

Beverages

   

     

30,338

     

     

30,338

   

Biotechnology

   

     

4,292

     

     

4,292

   

Broadline Retail

   

133,377

     

     

     

133,377

   

Capital Markets

   

     

17,270

     

     

17,270

   
Electronic Equipment,
Instruments &
Components
   

     

35,149

     

     

35,149

   

Entertainment

   

43,011

     

     

     

43,011

   

Financial Services

   

     

31,782

     

     

31,782

   

Ground Transportation

   

26,755

     

     

     

26,755

   
Hotels, Restaurants &
Leisure
   

39,538

     

92,906

     

     

132,444

   
Information Technology
Services
   

73,982

     

     

     

73,982

   
Interactive Media &
Services
   

     

39,015

     

     

39,015

   
Semiconductors &
Semiconductor
Equipment
   

     

72,054

     

     

72,054

   
Textiles, Apparel &
Luxury Goods
   

49,384

     

124,908

     

     

174,292

   

Total Common Stocks

   

433,024

     

634,059

     

     

1,067,083

   

Short-Term Investments

 

Investment Company

   

16,307

     

     

     

16,307

   

Repurchase Agreements

   

     

546

     

     

546

   
Total Short-Term
Investments
   

16,307

     

546

     

     

16,853

   

Total Assets

 

$

449,331

   

$

634,605

   

$

   

$

1,083,936

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Consolidated Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in
the Consolidated
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

2,865

(a)

 

$

   

$

(2,865

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received cash collateral of approximately $3,022,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Consolidated Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

FASB ASC 860, "Transfers & Servicing: Repurchase-toMaturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 Days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

3,022

   

$

   

$

   

$

   

$

3,022

   

Total Borrowings

 

$

3,022

   

$

   

$

   

$

   

$

3,022

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

3,022

   

6.  Redemption Fees: The Fund will assess a 2% redemption fee, on Class I shares, Class A shares, Class L shares, Class C shares, Class R6 shares and Class IR shares which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Consolidated Statements of Changes in Net Assets.

7.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

8.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and

other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.80

%

   

0.75

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.79% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares, 0.94% for Class R6 shares and 0.94% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $21,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a

distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to approximately $11,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $231,131,000 and $480,660,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $45,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
At Cost
(000)
  Proceeds
From Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,212

   

$

374,709

   

$

359,614

   

$

1,129

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

16,307

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net

unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded that there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

   

$

   

$

   

$

105,905

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

858

   

$

   


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $166,562,000 and $343,736,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 62.5%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of

the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of International Opportunity Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of International Opportunity Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $2,381,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $2,381,000 and has derived net income from sources within foreign countries amounting to approximately $8,059,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

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Dividend Disbursing and Transfer Agent

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Co-Transfer Agent

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Custodian

State Street Bank and Trust Company
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Legal Counsel

Dechert LLP
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Counsel to the Independent Directors

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22nd Floor
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200 Clarendon Street
Boston, Massachusetts 02116


40


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIOANN
6338359 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

International Resilience Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

10

   

Statements of Changes in Net Assets

   

11

   

Financial Highlights

   

12

   

Notes to Financial Statements

   

16

   

Report of Independent Registered Public Accounting Firm

   

23

   

Liquidity Risk Management Program

   

24

   

Federal Tax Notice

   

25

   

Important Notices

   

26

   

U.S. Customer Privacy Notice

   

27

   

Directors and Officers Information

   

30

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in International Resilience Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

International Resilience Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

International Resilience Portfolio Class I

 

$

1,000.00

   

$

1,003.10

   

$

1,022.18

   

$

3.03

   

$

3.06

     

0.60

%

 

International Resilience Portfolio Class A

   

1,000.00

     

1,000.60

     

1,020.37

     

4.84

     

4.89

     

0.96

   

International Resilience Portfolio Class C

   

1,000.00

     

997.20

     

1,016.59

     

8.61

     

8.69

     

1.71

   

International Resilience Portfolio Class R6

   

1,000.00

     

1,002.60

     

1,022.43

     

2.78

     

2.80

     

0.55

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

International Resilience Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 16.54%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the MSCI All Country World ex USA Net Index (the "Index"), which returned 15.62%.

Factors Affecting Performance

•  For the year, the Index delivered an impressive +15.6%. All sectors finished positive in 2023, with information technology leading. Helped by its exposure to the artificial intelligence (AI) euphoria, the sector returned a remarkable +36% in the year. Industrials was the other notable performer in the year, finishing up +23%. The defensive consumer staples and health care sectors lagged for much of 2023, finishing the year up a mere +5% and +8%, respectively. Energy ended the year up +15% after its stellar 2022.

•  Geographically, the Index was 10 percentage points behind the U.S.'s 26% performance in the year as the "Magnificent Seven" drove returns in the U.S. equity market.(i)​ Euroland was strong, with Germany, Italy, Spain and France finishing ahead of the Index for 2023. Elsewhere in Europe, Switzerland and the U.K. both managed to finish the year slightly ahead of the Index. Performance among major markets in Asia was more mixed. Semiconductor strength helped Taiwan and Korea both finish ahead of the Index for the year. China and Hong Kong finished as two of the weakest performing markets in the year, down double digits, given the concerns about the Chinese economy. Singapore finished the year behind the index, while Japan held up better and finished ahead of the Index for the year, up 20%. India was also up over 20% for the year. (Country performance is shown in U.S. dollar terms, unless otherwise noted.)

•  The Fund's relative outperformance in 2023 was driven by stock selection and sector allocation. Positive stock selection relative to the Index was driven by strength in communication services, consumer discretionary and information technology, which more than offset weakness in financials and health care. Sector allocation benefited relative to the Index from the overweight in information technology, which was more than enough to compensate for the combined 20%+ overweight to consumer staples and health care, which finished the year roughly 10% behind the Index.

Management Strategies

•  As of the close of the period, the MSCI World Index's(ii)​ current forward multiple did not look cheap, particularly as it is based on an arguably optimistic, double-digit earnings growth assumption for 2024 and 2025. This looks demanding given expected 2024 nominal gross domestic product growth in developed markets of 3% - 4% and seems to imply that margins will have to rise further from already close to peak levels.(iii)​ The multiples on these potentially optimistic earnings also look high. The MSCI World finished 2023 at 17.3x 12-month forward earnings, and the S&P 500 Index at virtually 20x.(iv)​ The overall setup strikes us as an unfavorable asymmetry, with upside limited due to the ambitious earnings estimates and high multiples, while there could be plenty of downside if there is a recession.

•  When it comes to the methodology behind the Fund's high quality portfolio, we are "double fussy" — concerned with the sustainability of both the earnings and the multiples. At period-end, our view was that the possibility of a downturn is not reflected in today's earnings expectations, nor in the current market multiple. Given the vulnerability of high earnings and high multiples in the event of an economic slowdown, we would argue that investing in a portfolio of high quality compounders makes sense.

(i)​  The "Magnificent Seven" are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

(ii)  ​The MSCI World Net Index is a free float adjusted market capitalization weighted index that is designed to measure the global equity market performance of developed markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity

markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. The index is unmanaged and does not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor.

(iii)  ​Source: Bloomberg L.P.

(iv)  ​Source: FactSet


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Resilience Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on July 29, 2022.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the MSCI All Country World ex USA Net Index(1)​, the Lipper International Multi-Cap Core Funds Index(2)​ and the Lipper International Large-Cap Growth Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(6)
 
Fund — Class I Shares
w/o sales charges(5)
   

16.54

%

   

     

     

9.46

%

 
Fund — Class A Shares
w/o sales charges(5)
   

16.06

     

     

     

9.07

   
Fund — Class A Shares with
maximum 5.25% sales charges(5)
   

9.97

     

     

     

5.04

   
Fund — Class C Shares
w/o sales charges(5)
   

15.33

     

     

     

8.27

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(5)
   

14.33

     

     

     

8.27

   
Fund — Class R6 Shares
w/o sales charges(5)
   

16.60

     

     

     

9.50

   
MSCI All Country World ex
USA Net Index
   

15.62

     

     

     

10.38

   
Lipper International Large-Cap
Growth Funds Index
   

17.04

     

     

     

9.91

   
Lipper International Multi-Cap
Core Funds Index
   

17.10

     

     

     

11.88

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World ex USA Net Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the United States. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper International Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper International Large-Cap Growth Funds classification.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

International Resilience Portfolio

(3)​  The Lipper International Multi-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Multi-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. Fund's Lipper category changed from International Multi-Cap Core to International Large-Cap Growth.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  Commenced operations on July 29, 2022.

(6)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

International Resilience Portfolio

   

Shares

  Value
(000)
 

Common Stocks (92.4%)

 

Australia (1.5%)

 

Aristocrat Leisure Ltd.

   

940

   

$

26

   

Canada (4.1%)

 

Constellation Software, Inc.

   

28

     

69

   

Denmark (2.6%)

 

Carlsberg AS Series B

   

347

     

44

   

Finland (2.0%)

 

Kone OYJ, Class B

   

684

     

34

   

France (12.3%)

 

L'Oreal SA

   

119

     

59

   

Legrand SA

   

497

     

52

   

LVMH Moet Hennessy Louis Vuitton SE

   

38

     

31

   

Pernod Ricard SA

   

268

     

47

   

Sanofi

   

208

     

21

   
     

210

   

Germany (15.3%)

 

adidas AG

   

31

     

6

   

Deutsche Boerse AG

   

289

     

60

   

Infineon Technologies AG

   

710

     

30

   

Merck KGaA

   

159

     

25

   

QIAGEN NV(a)

   

1,235

     

54

   

SAP SE

   

559

     

86

   
     

261

   

Hong Kong (1.8%)

 

AIA Group Ltd.

   

3,600

     

31

   

Italy (2.2%)

 

Moncler SpA

   

608

     

38

   

Japan (4.8%)

 

Hoya Corp.

   

300

     

37

   

Keyence Corp.

   

100

     

44

   
     

81

   

Netherlands (6.6%)

 

Heineken NV

   

632

     

64

   

Universal Music Group NV

   

1,724

     

49

   
     

113

   

Sweden (7.6%)

 

Atlas Copco AB, Class A

   

2,594

     

45

   

Epiroc AB, Class A

   

1,430

     

29

   

Hexagon AB, Class B

   

4,636

     

55

   
     

129

   

Switzerland (3.1%)

 

Alcon, Inc.

   

334

     

26

   

Roche Holding AG (Genusschein)

   

93

     

27

   
     

53

   

Taiwan (3.3%)

 

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

546

     

57

   

United Kingdom (16.6%)

 

AstraZeneca PLC

   

315

     

43

   

Experian PLC

   

1,194

     

49

   

Halma PLC

   

1,524

     

44

   
   

Shares

  Value
(000)
 

Prudential PLC

   

927

   

$

10

   

Reckitt Benckiser Group PLC

   

709

     

49

   

RELX PLC (LSE)

   

1,616

     

64

   

Rightmove PLC

   

3,220

     

24

   
     

283

   

United States (8.6%)

 

Danaher Corp.

   

128

     

30

   

Procter & Gamble Co.

   

213

     

31

   

Thermo Fisher Scientific, Inc.

   

81

     

43

   

Visa, Inc., Class A

   

166

     

43

   
     

147

   

Total Common Stocks (Cost $1,371)

   

1,576

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Canada (0.0%)‡

 
Constellation Software, Inc.
expires 3/31/40 (a) (Cost $—)
   

31

     

@

 
   

Shares

     

Short-Term Investment (1.3%)

 

Investment Company (1.3%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $22)
   

21,894

     

22

   

Total Investments (93.7%) (Cost $1,393) (b)(c)

   

1,598

   

Other Assets in Excess of Liabilities (6.3%)

   

108

   

Net Assets (100.0%)

 

$

1,706

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

@  Value is less than $500.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $1,303,000 and 76.4%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(c)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $1,398,000. The aggregate gross unrealized appreciation is approximately $234,000 and the aggregate gross unrealized depreciation is approximately $34,000, resulting in net unrealized appreciation of approximately $200,000.

ADR  American Depositary Receipt.

LSE  London Stock Exchange.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

International Resilience Portfolio

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

32.1

%

 

Software

   

9.8

   

Beverages

   

9.7

   

Electronic Equipment, Instruments & Components

   

9.0

   

Life Sciences Tools & Services

   

7.9

   

Pharmaceuticals

   

7.2

   

Professional Services

   

7.1

   

Machinery

   

6.8

   

Semiconductors & Semiconductor Equipment

   

5.4

   

Household Products

   

5.0

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Resilience Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,371)

 

$

1,576

   

Investment in Security of Affiliated Issuer, at Value (Cost $22)

   

22

   

Total Investments in Securities, at Value (Cost $1,393)

   

1,598

   

Foreign Currency, at Value (Cost $10)

   

10

   

Due from Adviser

   

95

   

Tax Reclaim Receivable

   

1

   

Dividends Receivable

   

@

 

Receivable from Affiliate

   

@

 

Other Assets

   

33

   

Total Assets

   

1,737

   

Liabilities:

 

Payable for Professional Fees

   

19

   

Payable for Custodian Fees

   

5

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

7

   

Total Liabilities

   

31

   

Net Assets

 

$

1,706

   

Net Assets Consist of:

 
Paid-in-Capital    

1,526

   

Total Distributable Earnings

   

180

   

Net Assets

 

$

1,706

   

CLASS I:

 

Net Assets

 

$

1,537

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

137,984

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.14

   

CLASS A:

 

Net Assets

 

$

56

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,088

   

Net Asset Value, Redemption Price Per Share

 

$

11.12

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.62

   

Maximum Offering Price Per Share

 

$

11.74

   

CLASS C:

 

Net Assets

 

$

56

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,067

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.05

   

CLASS R6:

 

Net Assets

 

$

57

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,108

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

11.14

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Resilience Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $4 of Foreign Taxes Withheld)

 

$

25

   

Dividends from Security of Affiliated Issuer (Note G)

   

1

   

Total Investment Income

   

26

   

Expenses:

 

Professional Fees

   

150

   

Offering Costs (Note A-7)

   

77

   

Registration Fees

   

30

   

Custodian Fees (Note F)

   

15

   

Advisory Fees (Note B)

   

11

   

Transfer Agency Fees — Class I (Note E)

   

2

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Shareholder Reporting Fees

   

7

   

Directors' Fees and Expenses

   

4

   

Pricing Fees

   

2

   

Administration Fees (Note C)

   

1

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

1

   

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class A

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

15

   

Total Expenses

   

321

   

Expenses Reimbursed by Adviser (Note B)

   

(288

)

 

Waiver of Advisory Fees (Note B)

   

(11

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

12

   

Net Investment Income

   

14

   

Realized Gain (Loss):

 

Investments Sold

   

(3

)

 

Foreign Currency Translation

   

@

 

Net Realized Gain (Loss)

   

(3

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

230

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

230

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

227

   

Net Increase in Net Assets Resulting from Operations

 

$

241

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

International Resilience Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Period from
July 29,2022^ to
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

14

   

$

(—

@)

 

Net Realized Loss

   

(3

)

   

(11

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

230

     

(25

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

241

     

(36

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(31

)

   

   

Class A

   

(1

)

   

   

Class C

   

(1

)

   

   

Class R6

   

(1

)

   

   

Total Dividends and Distributions to Shareholders

   

(34

)

   

   

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

1

     

1,350

   

Distributions Reinvested

   

31

     

   

Class A:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

1

     

   

Class C:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

1

     

   

Class R6:

 

Subscribed

   

     

50

   

Distributions Reinvested

   

1

     

   

Net Increase in Net Assets Resulting from Capital Share Transactions

   

35

     

1,500

   

Total Increase in Net Assets

   

242

     

1,464

   

Net Assets:

 

Beginning of Period

   

1,464

     

   

End of Period

 

$

1,706

   

$

1,464

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

@@

   

135

   

Shares Issued on Distributions Reinvested

   

3

     

   

Net Increase in Class I Shares Outstanding

   

3

     

135

   

Class A:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Net Increase in Class A Shares Outstanding

   

@@

   

5

   

Class C:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Net Increase in Class C Shares Outstanding

   

@@

   

5

   

Class R6:

 

Shares Subscribed

   

     

5

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Shares Redeemed

   

     

   

Net Increase in Class R6 Shares Outstanding

   

@@

   

5

   

^  Commencement of Operations.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Resilience Portfolio

   

Class I

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.76

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.10

     

0.00

(3)

 

Net Realized and Unrealized Gain (Loss)

   

1.51

     

(0.24

)

 

Total from Investment Operations

   

1.61

     

(0.24

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.08

)

   

   

Net Realized Gain

   

(0.15

)

   

   

Total Distributions

   

(0.23

)

   

   

Net Asset Value, End of Period

 

$

11.14

   

$

9.76

   

Total Return(4)

   

16.54

%(5)

   

(2.40

)%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,537

   

$

1,317

   

Ratio of Expenses Before Expense Limitation

   

19.42

%

   

25.45

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.73

%(8)(9)

   

0.84

%(7)(9)

 

Ratio of Net Investment Income

   

0.91

%(8)(9)

   

0.01

%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.01

%(7)

 

Portfolio Turnover Rate

   

25

%

   

7

%(6)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.10% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 16.44%. Refer to Note B in the Notes to Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.85

%

   

0.79

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Resilience Portfolio

   

Class A

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.75

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.06

     

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

1.51

     

(0.24

)

 

Total from Investment Operations

   

1.57

     

(0.25

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.05

)

   

   

Net Realized Gain

   

(0.15

)

   

   

Total Distributions

   

(0.20

)

   

   

Net Asset Value, End of Period

 

$

11.12

   

$

9.75

   

Total Return(3)

   

16.06

%(4)

   

(2.50

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

56

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

23.60

%

   

30.17

%(6)

 

Ratio of Expenses After Expense Limitation

   

1.08

%(7)(8)

   

1.20

%(6)(8)

 

Ratio of Net Investment Income (Loss)

   

0.55

%(7)(8)

   

(0.35

)%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

25

%

   

7

%(5)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.10% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 15.96%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.20

%

   

0.43

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Resilience Portfolio

   

Class C

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.71

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.02

)

   

(0.04

)

 

Net Realized and Unrealized Gain (Loss)

   

1.51

     

(0.25

)

 

Total from Investment Operations

   

1.49

     

(0.29

)

 

Distributions from and/or in Excess of:

 

Net Realized Gain

   

(0.15

)

   

   

Net Asset Value, End of Period

 

$

11.05

   

$

9.71

   

Total Return(3)

   

15.33

%(4)

   

(2.90

)%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

56

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

24.37

%

   

30.92

%(6)

 

Ratio of Expenses After Expense Limitation

   

1.83

%(7)(8)

   

1.95

%(6)(8)

 

Ratio of Net Investment Loss

   

(0.19

)%(7)(8)

   

(1.10

)%(6)(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.00

%(6)(9)

 

Portfolio Turnover Rate

   

25

%

   

7

%(5)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.10% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 15.23%. Refer to Note B in the Notes to Financial Statements.

(5)  Not annualized.

(6)  Annualized.

(7)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.95

%

   

(0.31

)%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(9)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

International Resilience Portfolio

   

Class R6

 

Selected Per Share Data and Ratios

  Year Ended
December 31, 2023
  Period from
July 29, 2022(1)​ to
December 31, 2022
 

Net Asset Value, Beginning of Period

 

$

9.76

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.10

     

0.00

(3)

 

Net Realized and Unrealized Gain (Loss)

   

1.52

     

(0.24

)

 

Total from Investment Operations

   

1.62

     

(0.24

)

 

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.09

)

   

   

Net Realized Gain

   

(0.15

)

   

   

Total Distributions

   

(0.24

)

   

   

Net Asset Value, End of Period

 

$

11.14

   

$

9.76

   

Total Return(4)

   

16.60

%(5)

   

(2.40

)%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

57

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

23.18

%

   

29.95

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.67

%(8)(9)

   

0.80

%(7)(9)

 

Ratio of Net Investment Income

   

0.97

%(8)(9)

   

0.05

%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(7)(10)

 

Portfolio Turnover Rate

   

25

%

   

7

%(6)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.11% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 16.49%. Refer to Note B in the Notes to Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.80

%

   

0.84

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the International Resilience Portfolio. The Fund seeks long-term capital appreciation.

The Fund commenced operations on July 29, 2022 and has issued four classes of shares — Class I, Class A, Class C and Class R6.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily

available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser") or Morgan Stanley Investment Management Limited ("MSIM Limited") (the "Sub-Adviser"), each a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser or the Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Beverages

 

$

   

$

155

   

$

   

$

155

   

Capital Markets

   

     

60

     

     

60

   

Electrical Equipment

   

     

52

     

     

52

   
Electronic Equipment,
Instruments &
Components
   

     

143

     

     

143

   

Entertainment

   

     

49

     

     

49

   

Financial Services

   

43

     

     

     

43

   
Health Care Equipment &
Supplies
   

     

63

     

     

63

   
Hotels, Restaurants &
Leisure
   

     

26

     

     

26

   

Household Products

   

31

     

49

     

     

80

   

Insurance

   

     

41

     

     

41

   
Interactive Media &
Services
   

     

24

     

     

24

   
Life Sciences Tools &
Services
   

73

     

54

     

     

127

   

Machinery

   

     

108

     

     

108

   

Personal Care Products

   

     

59

     

     

59

   

Pharmaceuticals

   

     

116

     

     

116

   

Professional Services

   

     

113

     

     

113

   


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Semiconductors &
Semiconductor
Equipment
 

$

57

   

$

30

   

$

   

$

87

   

Software

   

69

     

86

     

     

155

   
Textiles, Apparel &
Luxury Goods
   

     

75

     

     

75

   

Total Common Stocks

   

273

     

1,303

     

     

1,576

   

Warrants

   

     

@

   

     

@

 

Short-Term Investment

 

Investment Company

   

22

     

     

     

22

   

Total Assets

 

$

295

   

$

1,303

   

$

   

$

1,598

   

@ Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are

treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

5.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

6.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

7.  Offering Cost: Offering costs are accounted for as a deferred charge until operations begin and thereafter are amortized to expense over twelve months on a straight-line basis.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the average daily net assets as follows:

First $500
million
  Over $500
million
 
  0.70

%

   

0.65

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will

not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.95% for Class C shares and 0.80% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $11,000 of advisory fees were waived and approximately $296,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Fund with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Fund.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $407,000 and $534,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year

ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

14

   

$

418

   

$

410

   

$

1

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

22

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the two-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

27

   

$

7

   

$

   

$

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

3

   

$

(3

)

 

At December 31, 2023, the Fund had no distributable earnings on a tax basis.

During the year ended December 31, 2023, the Fund utilized capital loss carryforwards for U.S. federal income tax purposes of approximately $3,000.

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

Qualified
Late Year
Ordinary
Losses
(000)
  Post-October
Capital
Losses
(000)
 
$

   

$

19

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund did not have record owners of 10% or greater.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of International Resilience Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of International Resilience Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for the year ended December 31, 2023 and the period from July 29, 2022 (commencement of operations) through December 31, 2022 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended and the changes in its net assets and its financial highlights for the year ended December 31, 2023, and the period from July 29, 2022 (commencement of operations) through December 31, 2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule.The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated and paid approximately $7,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $27,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $4,000 and has derived net income from sources within foreign countries amounting to approximately $28,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since
August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since
February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since
August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since
February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since
January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

  Since
July
1991
 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since
August
1994 (Retired
December 31,
2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth Year
of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years
and Other Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director
During Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since
August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since
January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
  Chair of the
Board and
Director
  Chair of the
Board since
August 2020 and
Director since
August 2006
 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and Birth Year of
Executive Officer
  Position(s) Held
with
Registrant
  Length of
Time Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
  President and
Principal
Executive
Officer
  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
  Chief
Compliance
Officer
  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
  Treasurer and
Principal
Financial Officer
  Treasurer
since
July 2003
and Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

  Since
June
1999
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

  Since
June
2017
 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Sub-Adviser

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


35


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, New York 10036

© 2012 Morgan Stanley

IFIINTRESILANN
6337768 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Multi-Asset Real Return Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Consolidated Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

10

   

Consolidated Statement of Assets and Liabilities

   

14

   

Consolidated Statement of Operations

   

16

   

Consolidated Statements of Changes in Net Assets

   

17

   

Consolidated Financial Highlights

   

18

   

Notes to Consolidated Financial Statements

   

22

   

Report of Independent Registered Public Accounting Firm

   

33

   

Liquidity Risk Management Program

   

34

   

Important Notices

   

35

   

U.S. Customer Privacy Notice

   

36

   

Directors and Officers Information

   

39

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Multi-Asset Real Return Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Multi-Asset Real Return Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Multi-Asset Real Return Portfolio Class I

 

$

1,000.00

   

$

1,069.00

   

$

1,021.73

   

$

3.60

   

$

3.52

     

0.69

%

 

Multi-Asset Real Return Portfolio Class A

   

1,000.00

     

1,067.70

     

1,019.86

     

5.52

     

5.40

     

1.06

   

Multi-Asset Real Return Portfolio Class C

   

1,000.00

     

1,063.30

     

1,015.93

     

9.57

     

9.35

     

1.84

   

Multi-Asset Real Return Portfolio Class R6

   

1,000.00

     

1,069.50

     

1,021.88

     

3.44

     

3.36

     

0.66

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Multi-Asset Real Return Portfolio

The Fund seeks total return, targeted to be in excess of inflation, through capital appreciation and current income.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 5.41%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the Bloomberg U.S. Treasury Bills 1-3 Month Index (the "Index"),(i)​ which returned 5.14%. The Fund and benchmark index performance is in U.S. dollar ("USD") terms, unless otherwise noted.

Factors Affecting Performance*(ii)

•  Global markets rallied in 2023 (MSCI All Country World Index [ACWI] +22.2% in USD), recovering nearly all of their losses from the steep 2022 sell-off (–0.3% for the two-year period ending December 31, 2023). Equities surged at the start of the year but were temporarily interrupted by significant turmoil in the U.S. regional banking system that led to the collapse of Silicon Valley Bank and First Republic Bank. The rally resumed in May 2023 due to growing excitement about the potential growth impact of artificial intelligence (AI) following a blowout earnings report by Nvidia. As growth and the labor market remained persistently strong over the summer of 2023, the market narrative shifted toward expectations that interest rates might have to stay higher for longer. This pushed government bond yields higher, with the 10-year U.S. Treasury briefly reaching 5% in October 2023, to the detriment of stock and bond

prices. Sentiment turned more optimistic in November and December 2023 as increasing economic evidence indicated that a soft landing, in which inflation falls to target (2%) without causing a recession, had become more likely. A series of falling inflation reports encouraged the market to price in rate cuts as early as the second quarter of 2024, which was ultimately validated after the Federal Reserve (Fed) announced its dovish pivot in December 2023 and signaled 75 basis points (bps) of rate cuts in 2024.

•  Within equities, the rally was led by U.S. tech stocks (Nasdaq Composite +44.7%), which benefited from the AI-frenzy and rising valuations due to lower interest rates. U.S. equities gained 26.3% (S&P 500 Index), supported by a 107% advance from the "Magnificent Seven" (Apple, Amazon, Alphabet, Nvidia, Meta, Microsoft and Tesla). The breadth of the rally was the narrowest since 1987, as only 27% of stocks in the S&P 500 outperformed the index. The equal-weighted S&P 500 Index underperformed the cap-weighted S&P 500 Index by –12.4%. Although small caps underperformed large caps in 2023 (Russell 2000 Index +16.6%), they significantly outperformed large caps toward the end of the year, adding to investor excitement for the group going into 2024.

•  Global bonds appeared to be heading toward their third straight year of losses but reversed course in the last two months of the year, bringing 2023 performance into positive territory for the first time since 2020 (Bloomberg Global Aggregate Bond

*  Certain of the Fund's investment themes may, in whole or part, be implemented through the use of derivatives, including the purchase and sale of futures, options, swaps, structured investments (including commodity-linked notes) and other related instruments and techniques. The Fund may also invest in foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. The Fund may use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. As a result, the use of derivatives had a material effect on the Fund's performance during the period.

(i)​  "Bloomberg®​" and the Bloomberg Index/Indices used are service marks of Bloomberg Finance L.P. and its affiliates, and have been licensed for use for certain purposes by Morgan Stanley Investment Management (MSIM). Bloomberg is not affiliated with MSIM, does not approve, endorse, review, or recommend any product, and. does not guarantee the timeliness, accurateness, or completeness of any data or information relating to any product.

(ii)​  Source: Morgan Stanley Investment Management (MSIM) Global Multi-Asset Team analysis; market data sourced from Bloomberg. The MSCI All Country World Net Index (ACWI) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The Nasdaq Composite is a broad-market index measuring nearly all of the stocks traded on the Nasdaq market. The Standard & Poor's 500®​ Index (S&P 500®​) measures the performance of the large cap segment of the U.S.

equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The S&P 500®​ Equal Weight Index (EWI) is the equal-weight version of the widely-used S&P 500, which includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight — or 0.2% of the index total at each quarterly rebalance. The Russell 2000 Index measures the performance of the U.S. small-cap stock market. The Bloomberg Global Aggregate Index provides a broad-based measure of the global investment grade fixed-rate debt markets. The S&P GSCI Commodity Index is a composite index of commodity sector returns, representing an unleveraged, long only investment in commodity futures that is broadly diversified across the spectrum of commodities. Topix is a capitalization-weighted index measure the companies traded on First Section of the Tokyo Stock Exchange. The U.S. Dollar Index (DXY) is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. The indexes do not include any expenses, fees or sales charges, which would lower performance. The indexes are unmanaged and should not be considered an investment. It is not possible to invest directly in an index. One basis point = 0.01%.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Multi-Asset Real Return Portfolio

Index +5.7% in USD). Having peaked at 5% in October 2023, U.S. 10-year yields fell –105 bps over the November-December 2023 period. Both the Fed and the European Central Bank kept rates on hold in the fourth quarter of 2023 and gradually shifted toward a more dovish stance. By the end of the period, markets priced in –138 bps of cuts in 2024 in the U.S. and –155 bps of cuts in the eurozone.

•  Commodities and the U.S. dollar were the two notable exceptions to the broad market rally in 2023 (S&P GSCI Index –3.1%, DXY Index –2.4%). The dollar fell versus all G10 currencies except for the Japanese yen, as interest rate differentials narrowed compared to the U.S. The yen fell –5.7% versus the dollar as the Bank of Japan maintained its loose monetary policy despite above-target inflation. Within emerging markets (EM), the Argentine peso lost –78.9% of its value as the newly elected government announced major spending cuts including a 50% devaluation of the country's currency. Within commodities, oil prices finished the year in negative territory (Brent spot –6.3%) for the first time since 2020 despite production cuts by the Organization of the Petroleum Exporting Countries and its allies (known as OPEC+). Gold was the positive outlier in commodities (+13.1%) as investors priced in the increasing likelihood of Fed rate cuts (and therefore lower real rates) in 2024.

•  Within the Fund's Core Real Assets positions, long positions in Brent oil, energy-related equities, gold, and U.S. materials stocks contributed to performance. Detractors from performance included long positions in silver, platinum, and gold miners.

•  Within Opportunistic positions, contributors included long positions in U.S. real estate investment trusts (REITs), European Union (EMU) real estate, and in defensive currencies vs. the U.S. dollar. Detractors included long positions in U.S. defense stocks vs. U.S. equities, in U.S. industrials vs. U.S. tech stocks, and in iron ore miners vs. global equities.

Management Strategies(iii)

•  2023 was a year that confounded many market participants and pundits. The "most anticipated recession ever" never happened. The Fed tightened by 100 bps more than expected, driving bond yields to the highest levels since the 2000s. And, all the while, the U.S. stock market bent but did not break during the record bond sell-off, led to the upside not by a new acronym like FAANG or FANMAG but by the Magnificent Seven, while most other global equity markets underperformed, notably China. The year-end rally saw broad participation by smaller cap stocks, Value and non-U.S. stocks as well.

•  As we enter 2024, we present the key themes we expect to see develop across the global economy and global financial markets over the course of the year.

Goldilocks Eventually Morphs Into Growth Slump

•  In early 2023, we wrote that, despite widespread consensus expectations for a recession, we "expect[ed] a soft landing in 2023, followed by a deep recession in 2024." The first is what happened; the second has now become less likely.

•  A "Goldilocks" economy is theoretically characterized by growth that is neither too cold (stall or recession), nor too hot that it generates inflation. In short, it shows decent, trend-like growth with inflation at target levels. This is exactly where we are currently: after a 2022 growth slump, the economy recovered strongly in 2023 and currently looks to be growing at around a 2% pace with core personal consumption expenditure (PCE) inflation also running around 2% in the past six months. That combination is nirvana for stocks markets and risk assets generally, which explains the monster risk-assets rally from October to year-end 2023.

•  The key question going forward is how long this nirvana-like environment will last. Our base case is that growth will eventually slump below trend by the end of the year. The key factors driving this view are:

o  Tightest Fed policy in 15 years, with policy rates nearly 300 bps above inflation, much higher than real potential growth of 1.8%

(iii)​  Source: Morgan Stanley Investment Management (MSIM) Global Multi-Asset Team analysis; market data sourced from Bloomberg; consensus estimates sourced from Thomson Reuters I/B/E/S.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Multi-Asset Real Return Portfolio

o  Fiscal policy turning modestly contractionary after an unexpectedly stimulative 2023

o  Excess savings exhausted for most households (except the top quintile)

•  However, we recognize that this cycle is different from some of the more recent ones and will be cushioned by the following factors:

o  No private sector excesses: In the late 1990s, the corporate sector massively overinvested, causing a big retrenchment in 2001. Then, in the 2000s, households massively overborrowed and overinvested in houses, causing the housing bust and financial crisis in 2008-09. In this current cycle, neither households nor corporates are particularly stretched (i.e., overleveraged and overspending). Rather, it is the government that has overborrowed and overspent, which leads to a different dynamic.

o  No energy shock: Most post-war recessions have been accompanied by an oil shock, which hits households' purchasing power right at the time the central bank is taking away the punch bowl. This time, gasoline prices skyrocketed in 2021-22 to $5.00 a gallon but have since reversed to $3.25, thus freeing up households to spend on other goods and services.

o  Decent real income growth: With inflation collapsing to a 2% run rate and wages still running at 4% annualized rate, households are experiencing positive real wage growth (after a tough two-year period). And because firms are still hiring 175,000 new employees each month, aggregate real income is growing nearly 3% — a level sufficient to fuel real spending and modestly increasing savings.

•  Net-net: Growth is likely to slow because of tight money and modestly tighter fiscal policy, but for now, there are still many positive offsets, making a growth slump more likely than an immediate contraction.

•  Slumping growth will mean an end to Goldilocks (i.e., growth will get too cold) but will likely keep inflation relatively close to target, allowing the Fed to ease policy by the summer. Policy will be easing but not easy, as the Fed will have massively lagged the drop in inflation. If the Fed eases by 100 bps by

December 2024, but inflation drops to 2% year-on-year, real policy rates will still be +240 bps — way above neutral, i.e. still tight.

•  The appealing aspect of this baseline scenario is that, unlike last year, it is counter to market expectations for benign economic growth and +11% earnings per share (EPS) growth for S&P 500 companies. Of course, we recognize other scenarios are also plausible: with the consumer continuing to spend and firm profits recovering, a new cycle of hiring could restart, leading to above-trend growth and renewed inflation worries — i.e. overheating, prompting the Fed to hold off on cuts (or even consider hikes). Conversely, the Goldilocks environment could persist as unexpectedly low inflation seen in recent months allows the Fed to perfectly thread the needle and ease policy back to neutral quickly.

The Great Speculative Era Endures — For How Long?

•  After the bond yield-driven rally in the fourth quarter, U.S. stocks are currently trading at nearly 20x forward earnings (or 25x trailing reported EPS, not that anyone looks at that anymore). The last time real long-term rates averaged 1.75% (as today) was from 2003 to 2005. At that time, stocks were trading at 16x forward earnings, 20% cheaper than today, and earnings, having fallen 30%+ in the dot-com bust, were in the midst of a +140% multiyear explosion — unlikely to be repeated today.

•  So, despite the nirvana-like Goldilocks macro environment currently in place, it is very hard to get excited about buying such expensive stocks. If Goldilocks persists, we could see stocks rise further, in theory, in line with approximately 10% EPS growth; though, in practice, when earnings rise, so do multiples, potentially leading to bubble-like valuations (25.2x in 2000 and 23.2x in 2020).

•  However, whether the "Great Speculative Era" endures depends on a historically unlikely macro environment persisting. Our baseline of slumping economic growth by year-end 2024 would significantly challenge the profit outlook, a key underpinning of sky-high multiples. Conversely, an "Overheating" scenario could lead to a 2022 redux (simultaneous stock and bond sell-off). As a result, we are inclined to stay cautious on stocks, and maintain a very unheroic neutral allocation to


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Multi-Asset Real Return Portfolio

stocks, while focusing on the many regional and thematic opportunities we see, as described below.

After U.S. and Japan in 2023, Eurozone Stocks to Lead in 2024

•  Japanese stocks were the surprise outperformers in 2023, returning 28% (Topix), driven by a very weak yen, ripping Japanese banks stocks (+34%) as well as deflation — and optimism for the Bank of Japan's exit from its yield curve control policy. Note that unhedged (i.e., in U.S. dollars) Japanese stocks were actually only up 19% (less than the eurozone and EM ex-China in U.S. dollars).

•  In 2024, we expect eurozone stocks to broadly outperform U.S., Japan and global equities. Why? After all, the eurozone has been a perennial disappointer for the past two decades, and on the surface, little appears to have changed. However, three factors lead us to conclude eurozone stocks will likely outperform:

o  It is now generally accepted that, apart from a very small number of stocks, such as ASML, Hermes, Nestle, Unilever and L'Oreal, the eurozone has very few truly high-growth companies and just a few high quality companies. If you want good growth companies (and that's the only way to pick stocks, of course), there is really only the U.S. Not only are there few growth and quality companies in eurozone, but the economies there barely grow. The perception has returned to the late 1990s when the late Byron Wien quipped that Europe had become just "a vast open-air museum." From a contrarian perspective, this kind of wholesale rejection of an entire continent is highly appealing.

o  Interestingly, this kind of pessimism has reached a crescendo recently because of a relapse in EMU gross domestic product (GDP) growth while U.S. growth has kept surprising to the upside. However, we think the consensus is missing how much of an impact the collapse in inflation will have on households' psychology and willingness to spend. We expect headline inflation to drop to a 1% run rate over the next six months as utility prices catch "down" to natural gas and power prices. With hourly wages running at more than 4%, real wages are actually growing by +3% — the

best in a couple of decades. The past few months have seen an improvement in consumer and business confidence, reflecting these new conditions. In the meantime, U.S. growth has been strong, but, as discussed above, is likely to slump in 2024 and will likely undershoot EMU growth for the first time in 10 years. Better EMU GDP will mean better EPS growth, particularly for EMU domestic stocks.

o  Because of all the pessimism on EMU stocks and the economy, EMU domestic stocks are trading at 13.7x forward EPS versus 20.1x for U.S. domestic stocks. This 35% discount is double the usual 17% discount of EMU versus U.S. domestics, a testament to the skepticism about the prospect for the eurozone domestic economy.

•  Net-net: Near-record cheap eurozone stocks in an economy experiencing a reverse-energy shock amid widespread skepticism are likely to outperform "exceptional" but pricey U.S. stocks in a slumping U.S. economy. Of course, this may only last a year like most of Europe's (relative) rallies but could generate strong outperformance (more if the euro appreciates as we expect).

EM ex-China Finally Catches a Break Amid US Dollar Bear Market

•  From its nadir in the summer of 2008 in the midst of the Global Financial Crisis, the U.S. dollar appreciated 60% until its October 2022 peak. One of the three major dollar bull markets since the U.S. dollar discontinued the gold standard in 1971. The recent U.S. dollar bear market began in October 2022 when the first Fed pivot occurred (from 75 bp hikes to 50 bp hikes). Since then, the dollar has depreciated 10%. U.S. dollar bear markets usually last a decade and see a 30% - 50% depreciation over that time frame.

•  We expect the beginning of the Fed rate-cutting cycle to accelerate the decline in the U.S. dollar, particularly if it is associated with a homegrown slump in economic growth. The U.S.'s exceptionalism will appear less so, particularly with deficits twice as large as those of Europe, a worsening net international investment position, and continued central bank reserve diversification away from the U.S. dollar.


7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Multi-Asset Real Return Portfolio

•  One significant beneficiary of a weaker dollar has historically been emerging markets; so much so that the EM equity outperformance cycle has become almost indistinguishable from the U.S. dollar cycle. A weaker dollar is usually associated with easier Fed policy and greater risk-taking, which facilitates flow into capital-hungry emerging markets. Here we focus on EM ex-China, as China has entered a balance sheet recession cycle and does not appear ready yet to apply appropriate economic policies to solve the multitude of problems. (We have advocated for an all-of-the-above approach including easier monetary policy, weaker currency, fiscal policy stimulus, restructurings/defaults and fiscally-driven capital injections.)

•  Stocks in EM ex-China — particularly away from the darlings (India) and heavyweights (Taiwan and Korea) — are attractively cheap, though not as depressed as in the early 2000s after the Asian crisis. However, the economies are generally in better shape than in previous decades (with some exceptions such as Turkey and Argentina, but even there, policy has shifted to orthodoxy) with inflation under control, appropriately tight monetary policy, and modest budget deficits (especially compared to the United States). We expect these markets to outperform U.S. stocks, particularly if the U.S. dollar does depreciate, giving investors "two-for-the-price-of-one" (i.e., stock appreciation in an appreciating currency).

Value Bull Market Continues

•  Even though Value indexes in the U.S. underperformed Growth indexes by a significant margin in 2023 (by 31% using Russell 1000 indexes), Value stocks outperformed in Japan, Europe and emerging markets. And even in the U.S., if using "pure style indexes" such as our GMA Value stocks baskets, one can clearly see that underneath the hood Value continues its outperformance cycle that started in August 2020.

•  With Value stocks 25% - 30% cheaper than normal compared to Growth (or Anti-Value) stocks, we expect Value stocks to keep outperforming over 2024 and in coming years in the U.S., Europe, Japan and emerging markets.

*  Minimum Investment for Class I shares

**  Commenced Operations on June 18, 2018.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).


8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Multi-Asset Real Return Portfolio

Performance Compared to the Bloomberg U.S. Treasury Bill 1-3 Month Index(1)​, the MSIF Multi-Asset Real Return Blend Index(2)​ and the Lipper Real Return Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(6)
 
Fund — Class I Shares
w/o sales charges(5)
   

5.41

%

   

9.54

%

   

     

7.22

%

 
Fund — Class A Shares
w/o sales charges(5)
   

5.09

     

9.16

     

     

6.84

   
Fund — Class A Shares
with maximum 5.25%
sales charges(5)
   

–0.44

     

7.99

     

     

5.81

   
Fund — Class C Shares
w/o sales charges(5)
   

4.25

     

8.33

     

     

6.04

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(5)
   

3.25

     

8.33

     

     

6.04

   
Fund — Class R6 Shares
w/o sales charges(5)
   

5.46

     

9.58

     

     

7.26

   
Bloomberg U.S. Treasury
Bill 1-3 Month Index
   

5.14

     

1.87

     

     

1.89

   
MSIF Multi-Asset Real Return
Blend Index
   

5.14

     

13.29

     

     

9.68

   

Lipper Real Return Funds Index

   

3.57

     

6.90

     

     

4.20

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Bloomberg U.S. Treasury Bills 1-3 Month Index is designed to measure the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to one month and less than three months. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The MSIF Multi-Asset Real Return Blend Index is a performance linked benchmarks of the old and new benchmark of the Fund. The old benchmark represented by MSCI World Net Index (index that is designed to measure the equity market performance of developed markets) from the Fund's inception to August 30, 2021 to the new benchmark represented by Bloomberg U.S. Treasury Bill 1-3 Month Index for periods thereafter. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(3)​  The Lipper Real Return Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Real Return Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Real Return Funds classification.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  Commenced operations on June 18, 2018.

(6)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Multi-Asset Real Return Portfolio

   

Shares

  Value
(000)
 

Common Stocks (26.9%)

 

Austria (0.0%)‡

 

OMV AG

   

121

   

$

5

   

Belgium (0.3%)

 

Aedifica SA REIT

   

427

     

30

   

Cofinimmo SA REIT

   

305

     

24

   

Warehouses De Pauw CVA REIT

   

1,461

     

46

   
     

100

   

Finland (0.1%)

 

Kojamo OYJ

   

1,480

     

19

   

Neste OYJ

   

351

     

13

   
     

32

   

France (0.9%)

 

Covivio SA REIT

   

474

     

25

   

Gecina SA REIT

   

432

     

53

   

Klepierre SA REIT

   

1,741

     

48

   

TotalEnergies SE

   

2,066

     

140

   

Unibail-Rodamco-Westfield REIT (a)

   

900

     

67

   
     

333

   

Germany (0.7%)

 

LEG Immobilien SE (a)

   

666

     

59

   

Vonovia SE

   

6,373

     

200

   
     

259

   

Italy (0.1%)

 

Eni SpA

   

2,082

     

35

   

Tenaris SA

   

393

     

7

   
     

42

   

Norway (0.1%)

 

Aker BP ASA

   

264

     

8

   

Equinor ASA

   

796

     

25

   
     

33

   

Portugal (0.0%)‡

 

Galp Energia SGPS SA

   

417

     

6

   

Spain (0.2%)

 

Inmobiliaria Colonial Socimi SA REIT

   

2,583

     

18

   

Merlin Properties Socimi SA REIT

   

3,035

     

34

   

Repsol SA (b)

   

1,148

     

17

   
     

69

   

Sweden (0.5%)

 

Castellum AB (a)

   

3,777

     

54

   

Fabege AB

   

2,176

     

23

   

Fastighets AB Balder, Class B (a)

   

5,784

     

41

   

Sagax AB, Class B

   

1,862

     

51

   

Wihlborgs Fastigheter AB

   

2,424

     

23

   
     

192

   

Switzerland (0.5%)

 

Allreal Holding AG (Registered)

   

147

     

26

   

PSP Swiss Property AG (Registered)

   

434

     

61

   

Swiss Prime Site AG (Registered)

   

725

     

77

   
     

164

   
   

Shares

  Value
(000)
 

United Kingdom (2.1%)

 

Big Yellow Group PLC REIT

   

1,686

   

$

26

   
BP PLC    

15,102

     

90

   

British Land Co. PLC REIT

   

7,797

     

40

   

Derwent London PLC REIT

   

893

     

27

   

Land Securities Group PLC REIT

   

6,831

     

61

   

LondonMetric Property PLC REIT

   

9,302

     

23

   

LXI PLC REIT

   

14,359

     

19

   

Rightmove PLC

   

7,715

     

57

   

Safestore Holdings PLC REIT

   

1,977

     

22

   

Segro PLC REIT

   

10,338

     

117

   

Shell PLC

   

5,880

     

192

   

Tritax Big Box PLC REIT

   

17,324

     

37

   

UNITE Group PLC REIT

   

3,002

     

40

   
     

751

   

United States (21.4%)

 

Alexandria Real Estate Equities, Inc. REIT

   

283

     

36

   

American Homes 4 Rent, Class A REIT

   

562

     

20

   

American Tower Corp. REIT

   

805

     

174

   

APA Corp.

   

136

     

5

   

AvalonBay Communities, Inc. REIT

   

244

     

46

   

Baker Hughes Co.

   

434

     

15

   

Boston Properties, Inc. REIT

   

257

     

18

   

Camden Property Trust REIT

   

184

     

18

   

CBRE Group, Inc., Class A (a)

   

535

     

50

   

Cheniere Energy, Inc.

   

98

     

17

   

Chesapeake Energy Corp.

   

52

     

4

   

Chevron Corp.

   

792

     

118

   

Citizens Financial Group, Inc.

   

9,502

     

315

   

ConocoPhillips

   

531

     

62

   

CoStar Group, Inc. (a)

   

705

     

62

   

Coterra Energy, Inc.

   

342

     

9

   

Crown Castle, Inc. REIT

   

751

     

86

   

Devon Energy Corp.

   

262

     

12

   

Diamondback Energy, Inc.

   

72

     

11

   

Digital Realty Trust, Inc. REIT

   

501

     

67

   

EOG Resources, Inc.

   

250

     

30

   

EQT Corp.

   

145

     

6

   

Equinix, Inc. REIT

   

161

     

130

   

Equity Lifestyle Properties, Inc. REIT

   

305

     

22

   

Equity Residential REIT

   

621

     

38

   

Essex Property Trust, Inc. REIT

   

111

     

28

   

Extra Space Storage, Inc. REIT

   

364

     

58

   

Exxon Mobil Corp.

   

1,765

     

176

   

Gaming and Leisure Properties, Inc. REIT

   

452

     

22

   

General Dynamics Corp.

   

1,473

     

382

   

Halliburton Co.

   

382

     

14

   

Healthcare Realty Trust, Inc. REIT

   

658

     

11

   

Healthpeak Properties, Inc. REIT

   

945

     

19

   

Hess Corp.

   

117

     

17

   

HF Sinclair Corp.

   

66

     

4

   

Host Hotels & Resorts, Inc. REIT

   

1,228

     

24

   

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Real Return Portfolio

   

Shares

  Value
(000)
 

United States (cont'd)

 

Huntington Bancshares, Inc.

   

28,321

   

$

360

   

Huntington Ingalls Industries, Inc.

   

236

     

61

   

Invitation Homes, Inc. REIT

   

1,055

     

36

   

Iron Mountain, Inc. REIT

   

503

     

35

   

Kimco Realty Corp. REIT

   

1,070

     

23

   

Kinder Morgan, Inc.

   

878

     

15

   

L3Harris Technologies, Inc.

   

1,389

     

293

   

Lockheed Martin Corp.

   

1,337

     

606

   

M&T Bank Corp.

   

3,244

     

445

   

Marathon Oil Corp.

   

269

     

6

   

Marathon Petroleum Corp.

   

199

     

30

   

Mid-America Apartment Communities, Inc. REIT

   

201

     

27

   

NET Lease Office Properties

   

22

     

@

 

Northrop Grumman Corp.

   

883

     

413

   

Occidental Petroleum Corp.

   

314

     

19

   

ONEOK, Inc.

   

194

     

14

   

Ovintiv, Inc.

   

105

     

5

   

Phillips 66

   

201

     

27

   

Pioneer Natural Resources Co.

   

99

     

22

   

Prologis, Inc. REIT

   

1,591

     

212

   

Public Storage REIT

   

273

     

83

   

Realty Income Corp. REIT

   

1,162

     

67

   

Regency Centers Corp. REIT

   

287

     

19

   

Regions Financial Corp.

   

18,825

     

365

   

RTX Corp.

   

8,975

     

755

   

SBA Communications Corp. REIT

   

187

     

47

   

Schlumberger NV

   

607

     

32

   

Simon Property Group, Inc. REIT

   

564

     

80

   

Sun Communities, Inc. REIT

   

215

     

29

   

Targa Resources Corp.

   

93

     

8

   

Texas Pacific Land Corp.

   

2

     

3

   

Truist Financial Corp.

   

25,707

     

949

   

UDR, Inc. REIT

   

539

     

21

   

Valero Energy Corp.

   

163

     

21

   

Ventas, Inc. REIT

   

690

     

34

   

VICI Properties, Inc. REIT

   

1,730

     

55

   

Welltower, Inc. REIT

   

857

     

77

   

Weyerhaeuser Co. REIT

   

1,263

     

44

   

Williams Cos., Inc.

   

527

     

18

   

WP Carey, Inc. REIT

   

369

     

24

   

Zillow Group, Inc., Class C (a)

   

265

     

15

   

Zions Bancorp NA

   

2,975

     

131

   
     

7,652

   

Total Common Stocks (Cost $8,937)

   

9,638

   
    Face
Amount
(000)
  Value
(000)
 

U.S. Treasury Securities (41.5%)

 

United States (41.5%)

 
U.S. Treasury Bill,
5.35%, 2/29/24 (c)
 

$

7,962

   

$

7,895

   

5.50%, 2/29/24 (c)

   

6,080

     

6,028

   

U.S. Treasury Inflation-Indexed Bonds,

 

0.13%, 4/15/25 - 10/15/26

   

498

     

476

   

0.25%, 1/15/25

   

107

     

103

   

0.38%, 7/15/25

   

118

     

114

   

0.63%, 1/15/26

   

100

     

96

   

2.00%, 1/15/26

   

48

     

48

   

2.38%, 1/15/25

   

75

     

75

   

Total U.S. Treasury Securities (Cost $14,839)

   

14,835

   
   

Shares

     

Short-Term Investment (25.9%)

 

Investment Company (25.9%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $9,269)
   

9,269,407

     

9,269

   
Total Investments (94.3%) (Cost $33,045)
Including $3 of Securities Loaned (d)(e)(f)
   

33,742

   

Other Assets in Excess of Liabilities (5.7%)

   

2,043

   

Net Assets (100.0%)

 

$

35,785

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

@  Value is less than $500.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  Rate shown is the yield to maturity at December 31, 2023.

(d)  The approximate fair value and percentage of net assets, $1,986,000 and 5.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(e)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $39,610,000. The aggregate gross unrealized appreciation is approximately $4,181,000 and the aggregate gross unrealized depreciation is approximately $2,793,000, resulting in net unrealized appreciation of approximately $1,388,000.

(f)  Securities are available for collateral in connection with foreign currency forward exchange contracts, futures contract and swap agreements.

REIT  Real Estate Investment Trust.

CVA  Certificaten Van Aandelen.

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Real Return Portfolio

Foreign Currency Forward Exchange Contracts:

The Fund had the following foreign currency forward exchange contracts open at December 31, 2023:

Counterparty

  Contracts to
Deliver
(000)
  In Exchange
For
(000)
  Delivery
Date
  Unrealized
Appreciation
(Depreciation)
(000)
 

BNP Paribas SA

 

CHF

378

   

$

436

   

3/14/24

 

$

(17

)

 

BNP Paribas SA

 

EUR

7

   

$

8

   

3/14/24

   

(—

@)

 

BNP Paribas SA

 

EUR

72

   

$

80

   

3/14/24

   

@

 

BNP Paribas SA

 

GBP

305

   

$

384

   

3/14/24

   

(6

)

 

Citibank NA

 

CHF

9

   

$

11

   

3/14/24

   

@

 

Citibank NA

 

GBP

36

   

$

45

   

3/14/24

   

(—

@)

 

Citibank NA

 

GBP

350

   

$

444

   

3/14/24

   

(3

)

 

Citibank NA

 

GBP

48

   

$

61

   

3/14/24

   

@

 

Goldman Sachs International

 

CAD

591

   

$

445

   

3/14/24

   

(2

)

 

Goldman Sachs International

 

EUR

5

   

$

5

   

3/14/24

   

(—

@)

 

Goldman Sachs International

 

$

1,784

   

AUD

2,620

   

3/14/24

   

6

   

Goldman Sachs International

 

$

303

   

CHF

261

   

3/14/24

   

10

   

Goldman Sachs International

 

$

1,147

   

EUR

1,048

   

3/14/24

   

13

   

Goldman Sachs International

 

$

872

   

GBP

686

   

3/14/24

   

3

   

Goldman Sachs International

 

$

357

   

SEK

3,654

   

3/14/24

   

6

   

JPMorgan Chase Bank NA

 

CHF

10

   

$

12

   

3/14/24

   

(—

@)

 

JPMorgan Chase Bank NA

 

EUR

1,516

   

$

1,641

   

3/14/24

   

(37

)

 

JPMorgan Chase Bank NA

 

GBP

693

   

$

871

   

3/14/24

   

(12

)

 

JPMorgan Chase Bank NA

 

SEK

4,958

   

$

476

   

3/14/24

   

(17

)

 

JPMorgan Chase Bank NA

 

SEK

615

   

$

61

   

3/14/24

   

@

 

JPMorgan Chase Bank NA

 

$

1

   

CAD

1

   

3/14/24

   

@

 

JPMorgan Chase Bank NA

 

$

9

   

JPY

1,361

   

3/14/24

   

@

 
               

$

(56

)

 

Futures Contract:

The Fund had the following futures contract open at December 31, 2023:

    Number of
Contracts
  Expiration
Date
  Notional
Amount
(000)
  Value
(000)
  Unrealized
Appreciation
(000)
 

Long:

 
U.S. Treasury Ultra Long Bond
(United States)
   

67

   

Mar-24

 

$

6,700

   

$

8,951

   

$

813

   

Centrally Cleared Interest Rate Swap Agreements:

The Fund had the following centrally cleared interest rate swap agreements open at December 31, 2023:

Swap Counterparty

  Floating Rate
Index
  Pay/Receive
Floating Rate
  Fixed
Rate
  Payment
Frequency
Paid/
Received
  Maturity
Date
  Notional
Amount
(000)
  Value
(000)
  Upfront
Payment
Received
(000)
  Unrealized
Appreciation
(Depreciation)
(000)
 
Bank of America
Securities, Inc.
  Euro-stat Eurozone
HICP ex Tobacco Index
 

Receive

   

2.18

%

  Maturity/
Maturity
 

12/15/33

 

EUR

1,363

   

$

(6

)

 

$

   

$

(6

)

 
Bank of America
Securities, Inc.
  Euro-stat Eurozone
HICP ex Tobacco Index
 

Pay

   

2.07

    Maturity/
Maturity
 

12/15/28

   

1,389

     

6

     

      6    
Bank of America
Securities, Inc.
  US CPI All Urban
Consumers Index
 

Receive

   

2.44

    Maturity/
Maturity
 

12/13/33

 

$

1,835

     

(5

)

   

      (5

)

 
Bank of America
Securities, Inc.
  US CPI All Urban
Consumers Index
 

Pay

   

2.31

    Maturity/
Maturity
 

12/13/28

   

1,415

     

@

   

     

@

 

Morgan Stanley & Co. LLC

  Euro-stat Eurozone
HICP ex Tobacco Index
 

Receive

   

2.40

    Semi-Annual/
Quarterly
 

3/15/33

 

EUR

6,727

     

(102

)

   

     

(102

)

 

Morgan Stanley & Co. LLC

  Euro-stat Eurozone
HICP ex Tobacco Index
 

Pay

   

2.46

    Semi-Annual/
Quarterly
 

3/15/28

   

6,715

     

72

     

     

72

   

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.65

    Maturity/
Maturity
 

11/3/33

 

$

370

     

(8

)

   

     

(8

)

 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.61

    Maturity/
Maturity
 

10/10/53

   

7,176

     

(355

)

   

     

(355

)

 

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Multi-Asset Real Return Portfolio

Swap Counterparty

  Floating Rate
Index
  Pay/Receive
Floating Rate
  Fixed
Rate
  Payment
Frequency
Paid/
Received
  Maturity
Date
  Notional
Amount
(000)
  Value
(000)
  Upfront
Payment
(Received)
(000)
  Unrealized
Appreciation
(Depreciation)
(000)
 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.59

%

  Semi-Annual/
Quarterly
 

7/12/33

 

$

8,590

   

$

(95

)

 

$

   

$

(95

)

 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.53

    Maturity/
Maturity
 

12/1/53

   

126

     

(4

)

   

     

(4

)

 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.48

    Maturity/
Maturity
 

12/13/53

   

1,292

     

(28

)

   

     

(28

)

 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Receive

   

2.45

    Maturity/
Maturity
 

12/18/33

   

8,740

     

(29

)

   

     

(29

)

 

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Pay

   

2.35

    Maturity/
Maturity
 

12/18/28

   

8,929

     

17

     

     

17

   

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Pay

   

2.37

    Maturity/
Maturity
 

11/30/28

   

161

     

1

     

     

1

   

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Pay

   

2.59

    Semi-Annual/
Quarterly
 

3/13/28

   

2,433

     

12

     

(—

@)

   

12

   

Morgan Stanley & Co. LLC

  US CPI All Urban
Consumers Index
 

Pay

   

3.28

    Semi-Annual/
Quarterly
 

3/3/27

   

4,738

     

(—

@)

   

     

(—

@)

 
                           

$

(524

)

 

$

(—

@)

 

$

(524

)

 

@    Value is less than $500.

AUD  —  Australian Dollar

CAD  —  Canadian Dollar

CHF  —  Swiss Franc

EUR  —  Euro

GBP  —  British Pound

JPY  —  Japanese Yen

SEK  —  Swedish Krona

USD  —  United States Dollar

Portfolio Composition

Classification

  Percentage of
Total Investments
 

U.S. Treasury Securities

   

44.0

%

 

Short-Term Investments

   

27.5

   

Other*

   

13.5

   

Banks

   

7.6

   

Aerospace & Defense

   

7.4

   

Total Investments

   

100.0

%**

 

*  Industries and/or investment types representing less than 5% of total investments.

**  Does not include an open futures contract with a value of approximately $8,951,000 and unrealized appreciation of approximately $813,000. Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $56,000. Also does not include open swap agreements with net unrealized depreciation of approximately $524,000.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Multi-Asset Real Return Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $23,776)

 

$

24,473

   

Investment in Security of Affiliated Issuer, at Value (Cost $9,269)

   

9,269

   

Total Investments in Securities, at Value (Cost $33,045)

   

33,742

   

Foreign Currency, at Value (Cost $58)

   

60

   

Due from Broker

   

1,695

   

Cash

   

82

   

Receivable for Variation Margin on Futures Contracts

   

405

   

Unrealized Appreciation on Foreign Currency Forward Exchange Contracts

   

38

   

Receivable from Affiliate

   

36

   

Dividends Receivable

   

18

   

Due from Adviser

   

11

   

Tax Reclaim Receivable

   

3

   

Interest Receivable

   

2

   

Receivable for Fund Shares Sold

   

@

 

Other Assets

   

41

   

Total Assets

   

36,133

   

Liabilities:

 

Payable for Fund Shares Redeemed

   

102

   

Unrealized Depreciation on Foreign Currency Forward Exchange Contracts

   

94

   

Payable for Professional Fees

   

22

   

Payable for Custodian Fees

   

10

   

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class C

   

3

   

Payable for Variation Margin on Swap Agreements

   

3

   

Payable for Administration Fees

   

2

   

Payable for Sub Transfer Agency Fees — Class I

   

1

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Deferred Capital Gain Country Tax

   

2

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Swap Agreements Termination

   

@

 

Other Liabilities

   

107

   

Total Liabilities

   

348

   

Net Assets

 

$

35,785

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

34,501

   

Total Distributable Earnings

   

1,284

   

Net Assets

 

$

35,785

   

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Multi-Asset Real Return Portfolio

Consolidated Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

27,897

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,570,590

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.85

   

CLASS A:

 

Net Assets

 

$

4,347

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

400,045

   

Net Asset Value, Redemption Price Per Share

 

$

10.87

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.60

   

Maximum Offering Price Per Share

 

$

11.47

   

CLASS C:

 

Net Assets

 

$

3,527

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

327,248

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.78

   

CLASS R6:

 

Net Assets

 

$

14

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,319

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

10.85

   
(1)​ Including:
Securities on Loan, at Value:
 

$

3

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Multi-Asset Real Return Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Interest from Securities of Unaffiliated Issuers

 

$

1,056

   

Dividends from Security of Affiliated Issuer (Note G)

   

338

   

Dividends from Securities of Unaffiliated Issuers (Net of $10 of Foreign Taxes Withheld)

   

167

   

Income from Securities Loaned — Net

   

13

   

Total Investment Income

   

1,574

   

Expenses:

 

Advisory Fees (Note B)

   

213

   

Professional Fees

   

146

   

Registration Fees

   

62

   

Directors' Fees and Expenses

   

6

   

Shareholder Services Fees — Class A (Note D)

   

12

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

39

   

Custodian Fees (Note F)

   

46

   

Administration Fees (Note C)

   

28

   

Pricing Fees

   

19

   

Sub Transfer Agency Fees — Class I

   

9

   

Sub Transfer Agency Fees — Class A

   

5

   

Sub Transfer Agency Fees — Class C

   

3

   

Transfer Agency Fees — Class I (Note E)

   

3

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Other Expenses

   

36

   

Total Expenses

   

637

   

Waiver of Advisory Fees (Note B)

   

(213

)

 

Expenses Reimbursed by Adviser (Note B)

   

(60

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(13

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(9

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(—

@)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Net Expenses

   

337

   

Net Investment Income

   

1,237

   

Realized Gain (Loss):

 

Investments Sold (Net of $—@ of Capital Gain Country Tax)

   

1,177

   

Foreign Currency Forward Exchange Contracts

   

154

   

Foreign Currency Translation

   

(27

)

 

Futures Contracts

   

(482

)

 

Swap Agreements

   

51

   

Net Realized Gain

   

873

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

(233

)

 

Foreign Currency Forward Exchange Contracts

   

(64

)

 

Foreign Currency Translation

   

1

   

Futures Contracts

   

417

   

Swap Agreements

   

(648

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

(527

)

 

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

346

   

Net Increase in Net Assets Resulting from Operations

 

$

1,583

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Multi-Asset Real Return Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

1,237

   

$

1,619

   

Net Realized Gain (Loss)

   

873

     

(906

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

(527

)

   

99

   

Net Increase in Net Assets Resulting from Operations

   

1,583

     

812

   

Dividends and Distributions to Shareholders:

 

Class I

   

(1,253

)

   

(1,338

)

 

Class A

   

(189

)

   

(200

)

 

Class C

   

(137

)

   

(162

)

 

Class R6*

   

(1

)

   

(1

)

 

Total Dividends and Distributions to Shareholders

   

(1,580

)

   

(1,701

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

11,223

     

6,573

   

Distributions Reinvested

   

1,253

     

1,338

   

Redeemed

   

(17,120

)

   

(5,538

)

 

Class A:

 

Subscribed

   

1,993

     

8,829

   

Distributions Reinvested

   

189

     

189

   

Redeemed

   

(3,485

)

   

(3,952

)

 

Class C:

 

Subscribed

   

970

     

4,651

   

Distributions Reinvested

   

137

     

162

   

Redeemed

   

(2,574

)

   

(727

)

 

Class R6:*

 

Distributions Reinvested

   

1

     

1

   

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(7,413

)

   

11,526

   

Total Increase (Decrease) in Net Assets

   

(7,410

)

   

10,637

   

Net Assets:

 

Beginning of Period

   

43,195

     

32,558

   

End of Period

 

$

35,785

   

$

43,195

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

1,016

     

596

   

Shares Issued on Distributions Reinvested

   

118

     

125

   

Shares Redeemed

   

(1,580

)

   

(520

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

(446

)

   

201

   

Class A:

 

Shares Subscribed

   

182

     

794

   

Shares Issued on Distributions Reinvested

   

18

     

18

   

Shares Redeemed

   

(322

)

   

(365

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(122

)

   

447

   

Class C:

 

Shares Subscribed

   

93

     

429

   

Shares Issued on Distributions Reinvested

   

13

     

15

   

Shares Redeemed

   

(241

)

   

(68

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

(135

)

   

376

   

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@

   

@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than 500 shares.

The accompanying notes are an integral part of the consolidated financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Multi-Asset Real Return Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

10.80

   

$

10.93

   

$

10.38

   

$

10.51

   

$

9.06

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.40

     

0.44

     

0.21

     

0.16

     

0.19

   

Net Realized and Unrealized Gain (Loss)

   

0.17

     

(0.10

)

   

2.04

     

(0.14

)

   

1.46

   

Total from Investment Operations

   

0.57

     

0.34

     

2.25

     

0.02

     

1.65

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.52

)

   

(0.43

)

   

(0.26

)

   

(0.15

)

   

(0.20

)

 

Net Realized Gain

   

     

(0.04

)

   

(1.44

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.00

)(3)

 

Total Distributions

   

(0.52

)

   

(0.47

)

   

(1.70

)

   

(0.15

)

   

(0.20

)

 

Net Asset Value, End of Period

 

$

10.85

   

$

10.80

   

$

10.93

   

$

10.38

   

$

10.51

   

Total Return(4)

   

5.41

%(5)

   

3.11

%

   

22.11

%

   

0.39

%

   

18.35

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

27,897

   

$

32,578

   

$

30,776

   

$

17,942

   

$

10,728

   

Ratio of Expenses Before Expense Limitation

   

1.56

%

   

2.03

%

   

2.76

%

   

2.93

%

   

3.82

%

 

Ratio of Expenses After Expense Limitation

   

0.73

%(6)(7)

   

0.76

%(7)

   

0.79

%(7)

   

0.77

%(7)

   

0.76

%(7)

 

Ratio of Net Investment Income

   

3.71

%(6)(7)

   

4.03

%(7)

   

1.80

%(7)

   

1.68

%(7)

   

1.88

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.04

%

   

0.03

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

519

%

   

797

%

   

232

%

   

68

%

   

65

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.76

%

   

3.68

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the consolidated financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Multi-Asset Real Return Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

10.81

   

$

10.95

   

$

10.41

   

$

10.53

   

$

9.06

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.36

     

0.53

     

0.29

     

0.11

     

0.15

   

Net Realized and Unrealized Gain (Loss)

   

0.18

     

(0.23

)

   

1.92

     

(0.12

)

   

1.47

   

Total from Investment Operations

   

0.54

     

0.30

     

2.21

     

(0.01

)

   

1.62

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.48

)

   

(0.40

)

   

(0.23

)

   

(0.11

)

   

(0.15

)

 

Net Realized Gain

   

     

(0.04

)

   

(1.44

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.00

)(3)

 

Total Distributions

   

(0.48

)

   

(0.44

)

   

(1.67

)

   

(0.11

)

   

(0.15

)

 

Net Asset Value, End of Period

 

$

10.87

   

$

10.81

   

$

10.95

   

$

10.41

   

$

10.53

   

Total Return(4)

   

5.09

%(5)

   

2.75

%

   

21.62

%

   

0.07

%

   

17.93

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,347

   

$

5,646

   

$

826

   

$

43

   

$

42

   

Ratio of Expenses Before Expense Limitation

   

1.96

%

   

2.37

%

   

4.14

%

   

10.61

%

   

7.63

%

 

Ratio of Expenses After Expense Limitation

   

1.09

%(6)(7)

   

1.10

%(7)

   

1.14

%(7)

   

1.14

%(7)

   

1.14

%(7)

 

Ratio of Net Investment Income

   

3.35

%(6)(7)

   

4.94

%(7)

   

2.48

%(7)

   

1.18

%(7)

   

1.46

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.04

%

   

0.03

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

519

%

   

797

%

   

232

%

   

68

%

   

65

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.11

%

   

3.33

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the consolidated financial statements.
19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Multi-Asset Real Return Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(1)

 

2019(1)

 

Net Asset Value, Beginning of Period

 

$

10.73

   

$

10.90

   

$

10.36

   

$

10.50

   

$

9.06

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.28

     

0.45

     

0.08

     

0.05

     

0.07

   

Net Realized and Unrealized Gain (Loss)

   

0.17

     

(0.23

)

   

2.04

     

(0.14

)

   

1.48

   

Total from Investment Operations

   

0.45

     

0.22

     

2.12

     

(0.09

)

   

1.55

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.40

)

   

(0.35

)

   

(0.14

)

   

(0.05

)

   

(0.11

)

 

Net Realized Gain

   

     

(0.04

)

   

(1.44

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.00

)(3)

 

Total Distributions

   

(0.40

)

   

(0.39

)

   

(1.58

)

   

(0.05

)

   

(0.11

)

 

Net Asset Value, End of Period

 

$

10.78

   

$

10.73

   

$

10.90

   

$

10.36

   

$

10.50

   

Total Return(4)

   

4.25

%(5)

   

2.00

%

   

20.80

%

   

(0.81

)%

   

17.12

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,527

   

$

4,957

   

$

943

   

$

218

   

$

172

   

Ratio of Expenses Before Expense Limitation

   

2.67

%

   

3.09

%

   

4.04

%

   

5.10

%

   

8.50

%

 

Ratio of Expenses After Expense Limitation

   

1.84

%(6)(7)

   

1.82

%(7)

   

1.89

%(7)

   

1.89

%(7)

   

1.89

%(7)

 

Ratio of Net Investment Income

   

2.60

%(6)(7)

   

4.23

%(7)

   

0.69

%(7)

   

0.54

%(7)

   

0.68

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.04

%

   

0.03

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

519

%

   

797

%

   

232

%

   

68

%

   

65

%

 

(1)  Not consolidated.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.86

%

   

2.58

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the consolidated financial statements.
20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Multi-Asset Real Return Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020(2)

 

2019(2)

 

Net Asset Value, Beginning of Period

 

$

10.80

   

$

10.93

   

$

10.38

   

$

10.51

   

$

9.06

   

Income (Loss) from Investment Operations:

 

Net Investment Income(3)

   

0.41

     

0.44

     

0.20

     

0.16

     

0.19

   

Net Realized and Unrealized Gain (Loss)

   

0.17

     

(0.09

)

   

2.05

     

(0.13

)

   

1.47

   

Total from Investment Operations

   

0.58

     

0.35

     

2.25

     

0.03

     

1.66

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.53

)

   

(0.44

)

   

(0.26

)

   

(0.16

)

   

(0.21

)

 

Net Realized Gain

   

     

(0.04

)

   

(1.44

)

   

     

   

Paid-in-Capital

   

     

     

     

     

(0.00

)(4)

 

Total Distributions

   

(0.53

)

   

(0.48

)

   

(1.70

)

   

(0.16

)

   

(0.21

)

 

Net Asset Value, End of Period

 

$

10.85

   

$

10.80

   

$

10.93

   

$

10.38

   

$

10.51

   

Total Return(5)

   

5.46

%(6)

   

3.16

%

   

22.16

%

   

0.42

%

   

18.37

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

14

   

$

14

   

$

13

   

$

11

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

20.91

%

   

17.86

%

   

21.20

%

   

22.80

%

   

22.24

%

 

Ratio of Expenses After Expense Limitation

   

0.69

%(7)(8)

   

0.72

%(8)

   

0.74

%(8)

   

0.74

%(8)

   

0.74

%(8)

 

Ratio of Net Investment Income

   

3.75

%(7)(8)

   

4.03

%(8)

   

1.75

%(8)

   

1.62

%(8)

   

1.90

%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.04

%

   

0.03

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

519

%

   

797

%

   

232

%

   

68

%

   

65

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.71

%

   

3.73

%

 

(8)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the consolidated financial statements.
21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these consolidated financial statements, management has evaluated subsequent events occurring after the date of the Fund's consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Multi-Asset Real Return Portfolio. The Fund seeks total return, targeted to be in excess of inflation, through capital appreciation and current income.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Multi-Asset Real Return Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest, directly or indirectly through the use of derivatives, in securities, commodities, commodity-related instruments and other investments, primarily futures, swaps and notes. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary represented approximately $3,533,000 or approximately 9.88% of the net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to the commodity markets within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (4) OTC swaps may be valued


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

by an outside pricing service approved by the Directors or quotes from a reputable broker/dealer. Swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange. Total return swaps may also be fair valued using direct accrual/return calculations if prices on the reference asset on the total return leg of the swap are available from a pricing service/vendor for such instrument. In the event that the reference asset on the total return leg of the swap is a benchmark index, then price of such reference asset may be obtained from a pricing service provider or from the benchmark index sponsor; (5) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (6) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (7) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at

the spot and forward rates, respectively, as of the close of the NYSE; and (8) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The Fund invests a significant portion of its assets in securities of real estate investment trusts ("REITs"). The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Fund.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

2,510

   

$

   

$

   

$

2,510

   

Banks

   

2,565

     

     

     

2,565

   

Diversified REITs

   

24

     

179

     

     

203

   
Energy Equipment &
Services
   

61

     

7

     

     

68

   

Health Care REITs

   

141

     

54

     

     

195

   

Hotel & Resort REITs

   

24

     

     

     

24

   

Industrial REITs

   

212

     

223

     

     

435

   
Interactive Media &
Services
   

     

57

     

     

57

   

Office REITs

   

54

     

98

     

     

152

   
Oil, Gas &
Consumable Fuels
   

659

     

531

     

     

1,190

   
Real Estate
Management &
Development
   

127

     

634

     

     

761

   

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Residential REITs

 

$

285

   

$

40

   

$

   

$

325

   

Retail REITs

   

189

     

115

     

     

304

   

Specialized REITs

   

801

     

48

     

     

849

   

Total Common Stocks

   

7,652

     

1,986

     

     

9,638

   
U.S. Treasury
Securities
   

     

14,835

     

     

14,835

   

Short-Term Investment

 

Investment Company

   

9,269

     

     

     

9,269

   
Foreign Currency
Forward Exchange
Contracts
   

     

38

     

     

38

   

Futures Contract

   

813

     

     

     

813

   
Interest Rate Swap
Agreements
   

     

108

     

     

108

   

Total Assets

   

17,734

     

16,967

     

     

34,701

   

Liabilities:

 
Foreign Currency
Forward Exchange
Contracts
   

     

(94

)

   

     

(94

)

 
Interest Rate Swap
Agreements
   

     

(632

)

   

     

(632

)

 

Total Liabilities

   

     

(726

)

   

     

(726

)

 

Total

 

$

17,734

   

$

16,241

   

$

   

$

33,975

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Treasury Inflation-Protected Securities: The Fund may invest in Treasury Inflation-Protected Securities ("TIPS"), including structured bonds in which the principal amount is adjusted daily to keep pace with inflation, as

measured by the U.S. Consumer Pricing Index for Urban Consumers. The adjustments to principal due to inflation/deflation are reflected as increases/decreases to interest income with a corresponding adjustment to cost. Such adjustments may have a significant impact on the Fund's distributions and may result in a return of capital to shareholders. The repayment of the original bond principal upon maturity is guaranteed by the full faith and credit of the U.S. Government.

5.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund also entered into contracts with banks, brokers/dealers to purchase or sell foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Fund may use cross currency hedging or proxy hedging with respect to currencies in which the Fund has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized gain or loss. The Fund records realized gains (losses) when the currency

contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

Swaps: The Fund may enter into OTC swap contracts or cleared swap transactions. A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions may help reduce counterparty credit risk. In a cleared swap, the Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for OTC swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Fund or if the reference index, security or investments do not perform as expected. During the period swap agreements are open, payments are received from or made to the counterparty or clearing-house based on changes in the value of the contract or variation margin, respectively. The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange-trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis based on the type of market participant and U.S. Commodities Futures Trading Commission ("CFTC") approval of contracts for central clearing and exchange trading.

The Fund may enter into total return swaps in which one party agrees to make periodic payments to another party based on the change in market value of the assets underlying the contract, which may include, but not be limited to, a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swaps may be used to obtain long or short exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. Total return swaps may effectively add leverage to the Fund's portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. Total return swaps are subject to the risk that a counterparty will default on its payment obligations to the Fund thereunder, and conversely, that the Fund will not be able to meet its obligation to the counterparty.

The Fund may enter into interest rate swaps which is an agreement between two parties to exchange their respective commitments to pay or receive interest. Interest rate swaps are generally entered into on a net basis. Interest rate swaps do not involve the delivery of securities, other underlying assets, or principal. Accordingly, the risk of

market loss with respect to interest rate swaps is typically limited to the net amount of interest payments that the Fund is contractually obligated to make.

When the Fund has an unrealized loss on a swap agreement, the Fund has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. If applicable, cash collateral is included with "Due from (to) Broker" in the Consolidated Statement of Assets and Liabilities.

Upfront payments paid or received by the Fund will be reflected as an asset or liability, respectively, in the Consolidated Statement of Assets and Liabilities.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated
Statement of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 
Foreign Currency
Forward Exchange
Contracts
  Unrealized Appreciation on
Foreign Currency Forward
Exchange Contracts
 

Currency Risk
 

$

38

   
Futures Contract
 
  Variation Margin on
Futures Contract
 

Interest Rate Risk

   

813

(a)

 
Swap Agreements
 
  Variation Margin on
Swap Agreements
 

Interest Rate Risk

   

108

(a)

 

Total

         

$

959

   
    Liability Derivatives
Consolidated
Statement of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 
Foreign Currency
Forward Exchange
Contracts
  Unrealized Depreciation on
Foreign Currency Forward
Exchange Contracts
 

Currency Risk

 

$

(94

)

 
Swap Agreements
 
  Variation Margin on
Swap Agreements
 

Interest Rate Risk

   

(632

)(a)

 

Total

         

$

(726

)

 

(a) This amount represents the cumulative appreciation (depreciation) as reported in the Consolidated Portfolio of Investments. The Consolidated Statement of Assets and Liabilities only reflects the current day's net variation margin.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Foreign Currency Forward
Exchange Contracts
 

$

154

   

Commodity Risk

 

Futures Contracts

   

347

   

Equity Risk

 

Futures Contracts

   

(241

)

 

Interest Rate Risk

 

Futures Contracts

   

(588

)

 

Equity Risk

 

Swap Agreements

   

(155

)

 

Interest Rate Risk

 

Swap Agreements

   

206

   

Total

     

$

(277

)

 

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Foreign Currency Forward
Exchange Contracts
 

$

(64

)

 

Commodity Risk

 

Futures Contracts

   

(102

)

 

Equity Risk

 

Futures Contracts

   

(294

)

 

Interest Rate Risk

 

Futures Contracts

   

813

   

Equity Risk

 

Swap Agreements

   

(39

)

 

Interest Rate Risk

 

Swap Agreements

   

(609

)

 

Total

     

$

(295

)

 

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives(a)

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Foreign Currency Forward Exchange Contracts

 

$

38

   

$

(94

)

 

(a) Excludes exchange-traded derivatives.

(b) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements

govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented in the
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 

BNP Paribas SA

 

$

@

 

$

(—

@)

 

$

   

$

0

   

Citibank NA

   

@

   

(—

@)

   

     

0

   
Goldman Sachs
International
   

38

     

(2

)

   

     

36

   
JPMorgan Chase
Bank NA
   

@

   

(—

@)

   

     

0

   
Total  

$

38

   

$

(2

)

 

$

   

$

36

   

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Liability
Derivatives
Presented in the
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Pledged
(000)
  Net Amount
(not less
than $0)
(000)
 

BNP Paribas SA

 

$

23

   

$

(—

@)

 

$

   

$

23

   

Citibank NA

   

3

     

(—

@)

   

     

3

   
Goldman Sachs
International
   

2

     

(2

)

   

     

0

   
JPMorgan Chase
Bank NA
   

66

     

(—

@)

   

     

66

   

Total

 

$

94

   

$

(2

)

 

$

   

$

92

   


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:

 

Average monthly principal amount

 

$

11,391,000

   

Futures Contracts:

 

Average monthly notional value

 

$

35,942,000

   

Swap Agreements:

 

Average monthly notional amount

 

$

43,110,000

   

6.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Consolidated Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in
the Consolidated
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

3

(a)

 

$

   

$

(3

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received non-cash collateral of $3,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Consolidated Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

8.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Fund owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the average daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.60

%

   

0.55

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.80% for Class I shares, 1.15% for Class A shares, 1.90% for Class C shares and 0.75% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $213,000 of advisory fees were waived and approximately $65,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and

Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $44,850,000 and $48,424,000, respectively. For the year ended December 31, 2023, purchases and sales of long-term U.S. Government securities were approximately $46,118,000 and $61,430,000, respectively.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $13,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

11,277

   

$

198,220

   

$

200,228

   

$

338

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

9,269

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

1,580

   

$

   

$

1,698

   

$

3

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to a nondeductible expense and tax adjustments related to the Subsidiary, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Distributable
Earnings
(000)
  Paid-in-
Capital
(000)
 
$

462

   

$

(462

)

 

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

154

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $300,000 and $185,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be

based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 89.6%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Multi-Asset Real Return Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Multi-Asset Real Return Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for each of the two years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Investment Committee; Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


41


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


42


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


43


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


44


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIMARRANN
6338384 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Next Gen Emerging Markets Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

8

   

Statement of Operations

   

10

   

Statements of Changes in Net Assets

   

11

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

18

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Federal Tax Notice

   

27

   

Important Notices

   

28

   

U.S. Customer Privacy Notice

   

29

   

Directors and Officers Information

   

32

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Next Gen Emerging Markets Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Next Gen Emerging Markets Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Next Gen Emerging Markets Portfolio Class I

 

$

1,000.00

   

$

1,074.10

   

$

1,020.32

   

$

5.07

   

$

4.94

     

0.97

%

 

Next Gen Emerging Markets Portfolio Class A

   

1,000.00

     

1,072.10

     

1018.55

     

6.89

     

6.72

     

1.32

   

Next Gen Emerging Markets Portfolio Class L

   

1,000.00

     

1,070.30

     

1,016.03

     

9.50

     

9.25

     

1.82

   

Next Gen Emerging Markets Portfolio Class C

   

1,000.00

     

1,069.00

     

1014.82

     

10.74

     

10.46

     

2.06

   

Next Gen Emerging Markets Portfolio Class R6

   

1,000.00

     

1,074.40

     

1020.62

     

4.76

     

4.63

     

0.91

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Next Gen Emerging Markets Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 6.65%, net of fees. The Fund's Class I shares underperformed the benchmark, the MSCI Frontier Emerging Markets Net Index (the "Index"), which returned 11.83%.

Factors Affecting Performance

•  The Fund's allocations in South Africa detracted from relative performance due to weak macroeconomic conditions in the country. During the year we significantly reduced the Fund's exposure to the country, reallocating capital to higher-conviction positions.

•  Within Pakistan, the allocation to a digital IT services provider detracted from relative performance as the stock was negatively impacted by macro concerns and slightly disappointing earnings results. However, as of the close of the period, we believe fundamentals may improve from here. The company has operating leverage and is likely to benefit further from the decline in the currency (as its cost base is in local currency but its revenue collection is in U.S. dollars), which could provide an additional driver for margins.

•  The Fund's consumer holdings in Indonesia, including to a traditional medicine company and a chocolate producer, were negatively impacted by higher-than-expected inflation affecting consumer sentiment and spending. We adjusted the Fund's positioning in Indonesia in the fourth quarter of 2023 away from mass consumer-focused plays and toward the premium consumer following a recent trip to the country where we came away with concerns that the mass consumer will likely remain under pressure for the coming year.

•  The positioning in Kenya through a leading telecommunications and mobile money operator detracted from relative performance. As of the end of the period, we continued to believe the company has a high quality business and can benefit from tailwinds of mobile data revenue growth, increasing electronic payments penetration and expansion in

other markets, including Ethiopia. We added to the position during the year following the stock's underperformance.

•  The Fund's zero allocations to Peru, Romania, Egypt, Slovenia and Morocco hampered relative performance as these markets were among the best performing in the frontier emerging markets universe for the full year.

•  The positioning in Poland contributed to relative performance, led by the allocation to an apparel retailer. The apparel retailer continued to see strong store openings in Poland and across Central and Eastern Europe, and its management remained focused on improving profitability. At period-end, we believed improving margins and returns are also likely to be future growth drivers for the company.

•  The allocation to a Latin American e-commerce platform contributed positively to relative performance and was the largest stock contributor to returns for the full year. The company continued to be a high-conviction position in the portfolio as we continued to believe it has opportunities for further growth and margin expansion across a number of initiatives, including advertising and improving profitability.

•  Within Kazakhstan, the Fund's allocations to a uranium producer and an online application/platform contributed to relative performance. The latter operates a "super-app" with several services, including banking, payments and e-commerce; and given its leading market share, we believe the company will likely be able to profitably grow its businesses as penetration rates rise in e-commerce and digital payments. With regard to the uranium producer, we continued to be constructive on the outlook for uranium and nuclear energy's role in reducing global carbon emissions. This company has the largest share of global uranium production and is the lowest-cost and cleanest nuclear fuel producer, thanks to its in-situ recovery extraction method.(i)

•  Zero allocations to Nigeria, Iceland and Oman also contributed positively to relative performance.

(i)​  Source: Company reporting as of August 2023.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Next Gen Emerging Markets Portfolio

Management Strategies

•  We remain focused on investing in the next generation of global investment opportunities unfolding in large, overlooked frontier and small emerging markets. The Fund's investment universe, including Vietnam, Bangladesh, Indonesia and Nigeria, mirrors the early days of emerging market investing. We focus on countries with sizeable, fast-growing consumer populations that are in the early development stages. These markets have largely been ignored by investors and represent a small fraction of mainstream emerging markets and global equity indexes but provide less correlated returns at attractive valuations.

•  We believe quality businesses that we think can benefit from trends, including positive demographics, growing incomes and digitization in the coming decade, and we are excited about the opportunities to be unlocked in frontier and small emerging markets.

•  The Fund continued to be invested in domestic growth through the consumer across the NextGen universe. In many of the markets we focus on, the consumer sector is still in the very early stages of evolution. Many households are set to move into the middle class as incomes rise and individuals begin to form consumption habits, increasingly choosing to shop in modern retail formats as opposed to wet markets or mom and pop shops, focusing on branded products they feel they can trust, and even beginning to make aspirational purchases. This secular trend of consumer behavior should continue to play out over a number of years, irrespective of all the global uncertainties. We think we have found some strong consumer franchises in countries such as Vietnam that have built up trust over many years (or are in the process of doing so), have strong competitive advantages, and are trading at reasonable prices.

•  Similarly, we think financial services remain inaccessible in many of our markets, including Bangladesh and Nigeria. This has not changed, even with higher global interest rates. The Fund is invested in companies that offer access to financial

services in a cheaper, more convenient way, and we believe they can continue to gain share, while generating strong profits.

•  The Fund's investments in a number of IT service providers underlie our view that the world shows no signs of slowing digitization, especially given its embrace of artificial intelligence. The Fund's portfolio of companies offering carbon-friendly products and services should continue to see growth underpinned by a world focused on reducing carbon emissions.

•  The Fund remains invested in what we believe are top-tier businesses with strong management teams, in overlooked markets where we think earnings growth is being undervalued, that can deliver long-term capital appreciation.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C and R6 shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Next Gen Emerging Markets Portfolio

Performance Compared to the MSCI Frontier Emerging Markets Net Index(1), the MSCI Frontier Markets/MSCI Frontier Emerging Markets Blend Index(2) and the Lipper Emerging Markets Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(9)
 
Fund — Class I Shares
w/o sales charges(5)
   

6.65

%

   

–0.30

%

   

–1.29

%

   

–0.42

%

 
Fund — Class A Shares
w/o sales charges(6)
   

6.28

     

–0.67

     

–1.63

     

1.52

   
Fund — Class A Shares
with maximum 5.25%
sales charges(6)
   

0.71

     

–1.74

     

–2.16

     

1.04

   
Fund — Class L Shares
w/o sales charges(6)
   

5.78

     

–1.16

     

–2.18

     

0.96

   
Fund — Class C Shares
w/o sales charges(8)
   

5.54

     

–1.40

     

     

–3.18

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(8)
   

4.54

     

–1.40

     

     

–3.18

   
Fund — Class R6 Shares
w/o sales charges(7)
   

6.68

     

–0.20

     

     

–1.76

   
MSCI Frontier Emerging
Markets Net Index
   

11.83

     

1.17

     

0.54

     

–0.54

   
MSCI Frontier Markets/ MSCI Frontier
Emerging Markets Blend Index
   

11.83

     

5.35

     

2.98

     

0.37

   
Lipper Emerging Markets Funds
Index
   

13.10

     

4.77

     

3.06

     

3.12

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI Frontier Emerging Markets Net Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of frontier emerging markets. The MSCI Frontier Emerging Markets Index captures large and mid cap representation across 32 Frontier Emerging Markets countries. The performance of the Index is calculated in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The MSCI Frontier Markets/MSCI Frontier Emerging Markets Blend Index is performance linked benchmark of the old and new benchmark of the Fund. The old benchmark represented by MSCI Frontier Markets Net Index (index that measures equity market performance of frontier markets) from the Fund's inception to June 29, 2021 to the new benchmark represented by MSCI Frontier Emerging Markets Net Index for periods thereafter. The performance of the Index is calculated in U.S. dollars and assumes reinvestment of net dividends. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(3)​  The Lipper Emerging Markets Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Emerging Markets Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Emerging Markets Funds classification.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  On September 17, 2012, all assets of Morgan Stanley Frontier Markets Fund, Inc. (the "Predecessor Fund") were reorganized into Class I shares of Morgan Stanley Institutional Fund, Inc. Next Gen Emerging Markets Portfolio (formerly Morgan Stanley Institutional Fund, Inc. Frontier Markets Portfolio ("the Fund"). Performance shown for Class I shares reflects the performance of the shares of the Predecessor Fund for periods prior to September 17, 2012. The Predecessor Fund may have performed differently if it were an open-end fund since closed-end funds are generally not subject to the cash flow fluctuations of an open-end fund. In addition, Class I shares' returns of the Fund will differ from the Predecessor Fund as they have different expenses. The Predecessor Fund commenced operations on August 25, 2008. The Fund changed it's name to Next Gen Emerging Markets Portfolio effective June 30, 2021.

(6)​  Commenced offering on September 14, 2012.

(7)​  Commenced offering on February 27, 2015.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Next Gen Emerging Markets Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.9%)

 

Bangladesh (2.4%)

 
BRAC Bank PLC    

2,414,947

   

$

788

   

Brazil (1.0%)

 

Locaweb Servicos de Internet SA

   

261,031

     

323

   

Indonesia (15.3%)

 

Bank Mandiri Persero Tbk. PT

   

3,428,900

     

1,347

   

Champ Resto Indonesia Tbk. PT

   

4,702,300

     

395

   

Cisarua Mountain Dairy Tbk. PT

   

2,416,600

     

629

   

Industri Jamu Dan Farmasi Sido Muncul Tbk. PT

   

11,633,300

     

397

   

Map Aktif Adiperkasa PT

   

6,640,500

     

353

   

Medikaloka Hermina Tbk. PT

   

14,466,600

     

1,400

   

Selamat Sempurna Tbk. PT

   

493,300

     

64

   

Sumber Alfaria Trijaya Tbk. PT

   

1,775,400

     

338

   
     

4,923

   

Kazakhstan (10.5%)

 

Halyk Savings Bank of Kazakhstan JSC GDR

   

44,949

     

681

   

Kaspi.KZ JSC GDR (Registered)

   

13,907

     

1,279

   

NAC Kazatomprom JSC GDR

   

34,503

     

1,411

   
     

3,371

   

Kenya (2.6%)

 

Safaricom PLC

   

9,365,242

     

826

   

Pakistan (3.3%)

 

Systems Ltd.

   

715,003

     

1,077

   

Philippines (8.9%)

 

Bank of the Philippine Islands

   

361,410

     

677

   

BDO Unibank, Inc.

   

343,340

     

809

   

Century Pacific Food, Inc.

   

2,483,700

     

1,388

   
     

2,874

   

Poland (16.7%)

 
11 bit studios SA (a)    

10,028

     

1,380

   

Grupa Kety SA

   

6,738

     

1,276

   

LPP SA

   

294

     

1,210

   

Text SA

   

51,010

     

1,501

   
     

5,367

   

Singapore (1.8%)

 

Delfi Ltd.

   

670,800

     

569

   

United Arab Emirates (1.5%)

 

Emaar Properties PJSC

   

230,885

     

498

   

United Kingdom (3.3%)

 

Airtel Africa PLC

   

644,957

     

1,070

   

United States (11.0%)

 

EPAM Systems, Inc. (a)

   

3,556

     

1,057

   

Grid Dynamics Holdings, Inc. (a)

   

71,862

     

958

   

MercadoLibre, Inc. (a)

   

960

     

1,509

   
     

3,524

   
   

Shares

  Value
(000)
 

Vietnam (21.6%)

 

Bank for Foreign Trade of Vietnam JSC (a)

   

234,657

   

$

776

   

Binh Minh Plastics JSC

   

125,800

     

541

   

FPT Corp.

   

623,530

     

2,640

   

Mobile World Investment Corp.

   

424,488

     

748

   

Phu Nhuan Jewelry JSC

   

310,400

     

1,177

   

Vietnam Dairy Products JSC

   

380,292

     

1,059

   
     

6,941

   

Total Common Stocks (Cost $26,918)

   

32,151

   

Short-Term Investment (1.0%)

 

Investment Company (1.0%)

 
Morgan Stanley Institutional Liquidity
Funds — Government Portfolio —
Institutional Class (See Note G)
(Cost $320)
   

319,702

     

320

   

Total Investments (100.9%) (Cost $27,238) (b)(c)

   

32,471

   
Liabilities in Excess of Other Assets (–0.9%)    

30

   

Net Assets (100.0%)

 

$

32,501

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $27,839,000 and 86.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(c)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $28,942,000. The aggregate gross unrealized appreciation is approximately $6,914,000 and the aggregate gross unrealized depreciation is approximately $3,398,000, resulting in net unrealized appreciation of approximately $3,516,000.

GDR  Global Depositary Receipt.

PJSC  Public Joint Stock Company.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

41.3

%

 

Information Technology Services

   

18.7

   

Banks

   

15.7

   

Food Products

   

11.2

   

Textiles, Apparel & Luxury Goods

   

7.3

   

Wireless Telecommunication Services

   

5.8

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Next Gen Emerging Markets Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $26,918)

 

$

32,151

   

Investment in Security of Affiliated Issuer, at Value (Cost $320)

   

320

   

Total Investments in Securities, at Value (Cost $27,238)

   

32,471

   

Foreign Currency, at Value (Cost $157)

   

141

   

Cash

   

21

   

Receivable for Investments Sold

   

103

   

Due from Adviser

   

69

   

Tax Reclaim Receivable

   

24

   

Dividends Receivable

   

13

   

Receivable from Affiliate

   

1

   

Receivable for Fund Shares Sold

   

@

 

Other Assets

   

49

   

Total Assets

   

32,892

   

Liabilities:

 

Payable for Investments Purchased

   

279

   

Payable for Professional Fees

   

31

   

Payable for Custodian Fees

   

31

   

Payable for Fund Shares Redeemed

   

18

   

Payable for Sub Transfer Agency Fees — Class I

   

4

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Administration Fees

   

2

   

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

1

   

Payable for Distribution and Shareholder Services Fees — Class L

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

23

   

Total Liabilities

   

391

   

Net Assets

 

$

32,501

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

147,126

   

Total Accumulated Loss

   

(114,625

)

 

Net Assets

 

$

32,501

   

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Next Gen Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

27,525

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,846,411

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.91

   

CLASS A:

 

Net Assets

 

$

4,282

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

289,498

   

Net Asset Value, Redemption Price Per Share

 

$

14.79

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.82

   

Maximum Offering Price Per Share

 

$

15.61

   

CLASS L:

 

Net Assets

 

$

235

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

16,214

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.53

   

CLASS C:

 

Net Assets

 

$

419

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

29,502

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.20

   

CLASS R6:

 

Net Assets

 

$

40

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,603

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

14.97

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Next Gen Emerging Markets Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $102 of Foreign Taxes Withheld)

 

$

978

   

Dividends from Security of Affiliated Issuer (Note G)

   

39

   

Total Investment Income

   

1,017

   

Expenses:

 

Advisory Fees (Note B)

   

445

   

Professional Fees

   

196

   

Custodian Fees (Note F)

   

88

   

Registration Fees

   

73

   

Administration Fees (Note C)

   

30

   

Sub Transfer Agency Fees — Class I

   

23

   

Sub Transfer Agency Fees — Class A

   

7

   

Sub Transfer Agency Fees — Class L

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Transfer Agency Fees — Class I (Note E)

   

11

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class L (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Shareholder Services Fees — Class A (Note D)

   

12

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

2

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

4

   

Shareholder Reporting Fees

   

13

   

Directors' Fees and Expenses

   

6

   

Pricing Fees

   

1

   

Other Expenses

   

23

   

Total Expenses

   

947

   

Waiver of Advisory Fees (Note B)

   

(429

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(46

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(19

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(4

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(1

)

 

Net Expenses

   

439

   

Net Investment Income

   

578

   

Realized Loss:

 

Investments Sold

   

(3,057

)

 

Foreign Currency Translation

   

(73

)

 

Net Realized Loss

   

(3,130

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

5,033

   

Foreign Currency Translation

   

17

   

Net Change in Unrealized Appreciation (Depreciation)

   

5,050

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

1,920

   

Net Increase in Net Assets Resulting from Operations

 

$

2,498

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Next Gen Emerging Markets Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

578

   

$

425

   

Net Realized Loss

   

(3,130

)

   

(34,471

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

5,050

     

(23,980

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

2,498

     

(58,026

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(369

)

   

   

Class A

   

(42

)

   

   

Class L

   

(1

)

   

   

Class C

   

(1

)

   

   

Class R6*

   

(1

)

   

   

Total Dividends and Distributions to Shareholders

   

(414

)

   

   
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

1,938

     

9,954

   

Distributions Reinvested

   

358

     

   

Redeemed

   

(12,957

)

   

(57,215

)

 

Class A:

 

Subscribed

   

577

     

1,523

   

Distributions Reinvested

   

42

     

   

Redeemed

   

(2,319

)

   

(1,590

)

 

Class L:

 

Exchanged

   

     

33

   

Distributions Reinvested

   

1

     

   

Redeemed

   

(9

)

   

(66

)

 

Class C:

 

Subscribed

   

18

     

25

   

Distributions Reinvested

   

1

     

   

Redeemed

   

(109

)

   

(91

)

 

Class R6:*

 

Subscribed

   

25

     

1,006

   

Distributions Reinvested

   

1

     

   

Redeemed

   

(28

)

   

(28,304

)

 

Net Decrease in Net Assets Resulting from Capital Share Transactions

   

(12,461

)

   

(74,725

)

 

Redemption Fees

   

@

   

7

   

Total Decrease in Net Assets

   

(10,377

)

   

(132,744

)

 

Net Assets:

 

Beginning of Period

   

42,878

     

175,622

   

End of Period

 

$

32,501

   

$

42,878

   

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Next Gen Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

136

     

547

   

Shares Issued on Distributions Reinvested

   

25

     

   

Shares Redeemed

   

(910

)

   

(3,509

)

 

Net Decrease in Class I Shares Outstanding

   

(749

)

   

(2,962

)

 

Class A:

 

Shares Subscribed

   

41

     

100

   

Shares Issued on Distributions Reinvested

   

3

     

   

Shares Redeemed

   

(166

)

   

(98

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(122

)

   

2

   

Class L:

 

Shares Exchanged

   

     

3

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Shares Redeemed

   

(1

)

   

(4

)

 

Net Decrease in Class L Shares Outstanding

   

(1

)

   

(1

)

 

Class C:

 

Shares Subscribed

   

1

     

1

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Shares Redeemed

   

(8

)

   

(6

)

 

Net Decrease in Class C Shares Outstanding

   

(7

)

   

(5

)

 

Class R6:*

 

Shares Subscribed

   

2

     

53

   

Shares Issued on Distributions Reinvested

   

@@

   

   

Shares Redeemed

   

(2

)

   

(1,840

)

 

Net Decrease in Class R6 Shares Outstanding

   

(—

@@)

   

(1,787

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Next Gen Emerging Markets Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.03

   

$

22.48

   

$

19.49

   

$

17.10

   

$

15.63

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.23

     

0.13

     

(0.02

)

   

0.04

     

0.39

   

Net Realized and Unrealized Gain (Loss)

   

0.85

     

(8.58

)

   

3.01

     

2.36

     

1.58

   

Total from Investment Operations

   

1.08

     

(8.45

)

   

2.99

     

2.40

     

1.97

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.20

)

   

     

     

(0.01

)

   

(0.50

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.91

   

$

14.03

   

$

22.48

   

$

19.49

   

$

17.10

   

Total Return

   

7.73

%(4)(9)

   

(37.59

)%(3)

   

15.34

%(3)

   

14.02

%(3)

   

12.53

%(3)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

27,525

   

$

36,405

   

$

124,931

   

$

55,533

   

$

125,780

   

Ratio of Expenses Before Expense Limitation

   

2.47

%

   

2.30

%

   

2.21

%

   

2.13

%

   

1.92

%

 

Ratio of Expenses After Expense Limitation

   

1.12

%(5)(6)

   

1.24

%(6)

   

1.51

%(6)

   

1.90

%(6)(7)

   

1.90

%(6)(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.51

%(6)

   

1.85

%(6)

   

1.85

%(6)

 

Ratio of Net Investment Income (Loss)

   

1.62

%(5)(6)

   

0.77

%(6)

   

(0.11

)%(6)

   

0.24

%(6)

   

2.33

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

33

%

   

78

%

   

56

%

   

56

%

   

68

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.15% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 7.58%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.25

%

   

1.49

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

(9)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Fund Report and Performance Summary.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Next Gen Emerging Markets Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.91

   

$

22.37

   

$

19.47

   

$

17.15

   

$

15.61

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.18

     

0.10

     

(0.08

)

   

0.01

     

0.42

   

Net Realized and Unrealized Gain (Loss)

   

0.84

     

(8.56

)

   

2.98

     

2.32

     

1.48

   

Total from Investment Operations

   

1.02

     

(8.46

)

   

2.90

     

2.33

     

1.90

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

     

     

(0.01

)

   

(0.36

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.79

   

$

13.91

   

$

22.37

   

$

19.47

   

$

17.15

   

Total Return

   

7.37

%(4)(9)

   

(37.82

)%(3)

   

14.89

%(3)

   

13.57

%(3)

   

12.13

%(3)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,282

   

$

5,719

   

$

9,154

   

$

8,436

   

$

12,044

   

Ratio of Expenses Before Expense Limitation

   

2.84

%

   

2.66

%

   

2.70

%

   

2.44

%

   

2.23

%

 

Ratio of Expenses After Expense Limitation

   

1.47

%(5)(6)

   

1.59

%(6)

   

1.96

%(6)

   

2.26

%(6)(7)

   

2.25

%(6)(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.96

%(6)

   

2.20

%(6)

   

2.20

%(6)

 

Ratio of Net Investment Income (Loss)

   

1.27

%(5)(6)

   

0.68

%(6)

   

(0.38

)%(6)

   

0.07

%(6)

   

2.48

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

33

%

   

78

%

   

56

%

   

56

%

   

68

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.14% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 7.23%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.60

%

   

1.14

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

(9)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Fund Report and Performance Summary. Does not reflect the deduction of sales charge.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Next Gen Emerging Markets Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.68

   

$

22.11

   

$

19.34

   

$

17.11

   

$

15.59

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.11

     

0.01

     

(0.19

)

   

(0.06

)

   

0.25

   

Net Realized and Unrealized Gain (Loss)

   

0.82

     

(8.44

)

   

2.96

     

2.30

     

1.56

   

Total from Investment Operations

   

0.93

     

(8.43

)

   

2.77

     

2.24

     

1.81

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.08

)

   

     

     

(0.01

)

   

(0.29

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.53

   

$

13.68

   

$

22.11

   

$

19.34

   

$

17.11

   

Total Return

   

6.81

%(4)(9)

   

(38.13

)%(3)

   

14.32

%(3)

   

13.01

%(3)

   

11.58

%(3)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

235

   

$

229

   

$

396

   

$

378

   

$

570

   

Ratio of Expenses Before Expense Limitation

   

4.38

%

   

4.02

%

   

3.67

%

   

3.44

%

   

2.90

%

 

Ratio of Expenses After Expense Limitation

   

1.96

%(5)(6)

   

2.09

%(6)

   

2.46

%(6)

   

2.76

%(6)(7)

   

2.75

%(6)(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

2.46

%(6)

   

2.70

%(6)

   

2.70

%(6)

 

Ratio of Net Investment Income (Loss)

   

0.77

%(5)(6)

   

0.06

%(6)

   

(0.86

)%(6)

   

(0.39

)%(6)

   

1.47

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

33

%

   

78

%

   

56

%

   

56

%

   

68

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.15% for Class L shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class L shares would have been 6.66%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.10

%

   

0.63

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

(9)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Fund Report and Performance Summary.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Next Gen Emerging Markets Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.36

   

$

21.65

   

$

18.99

   

$

16.85

   

$

15.38

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.07

     

(0.02

)

   

(0.24

)

   

(0.10

)

   

0.20

   

Net Realized and Unrealized Gain (Loss)

   

0.81

     

(8.27

)

   

2.90

     

2.25

     

1.56

   

Total from Investment Operations

   

0.88

     

(8.29

)

   

2.66

     

2.15

     

1.76

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.04

)

   

     

     

(0.01

)

   

(0.29

)

 

Redemption Fees

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

   

0.00

(2)

 

Net Asset Value, End of Period

 

$

14.20

   

$

13.36

   

$

21.65

   

$

18.99

   

$

16.85

   

Total Return

   

6.59

%(4)(9)

   

(38.29

)%(3)

   

14.01

%(3)

   

12.74

%(3)

   

11.34

%(3)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

419

   

$

485

   

$

897

   

$

843

   

$

877

   

Ratio of Expenses Before Expense Limitation

   

4.20

%

   

3.75

%

   

3.67

%

   

3.42

%

   

3.07

%

 

Ratio of Expenses After Expense Limitation

   

2.21

%(5)(6)

   

2.34

%(6)

   

2.71

%(6)

   

3.00

%(6)(7)

   

2.99

%(6)(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

2.71

%(6)

   

2.95

%(6)

   

2.95

%(6)

 

Ratio of Net Investment Income (Loss)

   

0.52

%(5)(6)

   

(0.14

)%(6)

   

(1.13

)%(6)

   

(0.66

)%(6)

   

1.17

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.01

%

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

33

%

   

78

%

   

56

%

   

56

%

   

68

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.15% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 6.44%. Refer to Note B in the Notes to Financial Statements.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

2.35

%

   

0.38

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(8)  Amount is less than 0.005%.

(9)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Fund Report and Performance Summary. Does not reflect the deduction of sales charge.

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Next Gen Emerging Markets Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.09

   

$

22.48

   

$

19.49

   

$

17.09

   

$

15.63

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.24

     

(0.13

)

   

(0.07

)

   

0.09

     

0.33

   

Net Realized and Unrealized Gain (Loss)

   

0.85

     

(8.26

)

   

3.06

     

2.32

     

1.64

   

Total from Investment Operations

   

1.09

     

(8.39

)

   

2.99

     

2.41

     

1.97

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

     

     

(0.01

)

   

(0.51

)

 

Redemption Fees

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

   

0.00

(3)

 

Net Asset Value, End of Period

 

$

14.97

   

$

14.09

   

$

22.48

   

$

19.49

   

$

17.09

   

Total Return

   

7.76

%(5)(10)

   

(37.32

)%(4)

   

15.34

%(4)

   

14.02

%(4)

   

12.60

%(4)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

40

   

$

40

   

$

40,244

   

$

318

   

$

1,580

   

Ratio of Expenses Before Expense Limitation

   

8.23

%

   

2.24

%

   

1.80

%

   

2.20

%

   

1.91

%

 

Ratio of Expenses After Expense Limitation

   

1.08

%(6)(7)

   

1.19

%(7)

   

1.24

%(7)

   

1.86

%(7)(8)

   

1.85

%(7)(8)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

N/A

     

1.24

%(7)

   

1.80

%(7)

   

1.80

%(7)

 

Ratio of Net Investment Income (Loss)

   

1.67

%(6)(7)

   

(0.65

)%(7)

   

(0.29

)%(7)

   

0.55

%(7)

   

1.95

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(9)

   

0.01

%

   

0.00

%(9)

   

0.00

%(9)

   

0.00

%(9)

 

Portfolio Turnover Rate

   

33

%

   

78

%

   

56

%

   

56

%

   

68

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.15% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 7.61%. Refer to Note B in the Notes to Financial Statements.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.20

%

   

1.55

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Ratio is above the expense limitation due to interest expenses, which are not included in the determination of the expense limitation. Refer to Footnote B in the Notes to the Financial Statements.

(9)  Amount is less than 0.005%.

(10)  Calculated using the NAV for US GAAP financial reporting purposes and as such differs from the total return presented in the Fund Report and Performance Summary.

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Next Gen Emerging Markets Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued five classes of shares — Class I, Class A, Class L, Class C and Class R6. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between

the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Automobile Components

 

$

   

$

64

   

$

   

$

64

   

Banks

   

788

     

4,290

     

     

5,078

   

Broadline Retail

   

1,509

     

     

     

1,509

   

Building Products

   

     

541

     

     

541

   

Consumer Finance

   

     

1,279

     

     

1,279

   
Consumer Staples
Distribution & Retail
   

     

338

     

     

338

   

Entertainment

   

     

1,380

     

     

1,380

   

Food Products

   

     

3,645

     

     

3,645

   
Health Care Providers &
Services
   

     

1,400

     

     

1,400

   
Hotels, Restaurants &
Leisure
   

     

395

     

     

395

   
Information Technology
Services
   

2,015

     

4,040

     

     

6,055

   

Metals & Mining

   

     

1,276

     

     

1,276

   
Oil, Gas & Consumable
Fuels
   

     

1,411

     

     

1,411

   

Personal Care Products

   

     

397

     

     

397

   
Real Estate
Management &
Development
   

     

498

     

     

498

   

Software

   

     

1,501

     

     

1,501

   


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 

Specialty Retail

 

$

   

$

1,101

   

$

   

$

1,101

   
Textiles, Apparel &
Luxury Goods
   

     

2,387

     

     

2,387

   
Wireless
Telecommunication
Services
   

     

1,896

     

     

1,896

   

Total Common Stocks

   

4,312

     

27,839

     

     

32,151

   

Short-Term Investment

 

Investment Company

   

320

     

     

     

320

   

Total Assets

 

$

4,632

   

$

27,839

   

$

   

$

32,471

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

A significant portion of the Fund's net assets consist of securities of issuers located in emerging markets, which are denominated in foreign currencies. Such securities may be concentrated in a limited number of countries and regions and may vary throughout the year. Changes in currency exchange rates will affect the value of securities and investment income from foreign currency denominated securities. Emerging market securities are often subject to greater price volatility, limited capitalization and liquidity, and higher rates of inflation than securities of companies based in the U.S. In addition, emerging market issuers may be subject to substantial governmental involvement in the economy and greater social, economic and political uncertainty.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Redemption Fees: The Fund will assess a 2% redemption fee, on Class I shares, Class A shares, Class L shares, Class C shares and Class R6 shares, which is paid directly to the Fund, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Fund and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at an annual rate of 1.20% of the daily net assets of the Fund.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest

and other extraordinary expenses (including litigation), will not exceed 1.25% for Class I shares, 1.60% for Class A shares, 2.10% for Class L shares, 2.35% for Class C shares and 1.20% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $429,000 of advisory fees were waived and approximately $32,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $11,948,000 and $22,331,000, respectively. There were no purchases and sales of long-term

U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Government Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,860

   

$

14,844

   

$

16,384

   

$

39

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

320

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023 Distributions
Paid From:
Ordinary Income
(000)
  2022 Distributions
Paid From:
Ordinary Income
(000)
 
$

414

   

$

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

91

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $113,063,000 and $5,155,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 38.6%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Next Gen Emerging Markets Portfolio and the Board of
Directors of Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Next Gen Emerging Markets Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $515,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $102,000 and has derived net income from sources within foreign countries amounting to approximately $1,080,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


37


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFINGEMANN
6337748 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Passport Overseas Equity Portfolio

(formerly Active International Allocation Portfolio)

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

9

   

Statement of Operations

   

11

   

Statements of Changes in Net Assets

   

12

   

Financial Highlights

   

14

   

Notes to Financial Statements

   

20

   

Report of Independent Registered Public Accounting Firm

   

31

   

Liquidity Risk Management Program

   

32

   

Federal Tax Notice

   

33

   

Important Notices

   

34

   

U.S. Customer Privacy Notice

   

35

   

Directors and Officers Information

   

38

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Passport Overseas Equity Portfolio (the "Fund") (formerly MSIF Active International Allocation Portfolio) performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Passport Overseas Equity Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Passport Overseas Equity Portfolio Class I

 

$

1,000.00

   

$

1,012.30

   

$

1021.07

   

$

4.16

   

$

4.18

     

0.82

%

 

Passport Overseas Equity Portfolio Class A

   

1,000.00

     

1,010.70

     

1,019.51

     

5.73

     

5.75

     

1.13

   

Passport Overseas Equity Portfolio Class L

   

1,000.00

     

1,007.10

     

1016.74

     

8.50

     

8.54

     

1.68

   

Passport Overseas Equity Portfolio Class C

   

1,000.00

     

1,006.20

     

1,015.48

     

9.76

     

9.80

     

1.93

   

Passport Overseas Equity Portfolio Class R6

   

1,000.00

     

1,012.70

     

1021.27

     

3.96

     

3.97

     

0.78

   

Passport Overseas Equity Portfolio Class IR

   

1,000.00

     

1,012.10

     

1021.27

     

3.96

     

3.97

     

0.78

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Passport Overseas Equity Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 12.52%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the MSCI All Country World ex USA Index (the "Index"), which returned 15.62%.

Factors Affecting Performance

•  Aggregate stock selection in consumer discretionary contributed strongly to the Fund's relative performance, led by the allocation to a Latin American e-commerce platform, which was the largest stock contributor to relative returns during the period. The allocations to a Latin American online travel booking company and a Japan-based cameras and optical instruments manufacturer were also additive to relative performance.

•  The overweight to and stock selection in information technology (IT) — particularly semiconductors and tech hardware — added to relative returns, as did the allocation to a low-cost European airline and a leading universal Brazilian bank. Positioning in energy was also positive for relative performance, led by the allocation to a French engineering project consultant serving the energy industry. The zero allocations to the real estate and utilities sectors also added to relative returns.

•  The Fund's relative performance benefited from our active country allocation decisions, including the zero allocations to Hong Kong and Thailand. China finished 2023 with a negative return, and the portfolio underweight there was additive to relative performance. However, aggregate stock selection in China detracted slightly from relative performance, led by the overweight allocations to an e-commerce platform and a beer producer.

•  The overweight to and positioning within health care, specifically the allocation to a German pharmaceutical company, detracted from relative returns. Within the materials sector — the portfolio's largest overweight — stock selection

detracted from relative performance, led by the allocations to selected metals and mining companies. The overweight to and stock selection in consumer staples and communication services hampered relative returns as a U.K. consumer goods company and a Southeast Asia-based video gaming and e-commerce company underperformed.

•  Other material detractors from relative performance included the Fund's aggregate stock selection in India and the zero allocation to Italy.

•  The Fund utilized stock index futures and forward currency contracts in 2023 to manage certain market and currency exposures. This was a performance detractor in the period.

Management Strategies

•  2023 was a choppy year for non-U.S. equities, as represented by the Index. From January to July 2023, the Index rose and fell nearly 10% multiple times before falling more than 12% from August to October 2023, and then rallying nearly 15% into year-end 2023, to finish the year with a return of almost 16%. For the full-year period, every Index country posted a positive return except for China, Hong Kong, Thailand, Kuwait and Turkey. China had its third consecutive annual decline in 2023, and the annualized three-year return as of December 31, 2023 for the market was –18%.(i)​ Industry returns in the Index all were positive in 2023, except for consumer services, which declined 1%.

•  At the start of 2023, there was a strong consensus that a recession was expected in the first half of the year followed by a recovery in the second half. Markets expected the Federal Reserve (Fed) to cut policy interest rates during this period. However, we disagreed with this view, believing consensus was too tight for comfort, and we expected interest rates to remain higher during 2023.

•  An important area of focus in the portfolio was global semiconductors, which we added to during 2023. Within that, we saw an attractive opportunity for DRAM (dynamic random access memory) manufacturers and equipment suppliers. After the

(i)​  Regional and country returns are represented by their respective MSCI regional/country indexes, which are broad measures of the region/country's stock market performance.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Passport Overseas Equity Portfolio

worst year for DRAM fundamentals since 2008-09, we expected an industry recovery on the back of supply and capital expenditure cuts, while the demand appeared likely to inflect due to a recovery in PC and smartphone sales and demand for HBM (high-bandwidth memory) chips used by artificial intelligence (AI) servers. Industry conditions have finally seen pricing for chips improve as high inventories built over the last two years have been worked down.

•  We added to the portfolio's exposure to platinum group metals (PGM) producers. We thought reduced demand expectations were misplaced due to many factors, including tightening global emissions standards, lasting heavy-duty truck demand for catalytic converters, and a greater share of hybrid vehicles. We believe that PGM mining stocks were inexpensive on depressed earnings and have been under-owned, creating ample room for valuations to increase if prices react to lower supply and higher-than-expected demand.

•  We increased the portfolio's weight in a leading Latin American online travel agency, which we considered attractively valued with bookings and margins improving.

•  In Europe, we initiated a small position in a manufacturer that distributes food and beverage glass packaging. At the time of purchase, we considered the company a "Sustainable Grower," as it has been a market share leader in glass packaging in Europe and stands to benefit from premiumization in the wines and spirits industry, its main business driver. The company offers a higher mix of recycled glass content, and may benefit from the potential for glass to take share from other packaging substrates, most notably in non-alcoholic beverages and other food verticals.

•  As of the close of the period, Passport Overseas Portfolio was positioned in multiple industries, seeking companies with generally low leverage and robust business models, that we see as having favorable pricing power in the next several years. We have been avoiding highly valuation and highly leveraged companies and have been looking for opportunities for growth at what we believe are attractive valuations. We expect that equities, overall, should be an attractive asset class. Non-U.S.

markets look particularly attractive as they offer companies that we believe currently trade at more attractive valuations compared to many of their U.S. peers.

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if application).


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Passport Overseas Equity Portfolio

Performance Compared to the MSCI All Country World ex USA Index(1)​, the Active International Allocation Blend Index(2)​, and the Lipper International Large-Cap Growth Funds Index(3)

    Period Ended December 31, 2023
Total Returns(4)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(10)
 
Fund — Class I Shares
w/o sales charges(5)
   

12.52

%

   

7.60

%

   

3.40

%

   

5.56

%

 
Fund — Class A Shares
w/o sales charges(6)
   

12.15

     

7.28

     

3.07

     

4.87

   
Fund — Class A Shares with
maximum 5.25% sales charges(6)
   

6.29

     

6.13

     

2.51

     

4.66

   
Fund — Class L Shares
w/o sales charges(7)
   

11.51

     

6.70

     

2.52

     

5.39

   
Fund — Class C Shares
w/o sales charges(8)
   

11.27

     

6.43

     

     

2.54

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(8)
   

10.27

     

6.43

     

     

2.54

   
Fund — Class R6 Shares
w/o sales charges(9)
   

12.56

     

     

     

5.83

   
Fund — Class IR Shares
w/o sales charges(9)
   

12.49

     

     

     

5.80

   

MSCI All Country World ex USA Index

   

15.62

     

7.08

     

3.83

     

5.58

   
Active International Allocation
Blend Index
   

15.62

     

7.08

     

3.88

     

5.42

   
Lipper International Large-Cap
Growth Funds Index
   

17.04

     

8.94

     

4.82

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The MSCI All Country World ex USA Index is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the United States. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. Returns, including periods prior to January 1, 2001, are calculated using the return data of the MSCI All Country World ex USA Index (gross dividends) through December 31, 2000 and the return data of the MSCI All Country World ex USA Index (net dividends) after December 31, 2000. Net total return indices reinvest dividends after the deduction of withholding taxes, using (for international indices) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Active International Allocation Blend Index is performance linked benchmark of the old and new benchmark of the Fund, the old benchmark represented by MSCI EAFE Index (a benchmark measures the international equity market performance of developed markets excluding the United States and Canada) from the Fund's inception to December 31, 2016 and the new benchmark represented by MSCI All Country World ex USA Index for periods thereafter. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(3)​  The Lipper International Large-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper International Large-Cap Growth Funds classification.

(4)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(5)​  Commenced operations on January 17, 1992.

(6)​  Commenced offering on January 2, 1996.

(7)​  Commenced offering on June 14, 2012.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  Commenced offering on October 31, 2019.

(10)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Passport Overseas Equity Portfolio

   

Shares

  Value
(000)
 

Common Stocks (98.9%)

 

Argentina (4.3%)

 

Despegar.com Corp. (a)(b)

   

795,453

   

$

7,525

   

Brazil (2.3%)

 

Itau Unibanco Holding SA (Preference) ADR

   

372,299

     

2,587

   

Vale SA

   

89,697

     

1,421

   
     

4,008

   

Canada (4.5%)

 

Agnico Eagle Mines Ltd.

   

36,511

     

2,002

   

Canadian National Railway Co.

   

27,062

     

3,400

   

First Quantum Minerals Ltd.

   

79,941

     

654

   

Teck Resources Ltd., Class B

   

23,894

     

1,010

   

Tourmaline Oil Corp. (a)

   

17,370

     

781

   
     

7,847

   

China (4.9%)

 

Alibaba Group Holding Ltd. ADR

   

79,831

     

6,188

   

China Resources Beer Holdings Co. Ltd. (c)

   

130,000

     

570

   

Tencent Holdings Ltd. (c)

   

49,800

     

1,880

   
     

8,638

   

Denmark (2.0%)

 

Novo Nordisk AS, Class B

   

34,014

     

3,525

   

France (10.0%)

 

Air Liquide SA

   

7,756

     

1,510

   

Airbus SE

   

24,825

     

3,835

   

Hermes International

   

340

     

723

   

L'Oreal SA

   

3,130

     

1,560

   

Legrand SA

   

5,410

     

563

   

LVMH Moet Hennessy Louis Vuitton SE

   

1,915

     

1,556

   

Pernod Ricard SA

   

9,280

     

1,640

   

Sanofi

   

20,836

     

2,071

   

Technip Energies NV

   

43,015

     

1,004

   

TotalEnergies SE

   

25,517

     

1,735

   

Verallia SA

   

35,612

     

1,372

   
     

17,569

   

Germany (9.4%)

 

Bayer AG (Registered)

   

84,681

     

3,142

   

CTS Eventim AG & Co. KGaA

   

17,063

     

1,180

   

Infineon Technologies AG

   

47,306

     

1,976

   

Jungheinrich AG (Preference)

   

27,185

     

995

   

Linde PLC

   

11,745

     

4,778

   

Rheinmetall AG

   

5,939

     

1,883

   

Siemens Healthineers AG

   

43,179

     

2,507

   
     

16,461

   

India (5.2%)

 

Apollo Hospitals Enterprise Ltd.

   

18,656

     

1,278

   

HDFC Bank Ltd. ADR

   

47,503

     

3,188

   

ICICI Bank Ltd.

   

107,392

     

1,283

   

ICICI Prudential Life Insurance Co. Ltd.

   

118,294

     

759

   

Jio Financial Services Ltd. (b)

   

41,078

     

115

   

Reliance Industries Ltd.

   

41,078

     

1,275

   

State Bank of India

   

158,745

     

1,224

   
     

9,122

   
   

Shares

  Value
(000)
 

Ireland (2.1%)

 

Ryanair Holdings PLC ADR (b)

   

27,334

   

$

3,645

   

Israel (0.9%)

 

CyberArk Software Ltd. (b)

   

6,900

     

1,512

   

Japan (8.4%)

 

FANUC Corp.

   

21,750

     

638

   

Hoya Corp.

   

6,200

     

772

   

Keyence Corp.

   

5,600

     

2,460

   

Nikon Corp.

   

187,800

     

1,854

   

Shimano, Inc.

   

3,650

     

562

   

Shiseido Co. Ltd.

   

7,600

     

229

   

SMC Corp.

   

1,805

     

966

   

Sony Group Corp.

   

30,493

     

2,886

   

Sony Group Corp. ADR (a)

   

22,101

     

2,093

   

Tokyo Electron Ltd.

   

10,200

     

1,813

   

Unicharm Corp.

   

11,100

     

401

   
     

14,674

   

Korea, Republic of (4.9%)

 

Samsung Electronics Co. Ltd.

   

114,545

     

6,953

   

SK Hynix, Inc.

   

15,056

     

1,643

   
     

8,596

   

Netherlands (4.1%)

 

Akzo Nobel NV

   

11,091

     

919

   
ASML Holding NV    

4,026

     

3,039

   

Universal Music Group NV

   

70,366

     

2,009

   

Wolters Kluwer NV

   

8,625

     

1,227

   
     

7,194

   

Singapore (1.9%)

 

Sea Ltd. ADR (b)

   

83,911

     

3,398

   

South Africa (4.1%)

 

Anglo American Platinum Ltd. (a)

   

40,710

     

2,137

   

Impala Platinum Holdings Ltd.

   

163,883

     

814

   

Northam Platinum Holdings Ltd.

   

129,342

     

980

   

Sibanye Stillwater Ltd.

   

191,769

     

257

   

Sibanye Stillwater Ltd. ADR (a)

   

184,300

     

1,001

   

Thungela Resources Ltd. (a)

   

245,623

     

1,998

   
     

7,187

   

Spain (0.4%)

 

Amadeus IT Group SA

   

9,448

     

679

   

Switzerland (2.3%)

 

Nestle SA (Registered)

   

33,964

     

3,937

   

Taiwan (3.5%)

 

Taiwan Semiconductor Manufacturing Co. Ltd.

   

201,000

     

3,854

   

Taiwan Semiconductor Manufacturing Co. Ltd. ADR

   

22,069

     

2,295

   
     

6,149

   

United Kingdom (17.5%)

 

Anglo American PLC

   

72,820

     

1,822

   

AstraZeneca PLC

   

35,149

     

4,741

   

Diageo PLC

   

63,527

     

2,306

   

Experian PLC

   

61,841

     

2,523

   

Glencore PLC

   

1,167,847

     

7,020

   

Shell PLC

   

174,951

     

5,727

   

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments (cont'd)

Passport Overseas Equity Portfolio

   

Shares

  Value
(000)
 

United Kingdom (cont'd)

 

Unilever PLC

   

38,099

   

$

1,847

   

Unilever PLC ADR

   

33,864

     

1,642

   

Unilever PLC CVA

   

59,997

     

2,904

   
     

30,532

   

United States (6.2%)

 

MercadoLibre, Inc. (b)

   

2,084

     

3,275

   

Newmont Corp. (NYSE)

   

23,513

     

974

   

Newmont Corp. (TSX)

   

67,941

     

2,812

   

Schlumberger NV

   

22,674

     

1,180

   

Vertex Pharmaceuticals, Inc. (b)

   

6,361

     

2,588

   
     

10,829

   

Total Common Stocks (Cost $134,311)

   

173,027

   

Preferred Stock (0.7%)

 

United States (0.7%)

 
Neurogenesis, Inc., Series A (b)(d)(e) (acquisition
cost — $1,250; acquired 12/16/21)
   

32,692

     

1,250

   

Short-Term Investments (0.5%)

 

Investment Company (0.4%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $676)
   

675,596

     

676

   

Securities held as Collateral on Loaned Securities (0.1%)

 

Investment Company (0.1%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

181,320

     

181

   
    Face
Amount
(000)
     

Repurchase Agreements (0.0%)‡

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $13; fully
collateralized by U.S. Government
obligations; 0.25% - 3.00%
due 5/15/24 - 11/15/49;
valued at $14)
 

$

13

     

13

   
HSBC Securities USA, Inc., (5.33%,
dated 12/29/23, due 1/2/24;
proceeds $14; fully collateralized by a
U.S. Government obligation; 0.00%
due 8/15/27; valued at $14)
   

14

     

14

   
Merrill Lynch & Co., Inc., (5.31%,
dated 12/29/23, due 1/2/24;
proceeds $13; fully collateralized by a
U.S. Government obligation; 4.75%
due 11/15/53; valued at $14)
   

13

     

13

   
     

40

   
Total Securities held as Collateral on Loaned
Securities (Cost $221)
   

221

   

Total Short-Term Investments (Cost $897)

   

897

   
Total Investments (100.1%) (Cost $136,458)
Including $4,910 of Securities Loaned (f)(g)
   

175,174

   

Liabilities in Excess of Other Assets (–0.1%)

   

(139

)

 

Net Assets (100.0%)

 

$

175,035

   

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

‡  Amount is less than 0.05%.

(a)  All or a portion of this security was on loan at December 31, 2023.

(b)  Non-income producing security.

(c)  Security trades on the Hong Kong exchange.

(d)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at December 31, 2023 amounts to approximately $1,250,000 and represents 0.7% of net assets.

(e)  At December 31, 2023, the Fund held a fair valued security valued at approximately $1,250,000, representing 0.7% of net assets. This security has been fair valued using significant unobservable inputs as determined in good faith under procedures established by and under the general supervision of the Company's (as defined herein) Directors.

(f)  The approximate fair value and percentage of net assets, $119,277,000 and 68.1%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

(g)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $137,873,000. The aggregate gross unrealized appreciation is approximately $50,147,000 and the aggregate gross unrealized depreciation is approximately $13,177,000, resulting in net unrealized appreciation of approximately $36,970,000.

ADR  American Depositary Receipt.

CVA  Certificaten Van Aandelen.

NYSE  New York Stock Exchange.

TSX  Toronto Stock Exchange.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Other**

   

58.8

%

 

Metals & Mining

   

13.1

   

Semiconductors & Semiconductor Equipment

   

8.4

   

Pharmaceuticals

   

7.7

   

Oil, Gas & Consumable Fuels

   

6.6

   

Broadline Retail

   

5.4

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Passport Overseas Equity Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $135,601)

 

$

174,317

   

Investment in Security of Affiliated Issuer, at Value (Cost $857)

   

857

   

Total Investments in Securities, at Value (Cost $136,458)

   

175,174

   

Cash

   

2

   

Due from Broker

   

362

   

Tax Reclaim Receivable

   

271

   

Dividends Receivable

   

163

   

Receivable for Fund Shares Sold

   

24

   

Receivable from Securities Lending Income

   

2

   

Receivable from Affiliate

   

1

   

Other Assets

   

64

   

Total Assets

   

176,063

   

Liabilities:

 

Deferred Capital Gain Country Tax

   

311

   

Collateral on Securities Loaned, at Value

   

221

   

Payable for Advisory Fees

   

212

   

Payable for Fund Shares Redeemed

   

127

   

Payable to Bank

   

40

   

Payable for Sub Transfer Agency Fees — Class I

   

23

   

Payable for Sub Transfer Agency Fees — Class A

   

8

   

Payable for Sub Transfer Agency Fees — Class L

   

1

   

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Professional Fees

   

17

   

Payable for Custodian Fees

   

13

   

Payable for Administration Fees

   

12

   

Payable for Shareholder Services Fees — Class A

   

10

   

Payable for Distribution and Shareholder Services Fees — Class L

   

3

   

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class I

   

1

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

@

 

Payable for Transfer Agency Fees — Class C

   

1

   

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Transfer Agency Fees — Class IR

   

@

 

Other Liabilities

   

27

   

Total Liabilities

   

1,028

   

Net Assets

 

$

175,035

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

141,422

   

Total Distributable Earnings

   

33,613

   

Net Assets

 

$

175,035

   

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Passport Overseas Equity Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

119,815

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

7,988,748

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.00

   

CLASS A:

 

Net Assets

 

$

50,552

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

3,289,698

   

Net Asset Value, Redemption Price Per Share

 

$

15.37

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.85

   

Maximum Offering Price Per Share

 

$

16.22

   

CLASS L:

 

Net Assets

 

$

4,206

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

276,496

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.21

   

CLASS C:

 

Net Assets

 

$

433

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

28,626

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.12

   

CLASS R6:

 

Net Assets

 

$

16

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,096

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.02

   

CLASS IR:

 

Net Assets

 

$

13

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

843

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

15.00

   
(1)​ Including:
Securities on Loan, at Value:
 

$

4,910

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Passport Overseas Equity Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $335 of Foreign Taxes Withheld)

 

$

3,908

   

Dividends from Securities of Affiliated Issuers (Note G)

   

141

   

Income from Securities Loaned — Net

   

18

   

Total Investment Income

   

4,067

   

Expenses:

 

Advisory Fees (Note B)

   

1,132

   

Shareholder Services Fees — Class A (Note D)

   

131

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

32

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

5

   

Sub Transfer Agency Fees — Class I

   

95

   

Sub Transfer Agency Fees — Class A

   

42

   

Sub Transfer Agency Fees — Class L

   

3

   

Sub Transfer Agency Fees — Class C

   

@

 

Administration Fees (Note C)

   

139

   

Professional Fees

   

131

   

Registration Fees

   

100

   

Custodian Fees (Note F)

   

40

   

Shareholder Reporting Fees

   

33

   

Transfer Agency Fees — Class I (Note E)

   

8

   

Transfer Agency Fees — Class A (Note E)

   

10

   

Transfer Agency Fees — Class L (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

3

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Directors' Fees and Expenses

   

8

   

Pricing Fees

   

5

   

Other Expenses

   

36

   

Total Expenses

   

1,962

   

Waiver of Advisory Fees (Note B)

   

(143

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(61

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(45

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(1

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(11

)

 

Net Expenses

   

1,693

   

Net Investment Income

   

2,374

   

Realized Gain (Loss):

 

Investments Sold (Net of $9 of Capital Gain Country Tax)

   

(1,877

)

 

Investments in Affiliates

   

(481

)

 

Foreign Currency Forward Exchange Contracts

   

43

   

Foreign Currency Translation

   

9

   

Futures Contracts

   

(142

)

 

Net Realized Loss

   

(2,448

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments (Net of Increase in Deferred Capital Gain Country Tax of $67)

   

19,112

   

Investments in Affiliates

   

414

   

Foreign Currency Forward Exchange Contracts

   

16

   

Foreign Currency Translation

   

15

   

Net Change in Unrealized Appreciation (Depreciation)

   

19,557

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

17,109

   

Net Increase in Net Assets Resulting from Operations

 

$

19,483

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Passport Overseas Equity Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

2,374

   

$

2,030

   

Net Realized Gain (Loss)

   

(2,448

)

   

2,993

   

Net Change in Unrealized Appreciation (Depreciation)

   

19,557

     

(56,429

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

19,483

     

(51,406

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(4,000

)

   

(1,796

)

 

Class A

   

(1,493

)

   

(702

)

 

Class L

   

(103

)

   

(39

)

 

Class C

   

(9

)

   

(4

)

 

Class R6*

   

(1

)

   

(—

@)

 

Class IR

   

(—

@)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(5,606

)

   

(2,541

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions for all
periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

27,518

     

51,639

   

Distributions Reinvested

   

3,977

     

1,784

   

Redeemed

   

(24,654

)

   

(66,942

)

 

Class A:

 

Subscribed

   

2,231

     

7,349

   

Distributions Reinvested

   

1,477

     

696

   

Redeemed

   

(9,429

)

   

(11,717

)

 

Class L:

 

Exchanged

   

     

155

   

Distributions Reinvested

   

101

     

39

   

Redeemed

   

(382

)

   

(300

)

 

Class C:

 

Subscribed

   

56

     

126

   

Distributions Reinvested

   

9

     

4

   

Redeemed

   

(131

)

   

(318

)

 

Class R6:*

 

Subscribed

   

3

     

70

   

Distributions Reinvested

   

1

     

@

 

Redeemed

   

(12

)

   

(65

)

 

Class IR:

 

Distributions Reinvested

   

@

   

@

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

765

     

(17,480

)

 

Total Increase (Decrease) in Net Assets

   

14,642

     

(71,427

)

 

Net Assets:

 

Beginning of Period

   

160,393

     

231,820

   

End of Period

 

$

175,035

   

$

160,393

   

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Passport Overseas Equity Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1) Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

1,840

     

3,321

   

Shares Issued on Distributions Reinvested

   

273

     

130

   

Shares Redeemed

   

(1,659

)

   

(4,507

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

454

     

(1,056

)

 

Class A:

 

Shares Subscribed

   

147

     

459

   

Shares Issued on Distributions Reinvested

   

99

     

49

   

Shares Redeemed

   

(620

)

   

(757

)

 

Net Decrease in Class A Shares Outstanding

   

(374

)

   

(249

)

 

Class L:

 

Shares Exchanged

   

     

11

   

Shares Issued on Distributions Reinvested

   

7

     

3

   

Shares Redeemed

   

(26

)

   

(20

)

 

Net Decrease in Class L Shares Outstanding

   

(19

)

   

(6

)

 

Class C:

 

Shares Subscribed

   

4

     

9

   

Shares Issued on Distributions Reinvested

   

1

     

@@

 

Shares Redeemed

   

(9

)

   

(21

)

 

Net Decrease in Class C Shares Outstanding

   

(4

)

   

(12

)

 

Class R6:*

 

Shares Subscribed

   

@@

   

5

   

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(1

)

   

(5

)

 

Net Decrease in Class R6 Shares Outstanding

   

(1

)

   

(—

@@)

 

Class IR:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.80

   

$

17.91

   

$

19.03

   

$

14.59

   

$

12.07

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.22

     

0.18

     

0.17

     

0.04

     

0.16

   

Net Realized and Unrealized Gain (Loss)

   

1.50

     

(4.06

)

   

0.24

     

4.41

     

2.54

   

Total from Investment Operations

   

1.72

     

(3.88

)

   

0.41

     

4.45

     

2.70

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.26

)

   

(0.10

)

   

(0.23

)

   

(0.01

)

   

(0.18

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.52

)

   

(0.23

)

   

(1.53

)

   

(0.01

)

   

(0.18

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

15.00

   

$

13.80

   

$

17.91

   

$

19.03

   

$

14.59

   

Total Return(3)

   

12.52

%(4)

   

(21.57

)%

   

2.33

%

   

30.48

%

   

22.41

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

119,815

   

$

104,002

   

$

153,810

   

$

146,087

   

$

126,860

   

Ratio of Expenses Before Expense Limitation

   

1.02

%

   

1.08

%

   

0.95

%

   

1.02

%

   

0.97

%

 

Ratio of Expenses After Expense Limitation

   

0.86

%(5)(6)

   

0.89

%(6)

   

0.89

%(6)

   

0.89

%(6)

   

0.89

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.89

%(6)

   

0.89

%(6)

   

0.89

%(6)

   

N/A

   

Ratio of Net Investment Income

   

1.48

%(5)(6)

   

1.18

%(6)

   

0.87

%(6)

   

0.24

%(6)

   

1.22

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.89

%

   

1.45

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

14.13

   

$

18.32

   

$

19.43

   

$

14.94

   

$

12.36

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.18

     

0.13

     

0.11

     

(0.01

)

   

0.11

   

Net Realized and Unrealized Gain (Loss)

   

1.53

     

(4.13

)

   

0.25

     

4.51

     

2.61

   

Total from Investment Operations

   

1.71

     

(4.00

)

   

0.36

     

4.50

     

2.72

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

(0.06

)

   

(0.17

)

   

(0.01

)

   

(0.14

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.47

)

   

(0.19

)

   

(1.47

)

   

(0.01

)

   

(0.14

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

15.37

   

$

14.13

   

$

18.32

   

$

19.43

   

$

14.94

   

Total Return(3)

   

12.15

%(4)

   

(21.77

)%

   

2.03

%

   

30.10

%

   

22.00

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

50,552

   

$

51,769

   

$

71,668

   

$

69,135

   

$

58,339

   

Ratio of Expenses Before Expense Limitation

   

1.28

%

   

1.34

%

   

1.22

%

   

1.31

%

   

1.25

%

 

Ratio of Expenses After Expense Limitation

   

1.16

%(5)(6)

   

1.18

%(6)

   

1.18

%(6)

   

1.19

%(6)

   

1.22

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.18

%(6)

   

1.18

%(6)

   

1.19

%(6)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

1.18

%(5)(6)

   

0.88

%(6)

   

0.55

%(6)

   

(0.06

)%(6)

   

0.82

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.19

%

   

1.15

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.99

   

$

18.16

   

$

19.27

   

$

14.90

   

$

12.32

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.09

     

0.05

     

0.00

(2)

   

(0.09

)

   

0.05

   

Net Realized and Unrealized Gain (Loss)

   

1.51

     

(4.09

)

   

0.24

     

4.47

     

2.59

   

Total from Investment Operations

   

1.60

     

(4.04

)

   

0.24

     

4.38

     

2.64

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.12

)

   

     

(0.05

)

   

(0.01

)

   

(0.06

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.38

)

   

(0.13

)

   

(1.35

)

   

(0.01

)

   

(0.06

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

15.21

   

$

13.99

   

$

18.16

   

$

19.27

   

$

14.90

   

Total Return(3)

   

11.51

%(4)

   

(22.22

)%

   

1.48

%

   

29.38

%

   

21.43

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,206

   

$

4,129

   

$

5,475

   

$

5,718

   

$

4,644

   

Ratio of Expenses Before Expense Limitation

   

1.84

%

   

1.90

%

   

1.76

%

   

1.86

%

   

1.81

%

 

Ratio of Expenses After Expense Limitation

   

1.71

%(5)(6)

   

1.74

%(6)

   

1.74

%(6)

   

1.74

%(6)

   

1.74

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.74

%(6)

   

1.74

%(6)

   

1.74

%(6)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

0.63

%(5)(6)

   

0.32

%(6)

   

0.02

%(6)

   

(0.61

)%(6)

   

0.35

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.74

%

   

0.60

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

13.89

   

$

18.08

   

$

19.22

   

$

14.89

   

$

12.34

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.06

     

0.01

     

(0.02

)

   

(0.12

)

   

0.00

(2)

 

Net Realized and Unrealized Gain (Loss)

   

1.50

     

(4.07

)

   

0.21

     

4.46

     

2.59

   

Total from Investment Operations

   

1.56

     

(4.06

)

   

0.19

     

4.34

     

2.59

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.07

)

   

     

(0.03

)

   

(0.01

)

   

(0.04

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.33

)

   

(0.13

)

   

(1.33

)

   

(0.01

)

   

(0.04

)

 

Redemption Fees

   

     

     

     

     

0.00

(2)

 

Net Asset Value, End of Period

 

$

15.12

   

$

13.89

   

$

18.08

   

$

19.22

   

$

14.89

   

Total Return(3)

   

11.27

%(4)

   

(22.43

)%

   

1.23

%

   

29.13

%

   

21.03

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

433

   

$

459

   

$

821

   

$

144

   

$

45

   

Ratio of Expenses Before Expense Limitation

   

2.74

%

   

2.54

%

   

2.36

%

   

5.66

%

   

7.49

%

 

Ratio of Expenses After Expense Limitation

   

1.96

%(5)(6)

   

1.99

%(6)

   

1.99

%(6)

   

1.99

%(6)

   

1.99

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.99

%(6)

   

1.99

%(6)

   

1.99

%(6)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

0.37

%(5)(6)

   

0.05

%(6)

   

(0.09

)%(6)

   

(0.81

)%(6)

   

0.03

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Amount is less than $0.005 per share.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.99

%

   

0.34

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
October 31, 2019(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

December 31, 2019

 

Net Asset Value, Beginning of Period

 

$

13.82

   

$

17.91

   

$

19.04

   

$

14.59

   

$

13.79

   

Income (Loss) from Investment Operations:

 

Net Investment Income(3)

   

0.23

     

0.21

     

0.18

     

0.04

     

0.00

(4)

 

Net Realized and Unrealized Gain (Loss)

   

1.49

     

(4.06

)

   

0.23

     

4.42

     

0.98

   

Total from Investment Operations

   

1.72

     

(3.85

)

   

0.41

     

4.46

     

0.98

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.26

)

   

(0.11

)

   

(0.24

)

   

(0.01

)

   

(0.18

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.52

)

   

(0.24

)

   

(1.54

)

   

(0.01

)

   

(0.18

)

 

Net Asset Value, End of Period

 

$

15.02

   

$

13.82

   

$

17.91

   

$

19.04

   

$

14.59

   

Total Return(5)

   

12.56

%(6)

   

(21.45

)%

   

2.39

%

   

30.55

%

   

7.15

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

16

   

$

23

   

$

32

   

$

14

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

12.52

%

   

5.55

%

   

10.73

%

   

21.16

%

   

14.33

%(8)

 

Ratio of Expenses After Expense Limitation

   

0.81

%(9)(10)

   

0.84

%(10)

   

0.84

%(10)

   

0.84

%(10)

   

0.84

%(8)(10)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.84

%(10)

   

0.84

%(10)

   

0.84

%(10)

   

N/A

   

Ratio of Net Investment Income

   

1.52

%(9)(10)

   

1.41

%(10)

   

0.89

%(10)

   

0.28

%(10)

   

0.18

%(8)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%(8)

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Offering.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.84

%

   

1.49

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Passport Overseas Equity Portfolio

   

Class IR

 
   

Year Ended December 31,

  Period from
October 31, 2019(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

December 31, 2019

 

Net Asset Value, Beginning of Period

 

$

13.81

   

$

17.91

   

$

19.04

   

$

14.59

   

$

13.79

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.23

     

0.18

     

0.18

     

0.04

     

0.00

(3)

 

Net Realized and Unrealized Gain (Loss)

   

1.48

     

(4.04

)

   

0.23

     

4.42

     

0.98

   

Total from Investment Operations

   

1.71

     

(3.86

)

   

0.41

     

4.46

     

0.98

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.26

)

   

(0.11

)

   

(0.24

)

   

(0.01

)

   

(0.18

)

 

Net Realized Gain

   

(0.26

)

   

(0.13

)

   

(1.30

)

   

     

   

Total Distributions

   

(0.52

)

   

(0.24

)

   

(1.54

)

   

(0.01

)

   

(0.18

)

 

Net Asset Value, End of Period

 

$

15.00

   

$

13.81

   

$

17.91

   

$

19.04

   

$

14.59

   

Total Return(4)

   

12.49

%(5)

   

(21.51

)%

   

2.39

%

   

30.55

%

   

7.15

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

13

   

$

11

   

$

14

   

$

14

   

$

11

   

Ratio of Expenses Before Expense Limitation

   

19.62

%

   

18.22

%

   

14.38

%

   

20.70

%

   

14.33

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.81

%(8)(9)

   

0.84

%(9)

   

0.84

%(9)

   

0.84

%(9)

   

0.84

%(7)(9)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.84

%(9)

   

0.84

%(9)

   

0.84

%(9)

   

N/A

   

Ratio of Net Investment Income

   

1.52

%(8)(9)

   

1.21

%(9)

   

0.92

%(9)

   

0.29

%(9)

   

0.18

%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.01

%

   

0.01

%

   

0.01

%

   

0.01

%(7)

 

Portfolio Turnover Rate

   

14

%

   

25

%

   

39

%

   

37

%

   

34

%

 

(1)  Commencement of Offering.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class IR shares.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.85

%

   

1.48

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Passport Overseas Equity Portfolio (name changed on May 31, 2023, formerly Active International Allocation Portfolio). The Fund seeks long-term capital appreciation.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which clarifies the guidance in ASC Topic No. 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and introduces new disclosures related to such equity security. ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity

security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. Accordingly, an entity should not consider the contractual sale restriction when measuring the equity security's fair value (i.e., the entity should not apply a discount related to the contractual sale restriction, as stated in ASC 820-10-35-36B as amended by ASU 2022-03). In addition, ASU 2022-03 prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The new guidance is effective for public companies with annual reporting periods in fiscal years beginning after December 15, 2023, and interim periods in the following year, with early adoption permitted. An investment company that holds equity securities that are subject to contractual sale restrictions executed before the date at which the investment company first adopts ASU 2022-03 shall continue to account for that equity security using the accounting policy applied before the adoption of ASU 2022-03 until the contractual sale restriction expires or is modified.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Fund, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for

determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

   

$

5,718

   

$

   

$

5,718

   

Banks

   

5,775

     

2,507

     

     

8,282

   

Beverages

   

     

4,516

     

     

4,516

   

Biotechnology

   

2,588

     

     

     

2,588

   

Broadline Retail

   

9,463

     

     

     

9,463

   

Chemicals

   

     

7,207

     

     

7,207

   

Containers & Packaging

   

     

1,372

     

     

1,372

   

Electrical Equipment

   

     

563

     

     

563

   
Electronic Equipment,
Instruments &
Components
   

     

2,460

     

     

2,460

   
Energy Equipment &
Services
   

1,180

     

1,004

     

     

2,184

   

Entertainment

   

3,398

     

3,189

     

     

6,587

   

Financial Services

   

     

115

     

     

115

   

Food Products

   

     

3,937

     

     

3,937

   

Ground Transportation

   

3,400

     

     

     

3,400

   
Health Care Equipment &
Supplies
   

     

3,279

     

     

3,279

   
Health Care Providers &
Services
   

     

1,278

     

     

1,278

   
Hotels, Restaurants &
Leisure
   

7,525

     

679

     

     

8,204

   

Household Durables

   

2,093

     

4,740

     

     

6,833

   

Household Products

   

     

401

     

     

401

   

Insurance

   

     

759

     

     

759

   
Interactive Media &
Services
   

     

1,880

     

     

1,880

   

Leisure Products

   

     

562

     

     

562

   

Machinery

   

     

2,599

     

     

2,599

   

Metals & Mining

   

8,453

     

14,451

     

     

22,904

   

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Oil, Gas &
Consumable Fuels
 

$

781

   

$

10,735

   

$

   

$

11,516

   

Passenger Airlines

   

3,645

     

     

     

3,645

   

Personal Care Products

   

1,642

     

6,540

     

     

8,182

   

Pharmaceuticals

   

     

13,479

     

     

13,479

   

Professional Services

   

     

3,750

     

     

3,750

   
Semiconductors &
Semiconductor
Equipment
   

2,295

     

12,325

     

     

14,620

   

Software

   

1,512

     

     

     

1,512

   
Tech Hardware,
Storage & Peripherals
   

     

6,953

     

     

6,953

   
Textiles, Apparel &
Luxury Goods
   

     

2,279

     

     

2,279

   

Total Common Stocks

   

53,750

     

119,277

     

     

173,027

   

Preferred Stock

 

Biotechnology

   

     

     

1,250

     

1,250

   

Short-Term Investments

 

Investment Company

   

857

     

     

     

857

   

Repurchase Agreements

   

     

40

     

     

40

   
Total Short-Term
Investments
   

857

     

40

     

     

897

   

Total Assets

 

$

54,607

   

$

119,317

   

$

1,250

   

$

175,174

   

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

    Preferred
Stock
(000)
 

Beginning Balance

 

$

1,174

   

Purchases

   

   

Sales

   

   

Transfers in

   

   

Transfers out

   

   

Corporate actions

   

   

Change in unrealized appreciation (depreciation)

   

76

   

Realized gains (losses)

   

   

Ending Balance

 

$

1,250

   
Net change in unrealized appreciation (depreciation) from
investments still held as of December 31, 2023
 

$

76

   


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2023:

    Fair Value at
December 31, 2023
(000)
  Valuation
Technique
  Unobservable
Input
 

Amount

  Impact to
Valuation from an
Increase in Input*
 
Preferred Stock
 
 

$

1,250
  Market Transaction
Method
  Precedent
Transaction
    $38.24    

Increase

 

*  Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of

the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions 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


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative

transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return and the potential loss from futures contracts can exceed the Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time.

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Fund also entered into contracts with banks, brokers/dealers to purchase or sell foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Fund's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Fund than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized gain or loss. The Fund records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Foreign Currency
Forward Exchange
Contracts
 

$

43

   

Equity Risk

 

Futures Contracts

   

(142

)

 

Total

     

$

(99

)

 

  Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

 

Value
(000)

 

Currency Risk

 

Foreign Currency
Forward Exchange
Contracts

 

$

16

   

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:

 
Average monthly principal amount  

$

3,996,000

   

Futures Contracts:

 

Average monthly notional value

 

$

2,180,000

   


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

6.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in
the Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

4,910

(a)

 

$

   

$

(4,910

)(b)(c)

 

$

0

   

(a) Represents market value of loaned securities at year end.

(b) The Fund received cash collateral of approximately $221,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of approximately $4,880,000 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

221

   

$

   

$

   

$

   

$

221

   

Total Borrowings

 

$

221

   

$

   

$

   

$

   

$

221

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

221

   

7.  Restricted Securities: The Fund invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

9.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency fees and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.65

%

   

0.60

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.56% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I shares, 1.25% for Class A shares, 1.75% for Class L shares, 2.00% for Class C shares, 0.85% for

Class R6 shares and 0.85% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $143,000 of advisory fees were waived and approximately $54,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $2,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $24,018,000 and $26,955,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management

investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $5,000 relating to the Fund's investment in the Liquidity Fund.

The Fund invests in Morgan Stanley China A Share Fund, Inc., a closed-end management investment company advised by an affiliate of the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in Morgan Stanley China A Share Fund, Inc. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $6,000 relating to the Fund's investment in the Morgan Stanley China A Share Fund, Inc.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company/Issuer
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

2,085

   

$

37,213

   

$

38,441

   

$

141

   
Morgan Stanley
China A Share
Fund
   

653

     

     

586

     

   

Total

 

$

2,738

   

$

37,213

   

$

39,027

   

$

141

   
Affiliated
Investment
Company/Issuer (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

857

   
Morgan Stanley
China A Share Fund
   

(481

)

   

414

     

   

Total

 

$

(481

)

 

$

414

   

$

857

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, Each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

2,695

   

$

2,911

   

$

1,000

   

$

1,541

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

32

   

$

2

   

Qualified late year losses are capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year that, if elected, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2023, the Fund intends to defer to January 1, 2024 for U.S. federal income tax purposes the following losses:

Qualified
Late Year
Ordinary
Losses
(000)
  Post
October
Capital
Losses
(000)
 
$

   

$

3,382

   

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 81.2%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Passport Overseas Equity Portfolio
(Formerly Active International Allocation Portfolio)
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Passport Overseas Equity Portfolio (Formerly Active International Allocation Portfolio) (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated and paid approximately $2,911,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $3,030,000 as taxable at this lower rate.

The Fund intends to pass through foreign tax credits of approximately $335,000 and has derived net income from sources within foreign countries amounting to approximately $3,383,000.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)   April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


38


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


39


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


40


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


41


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


42


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


43


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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIPOEANN
6336624 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Permanence Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Consolidated Portfolio of Investments

   

6

   

Consolidated Statement of Assets and Liabilities

   

9

   

Consolidated Statement of Operations

   

10

   

Consolidated Statements of Changes in Net Assets

   

11

   

Consolidated Financial Highlights

   

12

   

Notes to Consolidated Financial Statements

   

16

   

Report of Independent Registered Public Accounting Firm

   

25

   

Liquidity Risk Management Program

   

26

   

Federal Tax Notice

   

27

   

Important Notices

   

28

   

U.S. Customer Privacy Notice

   

29

   

Directors and Officers Information

   

32

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Permanence Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Expense Example (unaudited)

Permanence Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Permanence Portfolio Class I

 

$

1,000.00

   

$

1,034.50

   

$

1,022.94

   

$

2.31

   

$

2.29

     

0.45

%

 

Permanence Portfolio Class A

   

1,000.00

     

1,033.40

     

1,020.52

     

4.77

     

4.74

     

0.93

   

Permanence Portfolio Class C

   

1,000.00

     

1,028.80

     

1,017.39

     

7.93

     

7.88

     

1.55

   

Permanence Portfolio Class R6

   

1,000.00

     

1,034.50

     

1,023.04

     

2.21

     

2.19

     

0.43

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Consolidated Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Permanence Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 26.44%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the S&P 500® Index (the "Index"), which returned 26.29%.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

Factors Affecting Performance

•  Surprised by the economy's resilience amid rising interest rates and persistently high (but falling) inflation, U.S. stocks performed well in 2023. The year saw its share of uncertainty, with recession fears dominating the start of the year, a regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, and multiple geopolitical flashpoints. However, by year-end, the U.S. Federal Reserve signaled it was likely finished lifting interest rates after pausing the hiking cycle halfway through the year. This triggered a stock market rally and retreat in long-term bond yields in the final two months of 2023. Additionally, excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform, adding meaningfully to the broader market's gain in the year.

•  U.S. equities, as measured by the Index, advanced over the year. Most sectors in the Index were positive, led by information technology, communication services and consumer discretionary. The largest underperformers in the Index were energy and utilities, both of which declined, and consumer staples.

•  Counterpoint Global seeks high quality companies, which we define primarily as those with sustainable competitive advantages. We manage focused portfolios that are highly differentiated from the benchmark, with securities weighted on our assessment of the quality of the company and our conviction. The value added or detracted in any

period of time will typically result from stock selection, given our philosophy and process.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund slightly outperformed the Index in this reporting period as favorable sector allocations offset the adverse impact of stock selection.

•  The information technology sector contributed positively to relative performance. A company that offers a global cloud platform that provides security, performance and reliability services to the applications of its customers was the greatest contributor across the portfolio. Despite facing a tougher demand environment and longer sales cycles, the company's shares performed well based on improving investor sentiment toward the software sector.

•  An average overweight in consumer discretionary was advantageous to relative performance, but it was more than offset by stock selection in the sector, which detracted.

•  A lack of exposure to utilities and average underweight positions in financials and energy were beneficial to performance relative to the Index.

•  Stock selection in health care was the greatest detractor from relative performance. A leader in next generation sequencing was the largest detractor in the sector and third greatest in the portfolio. Its shares underperformed as weaker spending trends in the biopharma industry and greater geopolitical tension continued to adversely affect demand for its products.

•  Stock selection in consumer staples also weighed on relative performance. A discount retailer that provides various merchandise products across the United States was the main detractor in the sector and one of the largest across the portfolio. Its shares underperformed due to concerns about softer sales trends, weaker near-term profitability and greater inventory shrink. We continued to monitor the company management's progress in restoring the business to prior profitability levels and getting shrink under control.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Permanence Portfolio

Management Strategies

•  As a team, we believe having a market outlook can be an anchor. Our focus is on assessing company prospects over a five-year horizon, and owning a portfolio of unique companies whose market value we believe can increase significantly for underlying fundamental reasons.

*  Minimum Investment for Class I shares

**  Commenced Operations on March 31, 2020.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the the S&P 500®​ Index(1) and the Lipper Multi-Cap Growth Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

26.44

%

   

     

     

17.38

%

 
Fund — Class A Shares
w/o sales charges(4)
   

26.11

     

     

     

16.99

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

19.53

     

     

     

15.33

   
Fund — Class C Shares
w/o sales charges(4)
   

25.15

     

     

     

16.08

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

24.15

     

     

     

16.08

   
Fund — Class R6 Shares
w/o sales charges(4)
   

26.51

     

     

     

17.44

   

S&P 500®​ Index

   

26.29

     

     

     

19.64

   
Lipper Multi-Cap Growth
Funds Index
   

35.17

     

     

     

16.39

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Standard & Poor's 500®​ Index (S&P 500®​ Index) measures the performance of the large cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Multi-Cap Growth Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Growth Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Multi-Cap Growth Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on March 31, 2020.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments

Permanence Portfolio

   

Shares

  Value
(000)
 

Common Stocks (94.5%)

 

Aerospace & Defense (2.6%)

 

Axon Enterprise, Inc. (a)

   

22

   

$

5

   

Babcock International Group PLC (United Kingdom)

   

19,875

     

100

   

HEICO Corp., Class A

   

33

     

5

   

TransDigm Group, Inc.

   

5

     

5

   
     

115

   

Beverages (1.6%)

 

Celsius Holdings, Inc. (a)

   

1,293

     

71

   

Broadline Retail (5.4%)

 

Amazon.com, Inc. (a)

   

1,555

     

236

   

Capital Markets (7.4%)

 

Intercontinental Exchange, Inc.

   

1,929

     

248

   

MSCI, Inc.

   

8

     

4

   

S&P Global, Inc.

   

163

     

72

   
     

324

   

Chemicals (0.2%)

 

Ecolab, Inc.

   

24

     

5

   

Sherwin-Williams Co.

   

16

     

5

   
     

10

   

Commercial Services & Supplies (4.3%)

 

Cintas Corp.

   

9

     

5

   

Copart, Inc. (a)

   

99

     

5

   

Rentokil Initial PLC (United Kingdom)

   

27,399

     

155

   

Rollins, Inc.

   

108

     

5

   

Veralto Corp.

   

220

     

18

   
     

188

   

Construction Materials (0.1%)

 

Martin Marietta Materials, Inc.

   

10

     

5

   

Consumer Staples Distribution & Retail (3.5%)

 

Dollar General Corp.

   

1,121

     

152

   

Distributors (1.0%)

 

Pool Corp.

   

109

     

43

   

Diversified Consumer Services (0.1%)

 

Service Corp. International

   

68

     

5

   

Entertainment (1.0%)

 

Netflix, Inc. (a)

   

67

     

32

   

Walt Disney Co.

   

119

     

11

   
     

43

   

Food Products (0.5%)

 

McCormick & Co., Inc.

   

318

     

22

   

Ground Transportation (5.0%)

 

Union Pacific Corp.

   

899

     

221

   

Health Care Equipment & Supplies (0.1%)

 

Intuitive Surgical, Inc. (a)

   

15

     

5

   

Health Care Technology (1.0%)

 

Veeva Systems, Inc., Class A (a)

   

233

     

45

   
   

Shares

  Value
(000)
 

Hotels, Restaurants & Leisure (0.3%)

 

Domino's Pizza, Inc.

   

11

   

$

5

   

McDonald's Corp.

   

16

     

5

   

Starbucks Corp.

   

45

     

4

   
     

14

   

Household Durables (3.9%)

 

NVR, Inc. (a)

   

7

     

49

   

Victoria PLC (United Kingdom) (a)

   

31,383

     

121

   
     

170

   

Information Technology Services (11.8%)

 

Cloudflare, Inc., Class A (a)

   

5,734

     

477

   

Gartner, Inc. (a)

   

95

     

43

   
     

520

   

Insurance (1.0%)

 

Brown & Brown, Inc.

   

612

     

44

   

Life Sciences Tools & Services (10.0%)

 

Danaher Corp.

   

912

     

211

   

Eurofins Scientific SE (France)

   

2,512

     

164

   

Illumina, Inc. (a)

   

422

     

59

   

Thermo Fisher Scientific, Inc.

   

7

     

3

   
     

437

   

Metals & Mining (2.3%)

 

Royal Gold, Inc.

   

846

     

102

   

Oil, Gas & Consumable Fuels (0.4%)

 

Texas Pacific Land Corp.

   

12

     

19

   

Personal Care Products (0.6%)

 

Estee Lauder Cos., Inc., Class A

   

29

     

4

   

Oddity Tech Ltd., Class A (Israel) (a)

   

500

     

24

   
     

28

   

Pharmaceuticals (5.0%)

 

Royalty Pharma PLC, Class A

   

7,590

     

213

   

Zoetis, Inc.

   

22

     

5

   
     

218

   

Semiconductors & Semiconductor Equipment (1.5%)

 

ASML Holding NV (Registered) (Netherlands)

   

89

     

67

   

Software (9.3%)

 

Cadence Design Systems, Inc. (a)

   

20

     

5

   

Constellation Software, Inc. (Canada)

   

44

     

109

   

Lumine Group, Inc. (Canada) (a)

   

280

     

6

   

Procore Technologies, Inc. (a)

   

1,124

     

78

   

Roper Technologies, Inc.

   

9

     

5

   

ServiceNow, Inc. (a)

   

72

     

51

   

Synopsys, Inc. (a)

   

10

     

5

   

Topicus.com, Inc. (Canada) (a)

   

1,468

     

99

   

Tyler Technologies, Inc. (a)

   

119

     

50

   
     

408

   

Specialized REITs (3.6%)

 

American Tower Corp. REIT

   

723

     

156

   

The accompanying notes are an integral part of the consolidated financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Permanence Portfolio

   

Shares

  Value
(000)
 

Specialty Retail (8.0%)

 

AutoZone, Inc. (a)

   

8

   

$

21

   

Floor & Decor Holdings, Inc., Class A (a)

   

2,356

     

263

   

Home Depot, Inc.

   

62

     

21

   

Tractor Supply Co.

   

205

     

44

   
     

349

   

Textiles, Apparel & Luxury Goods (2.4%)

 

Christian Dior SE (France)

   

137

     

107

   

Trading Companies & Distributors (0.6%)

 

Fastenal Co.

   

76

     

5

   

Watsco, Inc.

   

52

     

22

   
     

27

   

Total Common Stocks (Cost $3,634)

   

4,151

   

Investment Company (2.1%)

 
Grayscale Bitcoin Trust (a) (Cost $45)    

2,631

     

91

   
    No. of
Warrants
     

Warrants (0.0%)‡

 

Software (0.0%)‡

 
Constellation Software, Inc.,
expires 3/31/40 (a) (Cost $—)
   

58

     

@

 
   

Shares

     

Short-Term Investment (1.6%)

 

Investment Company (1.6%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
(Cost $70)
   

69,823

     

70

   
Total Investments Excluding Purchased
Options (98.2%) (Cost $3,749)
       

4,312

   
Total Purchased Options Outstanding (0.0%)‡
(Cost $13)
   

2

   

Total Investments (98.2%) (Cost $3,762) (b)(c)(d)

   

4,314

   

Other Assets in Excess of Liabilities (1.8%)

   

79

   

Net Assets (100.0%)

 

$

4,393

   

@  Value is less than $500.

‡  Amount is less than 0.05%.

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $646,000 and 14.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Consolidated Financial Statements.

(c)  Securities are available for collateral in connection with purchased options.

(d)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $3,872,000. The aggregate gross unrealized appreciation is approximately $838,000 and the aggregate gross unrealized depreciation is approximately $412,000, resulting in net unrealized appreciation of approximately $426,000.

REIT  Real Estate Investment Trust.

Call Options Purchased:

The Fund had the following call options purchased open at December 31, 2023:

Counterparty

 

Description

  Strike
Price
  Expiration
Date
  Number of
Contracts
  Notional
Amount
(000)
  Value
(000)
  Premiums
Paid
(000)
  Unrealized
Depreciation
(000)
 

JPMorgan Chase Bank NA

  USD/CNH  

CNH

7.43

   

Jan-24

   

765,238

     

765

   

$

@

 

$

3

   

$

(3

)

 

Standard Chartered Bank

  USD/CNH  

CNH

7.57

   

May-24

   

1,105,323

     

1,105

     

1

     

5

     

(4

)

 

JPMorgan Chase Bank NA

  USD/CNH  

CNH

7.79

   

Aug-24

   

1,263,287

     

1,263

     

1

     

5

     

(4

)

 
                       

$

2

   

$

13

   

$

(11

)

 

@    Value is less than $500.

CNH  —  Chinese Yuan Renminbi Offshore

USD  —  United States Dollar

The accompanying notes are an integral part of the consolidated financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Portfolio of Investments (cont'd)

Permanence Portfolio

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

37.0

%

 

Information Technology Services

   

12.1

   

Life Sciences Tools & Services

   

10.2

   

Software

   

9.4

   

Specialty Retail

   

8.1

   

Capital Markets

   

7.6

   

Broadline Retail

   

5.5

   

Ground Transportation

   

5.1

   

Pharmaceuticals

   

5.0

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the consolidated financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Permanence Portfolio

Consolidated Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $3,692)

 

$

4,244

   

Investment in Security of Affiliated Issuer, at Value (Cost $70)

   

70

   

Total Investments in Securities, at Value (Cost $3,762)

   

4,314

   

Foreign Currency, at Value (Cost $6)

   

6

   

Due from Adviser

   

88

   

Dividends Receivable

   

2

   

Receivable from Affiliate

   

@

 

Other Assets

   

22

   

Total Assets

   

4,432

   

Liabilities:

 

Payable for Professional Fees

   

24

   

Payable for Custodian Fees

   

2

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Sub Transfer Agency Fees — Class I

   

@

 

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

13

   

Total Liabilities

   

39

   

Net Assets

 

$

4,393

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

3,872

   

Total Distributable Earnings

   

521

   

Net Assets

 

$

4,393

   

CLASS I:

 

Net Assets

 

$

3,624

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

284,165

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.75

   

CLASS A:

 

Net Assets

 

$

660

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

52,388

   

Net Asset Value, Redemption Price Per Share

 

$

12.60

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.70

   

Maximum Offering Price Per Share

 

$

13.30

   

CLASS C:

 

Net Assets

 

$

48

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

3,947

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.23

   

CLASS R6:

 

Net Assets

 

$

61

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

4,752

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

12.77

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Permanence Portfolio

Consolidated Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers (Net of $1 of Foreign Taxes Withheld)

 

$

37

   

Dividends from Security of Affiliated Issuer (Note G)

   

5

   

Total Investment Income

   

42

   

Expenses:

 

Professional Fees

   

177

   

Registration Fees

   

57

   

Advisory Fees (Note B)

   

29

   

Shareholder Reporting Fees

   

16

   

Custodian Fees (Note F)

   

14

   

Transfer Agency Fees — Class I (Note E)

   

3

   

Transfer Agency Fees — Class A (Note E)

   

3

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Directors' Fees and Expenses

   

6

   

Administration Fees (Note C)

   

4

   

Pricing Fees

   

4

   

Shareholder Services Fees — Class A (Note D)

   

2

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

@

 

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class A

   

1

   

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

18

   

Total Expenses

   

339

   

Expenses Reimbursed by Adviser (Note B)

   

(260

)

 

Waiver of Advisory Fees (Note B)

   

(29

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(8

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

33

   

Net Investment Income

   

9

   

Realized Gain:

 

Investments Sold

   

283

   

Foreign Currency Translation

   

@

 

Net Realized Gain

   

283

   

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

633

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

633

   

Net Realized Gain and Change in Unrealized Appreciation (Depreciation)

   

916

   

Net Increase in Net Assets Resulting from Operations

 

$

925

   

@  Amount is less than $500.

The accompanying notes are an integral part of the consolidated financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Permanence Portfolio

Consolidated Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

9

   

$

(6

)

 

Net Realized Gain

   

283

     

138

   

Net Change in Unrealized Appreciation (Depreciation)

   

633

     

(1,004

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

925

     

(872

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(331

)

   

(84

)

 

Class A

   

(62

)

   

(4

)

 

Class C

   

(5

)

   

(—

@)

 

Class R6*

   

(6

)

   

(1

)

 

Total Dividends and Distributions to Shareholders

   

(404

)

   

(89

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

183

     

152

   

Distributions Reinvested

   

331

     

84

   

Redeemed

   

(485

)

   

(50

)

 

Class A:

 

Subscribed

   

1,181

     

185

   

Distributions Reinvested

   

62

     

4

   

Redeemed

   

(921

)

   

(140

)

 

Class C:

 

Subscribed

   

24

     

   

Distributions Reinvested

   

5

     

@

 

Redeemed

   

(3

)

   

   

Class R6:*

 

Subscribed

   

57

     

43

   

Distributions Reinvested

   

6

     

1

   

Redeemed

   

(52

)

   

(9

)

 

Net Increase in Net Assets Resulting from Capital Share Transactions

   

388

     

270

   

Total Increase (Decrease) in Net Assets

   

909

     

(691

)

 

Net Assets:

 

Beginning of Period

   

3,484

     

4,175

   

End of Period

 

$

4,393

   

$

3,484

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

14

     

13

   

Shares Issued on Distributions Reinvested

   

27

     

7

   

Shares Redeemed

   

(36

)

   

(5

)

 

Net Increase in Class I Shares Outstanding

   

5

     

15

   

Class A:

 

Shares Subscribed

   

92

     

16

   

Shares Issued on Distributions Reinvested

   

5

     

@@

 

Shares Redeemed

   

(72

)

   

(12

)

 

Net Increase in Class A Shares Outstanding

   

25

     

4

   

Class C:

 

Shares Subscribed

   

2

     

   

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(—

@@)

   

   

Net Increase in Class C Shares Outstanding

   

2

     

@@

 

Class R6:*

 

Shares Subscribed

   

5

     

4

   

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(4

)

   

(1

)

 

Net Increase in Class R6 Shares Outstanding

   

1

     

3

   

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the consolidated financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Permanence Portfolio

   

Class I

 
   

Year Ended December 31,

  Period from
March 31, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

11.16

   

$

14.42

   

$

14.65

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

0.04

     

(0.02

)

   

0.00

(4)

   

(0.00

)(4)

 

Net Realized and Unrealized Gain (Loss)

   

2.84

     

(2.93

)

   

2.39

     

5.51

   

Total from Investment Operations

   

2.88

     

(2.95

)

   

2.39

     

5.51

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

(0.04

)

   

(0.11

)

   

   

Net Realized Gain

   

(1.29

)

   

(0.27

)

   

(2.51

)

   

(0.86

)

 

Total Distributions

   

(1.29

)

   

(0.31

)

   

(2.62

)

   

(0.86

)

 

Net Asset Value, End of Period

 

$

12.75

   

$

11.16

   

$

14.42

   

$

14.65

   

Total Return(5)

   

26.44

%(6)

   

(20.55

)%

   

16.85

%

   

55.46

%(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

3,624

   

$

3,117

   

$

3,807

   

$

3,147

   

Ratio of Expenses Before Expense Limitation

   

7.44

%

   

8.14

%

   

7.49

%

   

10.85

%(8)

 

Ratio of Expenses After Expense Limitation

   

0.65

%(9)(10)

   

0.85

%(9)

   

0.85

%(9)

   

0.85

%(8)(9)

 

Ratio of Net Investment Income (Loss)

   

0.31

%(9)(10)

   

(0.14

)%(9)

   

0.01

%(9)

   

(0.02

)%(8)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(8)(11)

 

Portfolio Turnover Rate

   

100

%

   

57

%

   

70

%

   

68

%(7)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Performance was positively impacted by approximately 0.19% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 26.25%. Refer to Note B in the Notes to Consolidated Financial Statements.

(7)  Not annualized.

(8)  Annualized.

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.85

%

   

0.11

%

 

(11)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Permanence Portfolio

   

Class A

 
   

Year Ended December 31,

  Period from
March 31, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

11.07

   

$

14.31

   

$

14.61

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.01

)

   

(0.06

)

   

(0.05

)

   

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

2.83

     

(2.91

)

   

2.37

     

5.48

   

Total from Investment Operations

   

2.82

     

(2.97

)

   

2.32

     

5.47

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.11

)

   

   

Net Realized Gain

   

(1.29

)

   

(0.27

)

   

(2.51

)

   

(0.86

)

 

Total Distributions

   

(1.29

)

   

(0.27

)

   

(2.62

)

   

(0.86

)

 

Net Asset Value, End of Period

 

$

12.60

   

$

11.07

   

$

14.31

   

$

14.61

   

Total Return(4)

   

26.11

%(5)

   

(20.83

)%

   

16.41

%

   

55.05

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

660

   

$

303

   

$

324

   

$

256

   

Ratio of Expenses Before Expense Limitation

   

8.09

%

   

9.60

%

   

8.83

%

   

17.41

%(7)

 

Ratio of Expenses After Expense Limitation

   

1.03

%(8)(9)

   

1.20

%(9)

   

1.20

%(9)

   

1.20

%(7)(9)

 

Ratio of Net Investment Loss

   

(0.07

)%(8)(9)

   

(0.51

)%(9)

   

(0.33

)%(9)

   

(0.06

)%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(7)(10)

 

Portfolio Turnover Rate

   

100

%

   

57

%

   

70

%

   

68

%(6)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.29% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 25.82%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.20

%

   

(0.24

)%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Permanence Portfolio

   

Class C

 
   

Year Ended December 31,

  Period from
March 31, 2020(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(2)

 

Net Asset Value, Beginning of Period

 

$

10.86

   

$

14.16

   

$

14.52

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(3)

   

(0.09

)

   

(0.13

)

   

(0.17

)

   

(0.11

)

 

Net Realized and Unrealized Gain (Loss)

   

2.75

     

(2.90

)

   

2.35

     

5.49

   

Total from Investment Operations

   

2.66

     

(3.03

)

   

2.18

     

5.38

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

     

(0.03

)

   

   

Net Realized Gain

   

(1.29

)

   

(0.27

)

   

(2.51

)

   

(0.86

)

 

Total Distributions

   

(1.29

)

   

(0.27

)

   

(2.54

)

   

(0.86

)

 

Net Asset Value, End of Period

 

$

12.23

   

$

10.86

   

$

14.16

   

$

14.52

   

Total Return(4)

   

25.15

%(5)

   

(21.47

)%

   

15.52

%

   

54.15

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

48

   

$

20

   

$

26

   

$

21

   

Ratio of Expenses Before Expense Limitation

   

14.88

%

   

19.54

%

   

18.17

%

   

24.15

%(7)

 

Ratio of Expenses After Expense Limitation

   

1.71

%(8)(9)

   

1.95

%(9)

   

1.95

%(9)

   

1.95

%(7)(9)

 

Ratio of Net Investment Loss

   

(0.75

)%(8)(9)

   

(1.24

)%(9)

   

(1.09

)%(9)

   

(1.08

)%(7)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(7)(10)

 

Portfolio Turnover Rate

   

100

%

   

57

%

   

70

%

   

68

%(6)

 

(1)  Commencement of Operations.

(2)  Not consolidated.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.31% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 24.84%. Refer to Note B in the Notes to Consolidated Financial Statements.

(6)  Not annualized.

(7)  Annualized.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.95

%

   

(0.99

)%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Consolidated Financial Highlights

Permanence Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
March 31, 2020(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

December 31, 2020(3)

 

Net Asset Value, Beginning of Period

 

$

11.17

   

$

14.43

   

$

14.65

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(4)

   

0.05

     

(0.01

)

   

0.01

     

0.00

(5)

 

Net Realized and Unrealized Gain (Loss)

   

2.84

     

(2.94

)

   

2.40

     

5.51

   

Total from Investment Operations

   

2.89

     

(2.95

)

   

2.41

     

5.51

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

     

(0.04

)

   

(0.12

)

   

   

Net Realized Gain

   

(1.29

)

   

(0.27

)

   

(2.51

)

   

(0.86

)

 

Total Distributions

   

(1.29

)

   

(0.31

)

   

(2.63

)

   

(0.86

)

 

Net Asset Value, End of Period

 

$

12.77

   

$

11.17

   

$

14.43

   

$

14.65

   

Total Return(6)

   

26.51

%(7)

   

(20.50

)%

   

16.95

%

   

55.45

%(8)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

61

   

$

44

   

$

18

   

$

16

   

Ratio of Expenses Before Expense Limitation

   

11.18

%

   

12.68

%

   

20.29

%

   

25.34

%(9)

 

Ratio of Expenses After Expense Limitation

   

0.61

%(10)(11)

   

0.80

%(10)

   

0.80

%(10)

   

0.80

%(9)(10)

 

Ratio of Net Investment Income (Loss)

   

0.35

%(10)(11)

   

(0.06

)%(10)

   

0.07

%(10)

   

0.03

%(9)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(12)

   

0.00

%(12)

   

0.00

%(12)

   

0.00

%(9)(12)

 

Portfolio Turnover Rate

   

100

%

   

57

%

   

70

%

   

68

%(8)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

(3)  Not consolidated.

(4)  Per share amount is based on average shares outstanding.

(5)  Amount is less than $0.005 per share.

(6)  Calculated based on the net asset value as of the last business day of the period.

(7)  Performance was positively impacted by approximately 0.20% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 26.31%. Refer to Note B in the Notes to Consolidated Financial Statements.

(8)  Not annualized.

(9)  Annualized.

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.80

%

   

0.16

%

 

(12)  Amount is less than 0.005%.

The accompanying notes are an integral part of the consolidated financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Consolidated Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying consolidated financial statements relates to the Permanence Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its consolidated financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results may differ from those estimates.

The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands, Permanence Cayman Portfolio, Ltd. (the "Subsidiary"). The Subsidiary may invest in bitcoin indirectly through cash settled futures or indirectly through investments in Grayscale Bitcoin Trust (BTC) ("GBTC"), a privately offered investment vehicle that invests in bitcoin. The Fund is the sole shareholder of the Subsidiary, and it is not currently expected that shares of the Subsidiary will be sold or offered to other investors. The consolidated portfolio of investments and consolidated financial statements include the positions and accounts of the Fund and the Subsidiary. All intercompany accounts and transactions of the Fund and the Subsidiary have been eliminated in consolidation and all accounting policies of the Subsidiary are consistent with those of the Fund. As of December 31, 2023, the Subsidiary

represented approximately $92,000 or approximately 2.10% of the total net assets of the Fund.

Investments in the Subsidiary are expected to provide the Fund with exposure to bitcoin within the limitations of Subchapter M of the Code and recent Internal Revenue Service ("IRS") revenue rulings, which require that a mutual fund receive no more than ten percent of its gross income from such investments in order to receive favorable tax treatment as a regulated investment company ("RIC"). Tax treatment of the income received from the Subsidiary may potentially be affected by changes in legislation, regulations or other legally binding authority, which could affect the character, timing and amount of the Fund's taxable income and distributions. If such changes occur, the Fund may need to significantly change its investment strategy and recognize unrealized gains in order to remain qualified for taxation as a RIC, which could adversely affect the Fund.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest re-ported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

mean between the current bid and asked prices obtained from one or more reputable brokers or dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a reputable broker/dealer or valued by a pricing service/vendor; (5) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (6) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of

the NYSE; and (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

Aerospace & Defense

 

$

16

   

$

100

   

$

   

$

116

   

Beverages

   

70

     

     

     

70

   

Broadline Retail

   

236

     

     

     

236

   

Capital Markets

   

325

     

     

     

325

   

Chemicals

   

10

     

     

     

10

   
Commercial Services &
Supplies
   

33

     

154

     

     

187

   

Construction Materials

   

5

     

     

     

5

   
Consumer Staples
Distribution & Retail
   

152

     

     

     

152

   

Distributors

   

43

     

     

     

43

   
Diversified Consumer
Services
   

5

     

     

     

5

   

Entertainment

   

44

     

     

     

44

   

Food Products

   

22

     

     

     

22

   

Ground Transportation

   

221

     

     

     

221

   
Health Care Equipment &
Supplies
   

5

     

     

     

5

   

Health Care Technology

   

45

     

     

     

45

   
Hotels, Restaurants &
Leisure
   

14

     

     

     

14

   

Household Durables

   

49

     

121

     

     

170

   
Information Technology
Services
   

520

     

     

     

520

   

Insurance

   

43

     

     

     

43

   
Life Sciences Tools &
Services
   

274

     

164

     

     

438

   

Metals & Mining

   

102

     

     

     

102

   

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Common Stocks (cont'd)

 
Oil, Gas & Consumable
Fuels
 

$

19

   

$

   

$

   

$

19

   

Personal Care Products

   

27

     

     

     

27

   

Pharmaceuticals

   

217

     

     

     

217

   
Semiconductors &
Semiconductor
Equipment
   

68

     

     

     

68

   

Software

   

408

     

     

     

408

   

Specialized REITs

   

156

     

     

     

156

   

Specialty Retail

   

349

     

     

     

349

   
Textiles, Apparel &
Luxury Goods
   

     

107

     

     

107

   
Trading Companies &
Distributors
   

27

     

     

     

27

   

Total Common Stocks

   

3,505

     

646

     

     

4,151

   

Investment Company

   

91

     

     

     

91

   

Warrants

   

     

@

   

     

@

 

Call Options Purchased

   

     

2

     

     

2

   

Short-Term Investment

 

Investment Company

   

70

     

     

     

70

   

Total Assets

 

$

3,666

   

$

648

   

$

   

$

4,314

   

@ Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Consolidated Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Consolidated Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Fund may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid, risks arising from margin and payment requirements, risks arising from mispricing or valuation complexity and operational and legal risks. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Fund's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser seeks to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Fund used during the period and their associated risks:

Options: With respect to options, the Fund is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

investment objectives. If the Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by the Fund. The Fund may purchase and/or sell put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Consolidated Statement of Assets and Liabilities. Premiums paid for purchasing options which expired are treated as realized losses. If the Fund writes an option, it sells to another party the right to buy from or sell to the Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium received by the Fund. When options are purchased OTC, the Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.

The following table sets forth the fair value of the Fund's derivative contracts by primary risk exposure as of December 31, 2023:

    Asset Derivatives
Consolidated
Statement of Assets and
Liabilities Location
  Primary Risk
Exposure
  Value
(000)
 

Purchased Options

  Investments, at Value
(Purchased Options)
 

Currency Risk

 

$

2

(a)

 

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2023 in accordance with ASC 815:

Realized Gain (Loss)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(7

)(a)

 

(a) Amounts are included in Realized Gain on Investments Sold in the Consolidated Statement of Operations.

Change in Unrealized Appreciation (Depreciation)

 

Primary Risk Exposure

 

Derivative Type

  Value
(000)
 

Currency Risk

  Investments
(Purchased Options)
 

$

(8

)(a)

 

(a) Amounts are included in Change in Unrealized Appreciation (Depreciation) on Investments in the Consolidated Statement of Operations.

At December 31, 2023, the Fund's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities
Presented in the Consolidated Statement of Assets and Liabilities
 

Derivatives

  Assets(b)
(000)
  Liabilities(b)
(000)
 

Purchased Options

 

$

2

(a)

 

$

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

(b) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Consolidated Statement of Assets and Liabilities.

The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Fund's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Consolidated Statement of Assets and Liabilities

 

Counterparty

  Gross Asset
Derivatives
Presented in the
Statement of
Assets and
Liabilities(a)
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 

JPMorgan Chase Bank NA

 

$

1

   

$

   

$

   

$

1

   

Standard Chartered Bank

   

1

     

     

     

1

   

Total

 

$

2

   

$

   

$

   

$

2

   

(a) Amounts are included in Investments in Securities in the Consolidated Statement of Assets and Liabilities.

For the year ended December 31, 2023, the approximate average monthly amount outstanding for each derivative type is as follows:

Purchased Options:

 

Average monthly notional amount

   

2,846,000

   

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements

is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.65

%

   

0.60

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.95% for Class C shares and 0.80% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $29,000 of advisory fees were waived and approximately $269,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser provides investment advisory services to the Subsidiary pursuant to the Subsidiary Investment Management Agreement (the "Agreement"). Under the Agreement, the Subsidiary will pay the Adviser at the end of each fiscal quarter, calculated by applying a quarterly rate, based on the annual rate of 0.05%, to the average daily net assets of the Subsidiary.

The Adviser has agreed to waive its advisory fees by the amount of advisory fees it receives from the Subsidiary.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Consolidated Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Consolidated Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $4,220,000 and $4,271,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

35

   

$

2,621

   

$

2,586

   

$

5

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

70

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a RIC and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the consolidated financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net

unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for consolidated financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the consolidated financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Consolidated Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

120

   

$

284

   

$

21

   

$

68

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

33

   

$

55

   


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Consolidated Financial Statements (cont'd)

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 36.2%.

K. Market Risk and Risks Relating to Certain Financial Instruments:

Bitcoin: The Fund may have exposure to cryptocurrencies indirectly through investments in GBTC, a privately offered investment vehicle that invests in bitcoin. Cryptocurrencies (also referred to as "virtual currencies" and "digital currencies") are digital assets designed to act as a medium of exchange. Although cryptocurrency is an emerging asset class, there are thousands of cryptocurrencies, the most well-known of which is bitcoin. Cryptocurrency facilitates decentralized, peer-to-peer financial exchange and value storage that is used like money, without the oversight of a central authority or banks. The value of cryptocurrency is not backed by any government, corporation, or other identified body. Similar to fiat currencies (i.e., a currency that is backed by a central bank or a national, supra-national or quasi-national organization), cryptocurrencies are susceptible to theft, loss and destruction. For example, the bitcoin held by GBTC (and the Fund's indirect exposure to such bitcoin) is also susceptible to these risks. The value of the GBTC investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which have been and may in the future be highly volatile. The value of cryptocurrencies is determined by the supply and demand for cryptocurrency in the global market for the trading of cryptocurrency, which consists primarily of transactions on electronic exchanges. The price of bitcoin could drop precipitously (including to zero) for a variety of reasons, including, but not limited to, regulatory changes, a crisis of confidence, flaw or operational issue in the bitcoin network or a change in user preference to competing

cryptocurrencies. The GBTC exposure to cryptocurrency could result in substantial losses to the Fund.

Market: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Permanence Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of Permanence Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the consolidated portfolio of investments, as of December 31, 2023, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the three years in the period then ended, the financial highlights for the period from March 31, 2020 (commencement of operations) through December 31, 2020 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, its consolidated financial highlights for each of the three years in the period then ended and its financial highlights for the period from March 31, 2020 (commencement of operations) through December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 15.74% of the dividends qualified for the dividends received deduction.

The Fund designated and paid approximately $284,000 as a long-term capital gain distribution.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $30,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

  Since August
2006
 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

  Since February
2022
 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

  Since August
2006
 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since January
2015
 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

  Since February
2022
 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

  Since January
2015
 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

  Since August
1994 (Retired
December 31, 2023)
 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

  Since August
2006
 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent
Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

  Since January
2017
 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

  Since
September
2013
 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

  Since
November
2021
 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

  Treasurer
since July
2003 and
Principal
Financial
Officer since
September
2002
 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


37


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIPERMANN
6338405 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

US Core Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

8

   

Statements of Changes in Net Assets

   

9

   

Financial Highlights

   

10

   

Notes to Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

19

   

Liquidity Risk Management Program

   

20

   

Federal Tax Notice

   

21

   

Important Notices

   

22

   

U.S. Customer Privacy Notice

   

23

   

Directors and Officers Information

   

26

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in US Core Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

US Core Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

US Core Portfolio Class I

 

$

1,000.00

   

$

1,085.80

   

$

1,021.27

   

$

4.10

   

$

3.97

     

0.78

%

 

US Core Portfolio Class A

   

1,000.00

     

1,084.30

     

1,019.76

     

5.67

     

5.50

     

1.08

   

US Core Portfolio Class C

   

1,000.00

     

1,079.50

     

1,015.93

     

9.64

     

9.35

     

1.84

   

US Core Portfolio Class R6

   

1,000.00

     

1,085.80

     

1,021.58

     

3.79

     

3.67

     

0.72

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

US Core Portfolio

The Fund seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 18.06%, net of fees. The Fund's Class I shares underperformed the Fund's benchmark, the S&P 500® Index (the "Index"), which returned 26.29%.

Factors Affecting Performance

•  Despite strong absolute results, active managers generally experienced a challenging year in 2023, as the uber-growth mega-cap technology stocks drove much of the strong performance of the benchmark for the year through October 2023.

•  Maintaining an appropriate amount of portfolio risk prevented full ownership of the full suite of these stocks, thus negatively impacting portfolio performance relative to the Index.

•  Market breadth widening benefited the portfolio and its stock picking, positively impacting portfolio performance relative to the Index for the fourth quarter of 2023.

•  The strong rally into year-end 2023 broadened beyond that small group of mega-cap technology stocks, an indicator that historically has meant better times ahead for active stock pickers.

•  For the duration of the reporting period, the Fund held both value and growth stocks, with exposure to more defensive stocks in terms of utilities and real estate investment trusts (REITs) to help mitigate market volatility.

•  Value stocks were, and continue to be, historically inexpensive with strong balance sheets.

•  Throughout the reporting period, the portfolio was balanced with exposure to quality growth, with only some exposure to uber-growth stocks to manage how much risk was added to the portfolio.

•  Although positioning generally served the portfolio well, positions in two regional banks, as part of the portfolio allocation to a diverse group of financial stocks, significantly negatively impacted the relative

performance of the large-cap core equity portfolio early in the year.

•  As of the close of the period, the portfolio continued to hold both growth (technology and consumer discretionary) and value (financials and industrials) stocks. Growth and value stocks are currently priced at reasonable levels in terms of valuations.

•  The portfolio remained underweight in the defensive sectors (health care and consumer staples) at period-end. Defensive stocks are currently expensive, the result of investors clamoring for perceived relative safety.

•  Managing the overall risk of the portfolio continues to be a priority. Despite an overall positive thesis for the market in 2024, the expectation is that the market will be more volatile in contrast to the previous year.

•  Within stock selection, the largest detractors from relative performance for the period were two positions in investment grade rated regional banks with strong investment portfolios. One suffered from a concentration of risk in its deposit base and was impacted by a classic "run on the bank," almost completely wiping out the stock overnight. The second was a related casualty of the same nature. The demise of these two stocks nearly fully accounted for the relative underperformance of the Fund for the period. Additionally, not owning the full suite of uber-growth mega-cap technology stocks in the Index negatively impacted relative performance.

•  The Fund's relative performance benefited from its allocation to a subset of uber-growth mega-cap technology stocks. Additionally, the portfolio underweight to health care and overweight to consumer discretionary stocks benefited relative performance. Likewise, the portfolio underweight to the highest dividend-yielding defensive stocks and overweight to the lowest dividend-yielding stocks positively contributed to relative performance for the period.

Management Strategies

•  There have been no changes to the investment process during the period. Applied Equity Advisors'


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

US Core Portfolio

investment process is comprised of two parts: a Style Positioning Engine and a Stock Selection Engine. The first step, the Style Positioning Engine, considers not only what market styles (growth, value, defensive) or areas of the market are in leadership, but also how much momentum a particular style has, whether that style is cheap or expensive, and whether the timing is right to be tilted toward that style. The timing decision comes down to the team's judgment and our combined decades of experience in factor investing. Regarding the Style Positioning Engine, investing in a particular area of the market that shows cheap historical valuation levels may not appear to be advantageous at first, but if chosen correctly, sticking with that investment often proves to be successful over the longer term. The Stock Selection Engine begins its work once the desired style positioning is understood. There are three steps to the Stock Selection Engine: 1. determining which stocks are most correlated to the desired style and least correlated to other portfolio positions, 2. evaluation of the company fundamentals, and 3. Sustainability Analysis. The result is a highly active portfolio of fundamentally attractive stocks that the team believes could benefit from what we have identified to be investment styles likely to outperform.

*  Minimum Investment for Class I shares

**  Commenced Operations on May 27, 2016.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the S&P 500®​ Index(1) and the Lipper Multi-Cap Core Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

18.06

%

   

16.69

%

   

     

12.37

%

 
Fund — Class A Shares
w/o sales charges(4)
   

17.71

     

16.36

     

     

12.00

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

11.56

     

15.11

     

     

11.21

   
Fund — Class C Shares
w/o sales charges(4)
   

16.77

     

15.45

     

     

11.15

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(4)
   

15.77

     

15.45

     

     

11.15

   
Fund — Class R6 Shares
w/o sales charges(4)
   

18.05

     

16.76

     

     

12.41

   

S&P 500®​ Index

   

26.29

     

15.69

     

     

13.44

   
Lipper Multi-Cap Core Funds
Index
   

24.16

     

14.49

     

     

12.02

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Standard & Poor's 500®​ Index (S&P 500®​ Index) measures the performance of the large cap segment of the U.S. equities market, covering approximately 80% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Multi-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Multi-Cap Core Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on May 27, 2016.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

US Core Portfolio

   

Shares

  Value
(000)
 

Common Stocks (99.6%)

 

Banks (5.2%)

 

JPMorgan Chase & Co.

   

67,649

   

$

11,507

   

Broadline Retail (4.0%)

 

Amazon.com, Inc. (a)

   

58,742

     

8,925

   

Building Products (1.2%)

 

Fortune Brands Innovations, Inc.

   

34,818

     

2,651

   

Capital Markets (4.2%)

 

Ameriprise Financial, Inc.

   

24,741

     

9,397

   

Commercial Services & Supplies (2.6%)

 

Waste Management, Inc.

   

31,605

     

5,661

   

Consumer Staples Distribution & Retail (4.3%)

 

Costco Wholesale Corp.

   

14,474

     

9,554

   

Electric Utilities (1.1%)

 

NextEra Energy, Inc.

   

38,952

     

2,366

   

Entertainment (2.0%)

 

Netflix, Inc. (a)

   

9,270

     

4,513

   

Financial Services (4.1%)

 

Jack Henry & Associates, Inc.

   

3,247

     

531

   

Mastercard, Inc., Class A

   

20,350

     

8,679

   
     

9,210

   

Hotels, Restaurants & Leisure (4.9%)

 

McDonald's Corp.

   

27,873

     

8,265

   

MGM Resorts International (a)

   

57,816

     

2,583

   
     

10,848

   

Household Durables (1.5%)

 

Lennar Corp., Class A

   

22,125

     

3,298

   

Insurance (6.8%)

 

Brown & Brown, Inc.

   

92,908

     

6,607

   

Progressive Corp.

   

52,667

     

8,389

   
     

14,996

   

Interactive Media & Services (8.0%)

 

Alphabet, Inc., Class A (a)

   

127,597

     

17,824

   

Life Sciences Tools & Services (3.0%)

 

Danaher Corp.

   

10,940

     

2,531

   

West Pharmaceutical Services, Inc.

   

11,997

     

4,224

   
     

6,755

   

Metals & Mining (1.3%)

 

Nucor Corp.

   

17,188

     

2,991

   

Oil, Gas & Consumable Fuels (3.5%)

 

Chevron Corp.

   

27,233

     

4,062

   

Valero Energy Corp.

   

27,975

     

3,637

   
     

7,699

   

Semiconductors & Semiconductor Equipment (10.7%)

 

Applied Materials, Inc.

   

49,983

     

8,101

   

Lam Research Corp.

   

4,387

     

3,436

   

NVIDIA Corp.

   

24,748

     

12,256

   
     

23,793

   
   

Shares

  Value
(000)
 

Software (11.9%)

 

Microsoft Corp.

   

61,409

   

$

23,093

   

Tyler Technologies, Inc. (a)

   

8,223

     

3,438

   
     

26,531

   

Specialty Retail (5.0%)

 

Home Depot, Inc.

   

10,286

     

3,564

   

TJX Cos., Inc.

   

81,470

     

7,643

   
     

11,207

   

Tech Hardware, Storage & Peripherals (8.2%)

 

Apple, Inc.

   

94,683

     

18,229

   

Textiles, Apparel & Luxury Goods (3.0%)

 

Lululemon Athletica, Inc. (a)

   

12,897

     

6,594

   

Trading Companies & Distributors (3.1%)

 

United Rentals, Inc.

   

12,112

     

6,945

   

Total Common Stocks (Cost $165,075)

   

221,494

   

Short-Term Investment (0.5%)

 

Investment Company (0.5%)

 
Morgan Stanley Institutional Liquidity Funds —
Treasury Securities Portfolio — Institutional
Class (See Note G) (Cost $1,045)
   

1,044,523

     

1,045

   

Total Investments (100.1%) (Cost $166,120) (b)

   

222,539

   

Liabilities in Excess of Other Assets (–0.1%)

   

(312

)

 

Net Assets (100.0%)

 

$

222,227

   

(a)  Non-income producing security.

(b)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $171,845,000. The aggregate gross unrealized appreciation is approximately $56,844,000 and the aggregate gross unrealized depreciation is approximately $6,148,000, resulting in net unrealized appreciation of approximately $50,696,000.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

44.3

%

 

Software

   

11.9

   

Semiconductors & Semiconductor Equipment

   

10.7

   

Tech Hardware, Storage & Peripherals

   

8.2

   

Interactive Media & Services

   

8.0

   

Insurance

   

6.7

   

Banks

   

5.2

   

Specialty Retail

   

5.0

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

US Core Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $165,075)

 

$

221,494

   

Investment in Security of Affiliated Issuer, at Value (Cost $1,045)

   

1,045

   

Total Investments in Securities, at Value (Cost $166,120)

   

222,539

   

Dividends Receivable

   

238

   

Receivable for Fund Shares Sold

   

103

   

Receivable from Affiliate

   

7

   

Other Assets

   

36

   

Total Assets

   

222,923

   

Liabilities:

 

Payable for Fund Shares Redeemed

   

329

   

Payable for Advisory Fees

   

245

   

Payable for Sub Transfer Agency Fees — Class I

   

24

   

Payable for Sub Transfer Agency Fees — Class A

   

8

   

Payable for Sub Transfer Agency Fees — Class C

   

5

   

Payable for Shareholder Services Fees — Class A

   

10

   

Payable for Distribution and Shareholder Services Fees — Class C

   

26

   

Payable for Professional Fees

   

18

   

Payable for Administration Fees

   

15

   

Payable for Custodian Fees

   

3

   

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Other Liabilities

   

13

   

Total Liabilities

   

696

   

Net Assets

 

$

222,227

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

206,786

   

Total Distributable Earnings

   

15,441

   

Net Assets

 

$

222,227

   

CLASS I:

 

Net Assets

 

$

144,907

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

6,289,832

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

23.04

   

CLASS A:

 

Net Assets

 

$

46,123

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,021,592

   

Net Asset Value, Redemption Price Per Share

 

$

22.82

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

1.26

   

Maximum Offering Price Per Share

 

$

24.08

   

CLASS C:

 

Net Assets

 

$

31,178

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

1,434,585

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

21.73

   

CLASS R6:

 

Net Assets

 

$

19

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

814

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

23.05

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

US Core Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers

 

$

2,732

   

Dividends from Security of Affiliated Issuer (Note G)

   

81

   

Total Investment Income

   

2,813

   

Expenses:

 

Advisory Fees (Note B)

   

1,326

   

Shareholder Services Fees — Class A (Note D)

   

105

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

328

   

Sub Transfer Agency Fees — Class I

   

134

   

Sub Transfer Agency Fees — Class A

   

35

   

Sub Transfer Agency Fees — Class C

   

30

   

Administration Fees (Note C)

   

177

   

Professional Fees

   

154

   

Registration Fees

   

83

   

Shareholder Reporting Fees

   

25

   

Custodian Fees (Note F)

   

11

   

Transfer Agency Fees — Class I (Note E)

   

1

   

Transfer Agency Fees — Class A (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

4

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Directors' Fees and Expenses

   

9

   

Pricing Fees

   

2

   

Other Expenses

   

18

   

Total Expenses

   

2,448

   

Waiver of Advisory Fees (Note B)

   

(148

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(62

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(24

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(3

)

 

Net Expenses

   

2,209

   

Net Investment Income

   

604

   

Realized Loss:

 

Investments Sold

   

(31,194

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

64,508

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

33,314

   

Net Increase in Net Assets Resulting from Operations

 

$

33,918

   

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

US Core Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

604

   

$

263

   

Net Realized Loss

   

(31,194

)

   

(9,637

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

64,508

     

(36,749

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

33,918

     

(46,123

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(465

)

   

(314

)

 

Class A

   

(31

)

   

(22

)

 

Class C

   

     

(20

)

 

Class R6*

   

(—

@)

   

(—

@)

 

Total Dividends and Distributions to Shareholders

   

(496

)

   

(356

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

105,800

     

175,410

   

Distributions Reinvested

   

465

     

314

   

Redeemed

   

(134,135

)

   

(105,002

)

 

Class A:

 

Subscribed

   

9,916

     

37,936

   

Distributions Reinvested

   

31

     

22

   

Redeemed

   

(12,609

)

   

(22,403

)

 

Class C:

 

Subscribed

   

6,227

     

32,309

   

Distributions Reinvested

   

     

20

   

Redeemed

   

(16,418

)

   

(10,256

)

 

Class R6:*

 

Subscribed

   

16

     

20

   

Distributions Reinvested

   

@

   

@

 

Redeemed

   

(9

)

   

(272

)

 

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(40,716

)

   

108,098

   

Total Increase (Decrease) in Net Assets

   

(7,294

)

   

61,619

   

Net Assets:

 

Beginning of Period

   

229,521

     

167,902

   

End of Period

 

$

222,227

   

$

229,521

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

5,145

     

8,220

   

Shares Issued on Distributions Reinvested

   

21

     

16

   

Shares Redeemed

   

(6,587

)

   

(5,010

)

 

Net Increase (Decrease) in Class I Shares Outstanding

   

(1,421

)

   

3,226

   

Class A:

 

Shares Subscribed

   

479

     

1,812

   

Shares Issued on Distributions Reinvested

   

1

     

1

   

Shares Redeemed

   

(613

)

   

(1,081

)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(133

)

   

732

   

Class C:

 

Shares Subscribed

   

311

     

1,538

   

Shares Issued on Distributions Reinvested

   

     

1

   

Shares Redeemed

   

(849

)

   

(527

)

 

Net Increase (Decrease) in Class C Shares Outstanding

   

(538

)

   

1,012

   

Class R6:*

 

Shares Subscribed

   

1

     

1

   

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Shares Redeemed

   

(1

)

   

(12

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

@@

   

(11

)

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

US Core Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

19.58

   

$

24.59

   

$

18.09

   

$

14.61

   

$

10.89

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.10

     

0.08

     

0.05

     

0.06

     

0.09

   

Net Realized and Unrealized Gain (Loss)

   

3.43

     

(5.05

)

   

6.46

     

3.47

     

3.82

   

Total from Investment Operations

   

3.53

     

(4.97

)

   

6.51

     

3.53

     

3.91

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.07

)

   

(0.03

)

   

(0.01

)

   

     

(0.09

)

 

Net Realized Gain

   

     

(0.01

)

   

     

(0.05

)

   

(0.10

)

 

Total Distributions

   

(0.07

)

   

(0.04

)

   

(0.01

)

   

(0.05

)

   

(0.19

)

 

Net Asset Value, End of Period

 

$

23.04

   

$

19.58

   

$

24.59

   

$

18.09

   

$

14.61

   

Total Return(2)

   

18.06

%(3)

   

(20.21

)%

   

35.99

%

   

24.20

%

   

36.01

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

144,907

   

$

151,003

   

$

110,286

   

$

20,377

   

$

13,086

   

Ratio of Expenses Before Expense Limitation

   

0.91

%

   

0.95

%

   

1.07

%

   

1.97

%

   

2.09

%

 

Ratio of Expenses After Expense Limitation

   

0.79

%(4)(5)

   

0.80

%(5)

   

0.80

%(5)

   

0.80

%(5)

   

0.78

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.80

%(5)

   

0.80

%(5)

   

0.79

%(5)

   

N/A

   

Ratio of Net Investment Income

   

0.48

%(4)(5)

   

0.37

%(5)

   

0.21

%(5)

   

0.42

%(5)

   

0.71

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

45

%

   

23

%

   

26

%

   

54

%

   

69

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.80

%

   

0.47

%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

US Core Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

19.40

   

$

24.39

   

$

17.99

   

$

14.58

   

$

10.86

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.04

     

0.01

     

(0.01

)

   

0.01

     

0.05

   

Net Realized and Unrealized Gain (Loss)

   

3.40

     

(4.99

)

   

6.41

     

3.45

     

3.82

   

Total from Investment Operations

   

3.44

     

(4.98

)

   

6.40

     

3.46

     

3.87

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.02

)

   

     

     

     

(0.05

)

 

Net Realized Gain

   

     

(0.01

)

   

     

(0.05

)

   

(0.10

)

 

Total Distributions

   

(0.02

)

   

(0.01

)

   

     

(0.05

)

   

(0.15

)

 

Net Asset Value, End of Period

 

$

22.82

   

$

19.40

   

$

24.39

   

$

17.99

   

$

14.58

   

Total Return(2)

   

17.71

%(3)

   

(20.42

)%

   

35.58

%

   

23.77

%

   

35.68

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

46,123

   

$

41,802

   

$

34,693

   

$

5,807

   

$

3,393

   

Ratio of Expenses Before Expense Limitation

   

1.16

%

   

1.19

%

   

1.36

%

   

2.29

%

   

2.46

%

 

Ratio of Expenses After Expense Limitation

   

1.08

%(4)(5)

   

1.09

%(5)

   

1.09

%(5)

   

1.12

%(5)

   

1.15

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.09

%(5)

   

1.09

%(5)

   

1.11

%(5)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

0.19

%(4)(5)

   

0.07

%(5)

   

(0.06

)%(5)

   

0.07

%(5)

   

0.34

%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

45

%

   

23

%

   

26

%

   

54

%

   

69

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.09

%

   

0.18

%

 

(5)  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

US Core Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

18.61

   

$

23.56

   

$

17.51

   

$

14.30

   

$

10.70

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(1)

   

(0.11

)

   

(0.13

)

   

(0.17

)

   

(0.10

)

   

(0.05

)

 

Net Realized and Unrealized Gain (Loss)

   

3.23

     

(4.81

)

   

6.22

     

3.36

     

3.75

   

Total from Investment Operations

   

3.12

     

(4.94

)

   

6.05

     

3.26

     

3.70

   

Distributions from and/or in Excess of:

 

Net Realized Gain

   

     

(0.01

)

   

     

(0.05

)

   

(0.10

)

 

Net Asset Value, End of Period

 

$

21.73

   

$

18.61

   

$

23.56

   

$

17.51

   

$

14.30

   

Total Return(2)

   

16.77

%(3)

   

(20.97

)%

   

34.55

%

   

22.84

%

   

34.50

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

31,178

   

$

36,707

   

$

22,638

   

$

3,353

   

$

2,489

   

Ratio of Expenses Before Expense Limitation

   

1.92

%

   

1.91

%

   

2.12

%

   

3.07

%

   

3.23

%

 

Ratio of Expenses After Expense Limitation

   

1.84

%(4)(5)

   

1.81

%(5)

   

1.84

%(5)

   

1.90

%(5)

   

1.90

%(5)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.81

%(5)

   

1.84

%(5)

   

1.90

%(5)

   

N/A

   

Ratio of Net Investment Loss

   

(0.57

)%(4)(5)

   

(0.65

)%(5)

   

(0.80

)%(5)

   

(0.68

)%(5)

   

(0.39

)%(5)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

   

0.00

%(6)

 

Portfolio Turnover Rate

   

45

%

   

23

%

   

26

%

   

54

%

   

69

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(4)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.85

%

   

(0.58

)%

 

(5)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(6)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

US Core Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

19.60

   

$

24.61

   

$

18.10

   

$

14.61

   

$

10.88

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.11

     

0.06

     

0.06

     

0.07

     

0.10

   

Net Realized and Unrealized Gain (Loss)

   

3.42

     

(5.02

)

   

6.47

     

3.47

     

3.83

   

Total from Investment Operations

   

3.53

     

(4.96

)

   

6.53

     

3.54

     

3.93

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.08

)

   

(0.04

)

   

(0.02

)

   

     

(0.10

)

 

Net Realized Gain

   

     

(0.01

)

   

     

(0.05

)

   

(0.10

)

 

Total Distributions

   

(0.08

)

   

(0.05

)

   

(0.02

)

   

(0.05

)

   

(0.20

)

 

Net Asset Value, End of Period

 

$

23.05

   

$

19.60

   

$

24.61

   

$

18.10

   

$

14.61

   

Total Return(3)

   

18.05

%(4)

   

(20.16

)%

   

36.06

%

   

24.27

%

   

36.17

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

19

   

$

9

   

$

285

   

$

18

   

$

26

   

Ratio of Expenses Before Expense Limitation

   

19.75

%

   

3.92

%

   

2.20

%

   

13.73

%

   

16.90

%

 

Ratio of Expenses After Expense Limitation

   

0.73

%(5)(6)

   

0.75

%(6)

   

0.75

%(6)

   

0.75

%(6)

   

0.75

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.75

%(6)

   

0.75

%(6)

   

0.75

%(6)

   

N/A

   

Ratio of Net Investment Income

   

0.54

%(5)(6)

   

0.28

%(6)

   

0.25

%(6)

   

0.50

%(6)

   

0.74

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

45

%

   

23

%

   

26

%

   

54

%

   

69

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.75

%

   

0.52

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the US Core Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official

closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; and (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for

exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

$

221,494

(1)

 

$

   

$

   

$

221,494

   

Short-Term Investment

 

Investment Company

   

1,045

     

     

     

1,045

   

Total Assets

 

$

222,539

   

$

   

$

   

$

222,539

   

(1) The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

4.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

5.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $750
million
  Next $750
million
  Over $1.5
billion
 
  0.60

%

   

0.55

%

   

0.50

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.53% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.80% for Class I shares, 1.15% for Class A shares, 1.90% for Class C shares and 0.75% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $148,000 of advisory fees were waived and approximately $64,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $1,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $99,566,000 and $133,261,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $3,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

4,147

   

$

67,142

   

$

70,244

   

$

81

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

1,045

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an af-

filiate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

496

   

$

   

$

236

   

$

120

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

198

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $16,193,000 and $19,240,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative

net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 83.4%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of US Core Portfolio
and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of US Core Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023. For corporate shareholders 100% of the dividends qualified for the dividends received deduction.

For federal income tax purposes, the following information is furnished with respect to the Fund's earnings for its taxable year ended December 31, 2023. When distributed, certain earnings may be subject to a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designated up to a maximum of approximately $496,000 as taxable at this lower rate.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


31


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(This page has been left blank intentionally.)


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSCPANN
6338642 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

U.S. Focus Real Estate Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

8

   

Statements of Changes in Net Assets

   

9

   

Financial Highlights

   

10

   

Notes to Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

21

   

Liquidity Risk Management Program

   

22

   

Federal Tax Notice

   

23

   

Important Notices

   

24

   

U.S. Customer Privacy Notice

   

25

   

Directors and Officers Information

   

28

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in U.S. Focus Real Estate Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

U.S. Focus Real Estate Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

U.S. Focus Real Estate Portfolio Class I

 

$

1,000.00

   

$

1,078.90

   

$

1,021.12

   

$

4.24

   

$

4.13

     

0.81

%

 

U.S. Focus Real Estate Portfolio Class A

   

1,000.00

     

1,077.30

     

1,019.36

     

6.07

     

5.90

     

1.16

   

U.S. Focus Real Estate Portfolio Class C

   

1,000.00

     

1,073.70

     

1,015.58

     

9.98

     

9.70

     

1.91

   

U.S. Focus Real Estate Portfolio Class R6

   

1,000.00

     

1,079.30

     

1,021.42

     

3.93

     

3.82

     

0.75

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

U.S. Focus Real Estate Portfolio

The Fund seeks to provide current income and long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 13.30%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the FTSE Nareit All Equity REITs Index (the "Index"), which returned 11.36%.

Factors Affecting Performance

•  After four 25-basis point(i)​ interest rate hikes from the beginning of the year through July 2023, the Federal Reserve (Fed) held interest rates steady the remainder of the year and signaled it may begin cutting interest rates as early as the first half of 2024 amid recent favorable inflation data and an increasing belief that the Fed may achieve a "soft landing" in the economy. Within the Index, seniors housing health care was a top-performing sector for the year, as it benefited from the long-term secular tailwind of an aging U.S. population and the necessity-based nature of seniors housing demand. The mall sector was also a key outperformer, bolstered by the lack of new supply of retail real estate and increased demand from retailers for prime storefronts, creating upward pressure on rents. The data center sector outperformed, as it benefited from favorable secular demand trends driven by data growth and digital transformation combined with limited new supply growth. The hotel sector was another outperformer, primarily a beneficiary of "risk-on" markets and a more optimistic view on the economy in the fourth quarter of 2023. A key underperformer for the year was the life science health care sector, which faced supply headwinds coupled with lower demand for space. Retail net lease was another underperformer due to the higher interest rate environment and narrowing investment spreads. Apartments also underperformed, as third quarter 2023 earnings results were below expectations and a deceleration in rents in September and October 2023 that was worse than anticipated.

•  The Fund's sector overweight to and security selection within the seniors housing health care

sector, the overweight to data centers, security selection in apartments, and the zero weight allocation to life science health care were the top relative contributors for the year. Key relative performance detractors included security selection in the industrial sector, the underweight to skilled nursing health care, and the overweight to and security selection within the retail net lease sector.

Management Strategies

•  The team uses internal proprietary research to invest in public real estate companies that we believe offer the best value relative to their underlying assets and growth prospects. The team combines a bottom-up approach, assessing the intrinsic value, equity multiples and growth prospects of each security, with a top-down view that incorporates fundamental inflection points, macroeconomic considerations, and geopolitical risk, and actively selects positions in a limited number of equity securities. By incorporating both an equity market valuation and a more traditional real estate valuation with a top-down overlay, we believe the Fund will be better prepared to identify securities with the best expected total returns.

•  Given the stabilization in interest rates across the globe and the increasing likelihood of interest rate cuts, forecasted returns for the asset class have improved. Moreover, we believe relative strength in cash flows can be expected given the unique nature of listed real estate. Specifically, the contracted rental streams with inflation-linked escalations and the necessity-based nature of real estate — the listed real estate market evolves and grows with the broader needs of society and the economy and sits at the epicenter of how people live, work, shop and communicate — coupled with limited new real estate supply additions in the vast majority of sectors, should result in cash flow growth. Additionally, we believe the relative valuation of real estate securities is attractive, specifically when compared to direct property investment and the broader equities market, and is presenting an interesting pricing arbitrage opportunity for investors.

(i)​  One basis point = 0.01%


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

U.S. Focus Real Estate Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on September 30, 2021.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the the FTSE Nareit All Equity REITs Index(1)​ and the Lipper Real Estate Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

13.30

%

   

     

     

–2.68

%

 
Fund — Class A Shares
w/o sales charges(4)
   

12.89

     

     

     

–3.03

   
Fund — Class A Shares
with maximum 5.25%
sales charges(4)
   

6.95

     

     

     

–5.31

   
Fund — Class C Shares
w/o sales charges(4)
   

12.04

     

     

     

–3.77

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

11.04

     

     

     

–3.77

   
Fund — Class R6 Shares
w/o sales charges(4)
   

13.35

     

     

     

–2.64

   

FTSE Nareit All Equity REITs Index

   

11.36

     

     

     

–1.30

   

Lipper Real Estate Funds Index

   

11.98

     

     

     

–2.22

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)  ​The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Real Estate Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Real Estate Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Real Estate Funds classification."

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)  ​Commenced operations on September 30, 2021.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

U.S. Focus Real Estate Portfolio

   

Shares

  Value
(000)
 

Common Stocks (97.2%)

 

Apartments (8.3%)

 

AvalonBay Communities, Inc. REIT

   

975

   

$

183

   

Essex Property Trust, Inc. REIT

   

845

     

209

   
     

392

   

Data Centers (10.8%)

 

Digital Realty Trust, Inc. REIT

   

1,410

     

190

   

Equinix, Inc. REIT

   

392

     

316

   
     

506

   

Free Standing (5.4%)

 

Agree Realty Corp. REIT

   

1,450

     

91

   

Realty Income Corp. REIT

   

2,818

     

162

   
     

253

   

Gaming (3.2%)

 

VICI Properties, Inc. REIT

   

4,740

     

151

   

Health Care (9.0%)

 

CareTrust REIT, Inc.

   

4,126

     

92

   

Welltower, Inc. REIT

   

3,680

     

332

   
     

424

   

Industrial (12.2%)

 

Americold Realty Trust, Inc. REIT

   

3,094

     

94

   

EastGroup Properties, Inc. REIT

   

504

     

92

   

Prologis, Inc. REIT

   

2,039

     

272

   

Rexford Industrial Realty, Inc. REIT

   

2,058

     

115

   
     

573

   

Lodging/Resorts (1.5%)

 

Hilton Worldwide Holdings, Inc.

   

385

     

70

   

Office (2.8%)

 

Kilroy Realty Corp. REIT

   

3,264

     

130

   

Regional Malls (3.9%)

 

Simon Property Group, Inc. REIT

   

1,276

     

182

   

Self Storage (9.4%)

 

Extra Space Storage, Inc. REIT

   

1,436

     

230

   

Public Storage REIT

   

700

     

214

   
     

444

   

Shopping Centers (5.4%)

 

Federal Realty Investment Trust REIT

   

891

     

92

   

Kimco Realty Corp. REIT

   

7,697

     

164

   
     

256

   

Single Family Homes (4.1%)

 

American Homes 4 Rent Class A REIT

   

5,394

     

194

   

Specialty (2.3%)

 

Iron Mountain, Inc. REIT

   

1,534

     

107

   

Telecommunications REITs (16.4%)

 

American Tower Corp. REIT

   

2,041

     

441

   

Crown Castle, Inc. REIT

   

941

     

108

   

SBA Communications Corp. REIT

   

868

     

220

   

   

769

   
   

Shares

  Value
(000)
 

Timberland REITs (2.5%)

 
Weyerhaeuser Co. REIT3,356  

$

117

   

Total Common Stocks (Cost $4,172)

   

4,568

   

Short-Term Investment (0.7%)

 

Investment Company (0.7%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $34)
   

34,009

     

34

   

Total Investments (97.9%) (Cost $4,206) (a)

   

4,602

   

Other Assets in Excess of Liabilities (2.1%)

   

98

   

Net Assets (100.0%)

 

$

4,700

   

(a)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $4,288,000. The aggregate gross unrealized appreciation is approximately $402,000 and the aggregate gross unrealized depreciation is approximately $88,000, resulting in net unrealized appreciation of approximately $314,000.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

21.3

%

 

Telecommunications REITs

   

16.7

   

Industrial

   

12.5

   

Data Centers

   

11.0

   

Self Storage

   

9.7

   

Health Care

   

9.2

   

Apartments

   

8.5

   

Shopping Centers

   

5.6

   

Free Standing

   

5.5

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Focus Real Estate Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $4,172)

 

$

4,568

   

Investment in Security of Affiliated Issuer, at Value (Cost $34)

   

34

   

Total Investments in Securities, at Value (Cost $4,206)

   

4,602

   

Foreign Currency, at Value (Cost $—@)

   

@

 

Due from Adviser

   

64

   

Dividends Receivable

   

19

   

Receivable from Affiliate

   

@

 

Other Assets

   

37

   

Total Assets

   

4,722

   

Liabilities:

 

Payable for Professional Fees

   

15

   

Payable for Custodian Fees

   

1

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

6

   

Total Liabilities

   

22

   

Net Assets

 

$

4,700

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

5,200

   

Total Accumulated Loss

   

(500

)

 

Net Assets

 

$

4,700

   

CLASS I:

 

Net Assets

 

$

4,560

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

507,471

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.99

   

CLASS A:

 

Net Assets

 

$

47

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,189

   

Net Asset Value, Redemption Price Per Share

 

$

8.99

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.50

   

Maximum Offering Price Per Share

 

$

9.49

   

CLASS C:

 

Net Assets

 

$

46

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,101

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.99

   

CLASS R6:

 

Net Assets

 

$

47

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,237

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.99

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Focus Real Estate Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers

 

$

137

   

Dividends from Security of Affiliated Issuer (Note G)

   

2

   

Income from Securities Loaned — Net

   

@

 

Total Investment Income

   

139

   

Expenses:

 

Professional Fees

   

154

   

Registration Fees

   

59

   

Advisory Fees (Note B)

   

30

   

Transfer Agency Fees — Class I (Note E)

   

2

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Directors' Fees and Expenses

   

6

   

Custodian Fees (Note F)

   

5

   

Administration Fees (Note C)

   

3

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

@

 

Sub Transfer Agency Fees — Class I

   

@

 

Other Expenses

   

7

   

Total Expenses

   

272

   

Expenses Reimbursed by Adviser (Note B)

   

(198

)

 

Waiver of Advisory Fees (Note B)

   

(30

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

36

   

Net Investment Income

   

103

   

Realized Loss:

 

Investments Sold

   

(305

)

 

Foreign Currency Translation

   

(—

@)

 

Net Realized Loss

   

(305

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

754

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

754

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

449

   

Net Increase in Net Assets Resulting from Operations

 

$

552

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Focus Real Estate Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

103

   

$

79

   

Net Realized Loss

   

(305

)

   

(624

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

754

     

(1,038

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

552

     

(1,583

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(85

)

   

(95

)

 

Class A

   

(1

)

   

(1

)

 

Class C

   

(—

@)

   

(—

@)

 

Class R6*

   

(1

)

   

(1

)

 

Total Dividends and Distributions to Shareholders

   

(87

)

   

(97

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

     

18

   

Distributions Reinvested

   

84

     

95

   

Redeemed

   

     

(16

)

 

Class A:

 

Distributions Reinvested

   

1

     

1

   

Class C:

 

Distributions Reinvested

   

@

   

@

 

Class R6:*

 

Distributions Reinvested

   

1

     

1

   

Net Increase in Net Assets Resulting from Capital Share Transactions

   

86

     

99

   

Total Increase (Decrease) in Net Assets

   

551

     

(1,581

)

 

Net Assets:

 

Beginning of Period

   

4,149

     

5,730

   

End of Period

 

$

4,700

   

$

4,149

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

     

2

   

Shares Issued on Distributions Reinvested

   

10

     

11

   

Shares Redeemed

   

     

(2

)

 

Net Increase in Class I Shares Outstanding

   

10

     

11

   

Class A:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Class C:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Focus Real Estate Portfolio

   

Class I

 
   

Year Ended December 31,

  Period from
September 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

8.10

   

$

11.43

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.20

     

0.16

     

0.02

   

Net Realized and Unrealized Gain (Loss)

   

0.86

     

(3.30

)

   

1.44

   

Total from Investment Operations

   

1.06

     

(3.14

)

   

1.46

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.17

)

   

(0.12

)

   

(0.03

)

 

Net Realized Gain

   

     

(0.07

)

   

   

Total Distributions

   

(0.17

)

   

(0.19

)

   

(0.03

)

 

Net Asset Value, End of Period

 

$

8.99

   

$

8.10

   

$

11.43

   

Total Return(3)

   

13.30

%(4)

   

(27.56

)%

   

14.62

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

4,560

   

$

4,025

   

$

5,559

   

Ratio of Expenses Before Expense Limitation

   

6.19

%

   

7.46

%

   

8.45

%(6)

 

Ratio of Expenses After Expense Limitation

   

0.85

%(7)(8)(9)

   

0.89

%(9)

   

0.89

%(6)(9)

 

Ratio of Net Investment Income

   

2.37

%(8)(9)

   

1.68

%(9)

   

0.92

%(6)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(6)(10)

 

Portfolio Turnover Rate

   

92

%

   

99

%

   

26

%(5)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class I shares.

(5)  Not annualized.

(6)  Annualized.

(7)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.75% for Class I shares. Prior to December 11, 2023, the maximum ratio was 0.90% for Class I shares.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.89

%

   

2.33

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Focus Real Estate Portfolio

   

Class A

 
   

Year Ended December 31,

  Period from
September 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

8.10

   

$

11.43

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.17

     

0.12

     

0.02

   

Net Realized and Unrealized Gain (Loss)

   

0.86

     

(3.29

)

   

1.43

   

Total from Investment Operations

   

1.03

     

(3.17

)

   

1.45

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

(0.09

)

   

(0.02

)

 

Net Realized Gain

   

     

(0.07

)

   

   

Total Distributions

   

(0.14

)

   

(0.16

)

   

(0.02

)

 

Net Asset Value, End of Period

 

$

8.99

   

$

8.10

   

$

11.43

   

Total Return(3)

   

12.89

%(4)

   

(27.83

)%

   

14.51

%(5)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

47

   

$

41

   

$

57

   

Ratio of Expenses Before Expense Limitation

   

11.11

%

   

11.91

%

   

11.91

%(6)

 

Ratio of Expenses After Expense Limitation

   

1.20

%(7)(8)(9)

   

1.25

%(9)

   

1.25

%(6)(9)

 

Ratio of Net Investment Income

   

2.02

%(8)(9)

   

1.32

%(9)

   

0.56

%(6)(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(10)

   

0.00

%(10)

   

0.00

%(6)(10)

 

Portfolio Turnover Rate

   

92

%

   

99

%

   

26

%(5)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(4)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class A shares.

(5)  Not annualized.

(6)  Annualized.

(7)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.10% for Class A shares. Prior to December 11, 2023, the maximum ratio was 1.25% for Class A shares.

(8)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.24

%

   

1.98

%

 

(9)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(10)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Focus Real Estate Portfolio

   

Class C

 
   

Year Ended December 31,

  Period from
September 30, 2021(1)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

8.10

   

$

11.43

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(2)

   

0.11

     

0.05

     

(0.01

)

 

Net Realized and Unrealized Gain (Loss)

   

0.86

     

(3.29

)

   

1.44

   

Total from Investment Operations

   

0.97

     

(3.24

)

   

1.43

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.08

)

   

(0.02

)

   

(0.00

)(3)

 

Net Realized Gain

   

     

(0.07

)

   

   

Total Distributions

   

(0.08

)

   

(0.09

)

   

(0.00

)(3)

 

Net Asset Value, End of Period

 

$

8.99

   

$

8.10

   

$

11.43

   

Total Return(4)

   

12.04

%(5)

   

(28.39

)%

   

14.30

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

46

   

$

41

   

$

57

   

Ratio of Expenses Before Expense Limitation

   

11.93

%

   

12.69

%

   

12.67

%(7)

 

Ratio of Expenses After Expense Limitation

   

1.95

%(8)(9)(10)

   

2.00

%(10)

   

2.00

%(7)(10)

 

Ratio of Net Investment Income (Loss)

   

1.27

%(9)(10)

   

0.57

%(10)

   

(0.19

)%(7)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(7)(11)

 

Portfolio Turnover Rate

   

92

%

   

99

%

   

26

%(6)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class C shares.

(6)  Not annualized.

(7)  Annualized.

(8)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class C shares. Prior to December 11, 2023, the maximum ratio was 2.00% for Class C shares.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.99

%

   

1.23

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Focus Real Estate Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

  Period from
September 30, 2021(2)​ to
 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021

 

Net Asset Value, Beginning of Period

 

$

8.10

   

$

11.43

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income(3)

   

0.20

     

0.16

     

0.03

   

Net Realized and Unrealized Gain (Loss)

   

0.86

     

(3.30

)

   

1.43

   

Total from Investment Operations

   

1.06

     

(3.14

)

   

1.46

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.17

)

   

(0.12

)

   

(0.03

)

 

Net Realized Gain

   

     

(0.07

)

   

   

Total Distributions

   

(0.17

)

   

(0.19

)

   

(0.03

)

 

Net Asset Value, End of Period

 

$

8.99

   

$

8.10

   

$

11.43

   

Total Return(4)

   

13.35

%(5)

   

(27.53

)%

   

14.63

%(6)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

47

   

$

42

   

$

57

   

Ratio of Expenses Before Expense Limitation

   

11.29

%

   

11.65

%

   

11.65

%(7)

 

Ratio of Expenses After Expense Limitation

   

0.80

%(8)(9)(10)

   

0.85

%(10)

   

0.85

%(7)(10)

 

Ratio of Net Investment Income

   

2.42

%(9)(10)

   

1.72

%(10)

   

0.95

%(7)(10)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(11)

   

0.00

%(11)

   

0.00

%(7)(11)

 

Portfolio Turnover Rate

   

92

%

   

99

%

   

26

%(6)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency fees that were reimbursed in the current period. The amount of the reimbursement was immaterial on a per share basis and the impact was less than 0.005% to the total return of Class R6 shares.

(6)  Not annualized.

(7)  Annualized.

(8)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.70% for Class R6 shares. Prior to December 11, 2023, the maximum ratio was 0.85% for Class R6 shares.

(9)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.84

%

   

2.38

%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(11)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the U.S. Focus Real Estate Portfolio. The Fund seeks to provide current income and long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-thecounter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing

price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The Fund invests a significant portion of its assets in securities of real estate investment trusts ("REITs"). The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Fund.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

$

4,568

(1)

 

$

   

$

   

$

4,568

   

Short-Term Investment

 

Investment Company

   

34

     

     

     

34

   

Total Assets

 

$

4,602

   

$

   

$

   

$

4,602

   

(1) The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in

the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

At December 31, 2023, the Fund did not have any outstanding securities on loan.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

income, if any, are declared and paid quarterly. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Fund owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.70

%

   

0.65

%

 

Effective December 11, 2023, the Adviser provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1
billion
  Over $1
billion
 
  0.60

%

   

0.55

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I shares, 1.25% for Class A shares, 2.00% for Class C shares and 0.85% for Class R6 shares. Effective December 11, 2023, the Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses will not exceed 0.75% for Class I shares, 1.10% for Class A shares, 1.85% for Class C shares and 0.70% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $30,000 of advisory fees were waived and approximately $204,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $3,934,000 and $3,911,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

115

   

$

639

   

$

720

   

$

2

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

34

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly,


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the three-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
  Ordinary
Income
(000)
  Long-Term
Capital Gain
(000)
 
$

87

   

$

   

$

94

   

$

3

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a prior year tax return adjustment, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

(4

)

 

$

4

   

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

35

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $514,000 and $332,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund did not have record owners of 10% or greater.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of U.S. Focus Real Estate Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of U.S. Focus Real Estate Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the two years in the period then ended and the period from September 30, 2021 (commencement of operations) through December 31, 2021 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the two years in the period then ended and the period from September 30, 2021 (commencement of operations) through December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated approximately $62,000 of its distributions paid as qualified business income.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


33


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSFREANN
6338437 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

U.S. Real Estate Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

7

   

Statement of Assets and Liabilities

   

8

   

Statement of Operations

   

10

   

Statements of Changes in Net Assets

   

11

   

Financial Highlights

   

13

   

Notes to Financial Statements

   

19

   

Report of Independent Registered Public Accounting Firm

   

26

   

Liquidity Risk Management Program

   

27

   

Federal Tax Notice

   

28

   

Important Notices

   

29

   

U.S. Customer Privacy Notice

   

30

   

Directors and Officers Information

   

33

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in U.S. Real Estate Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

U.S. Real Estate Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

U.S. Real Estate Portfolio Class I

 

$

1,000.00

   

$

1,069.70

   

$

1,023.89

   

$

1.36

   

$

1.33

     

0.26

%

 

U.S. Real Estate Portfolio Class A

   

1,000.00

     

1,068.40

     

1,022.18

     

3.13

     

3.06

     

0.60

   

U.S. Real Estate Portfolio Class L

   

1,000.00

     

1,065.70

     

1,019.46

     

5.94

     

5.80

     

1.14

   

U.S. Real Estate Portfolio Class C

   

1,000.00

     

1,063.60

     

1,017.59

     

7.85

     

7.68

     

1.51

   

U.S. Real Estate Portfolio Class R6

   

1,000.00

     

1,070.30

     

1,024.25

     

0.99

     

0.97

     

0.19

   

U.S. Real Estate Portfolio Class IR

   

1,000.00

     

1,070.30

     

1,024.40

     

0.83

     

0.82

     

0.16

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

U.S. Real Estate Portfolio

The Fund seeks to provide above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts ("REITs").

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 14.69%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the FTSE Nareit Equity REITs Index (the "Index"), which returned 13.73%.

Factors Affecting Performance

•  After four 25-basis point(i)​ interest rate hikes from the beginning of the year through July 2023, the Federal Reserve (Fed) held interest rates steady the remainder of the year and signaled it may begin cutting interest rates as early as the first half of 2024 amid recent favorable inflation data and an increasing belief that the Fed may achieve a "soft landing" in the economy. Within the Index, seniors housing health care was a top-performing sector for the year, as it benefited from the long-term secular tailwind of an aging U.S. population and the necessity-based nature of seniors housing demand. The mall sector was also a key outperformer, bolstered by the lack of new supply of retail real estate and increased demand from retailers for prime storefronts, creating upward pressure on rents. The data center sector outperformed, as it benefited from favorable secular demand trends driven by data growth and digital transformation combined with limited new supply growth. The hotel sector was another outperformer, primarily a beneficiary of "risk-on" markets and a more optimistic view on the economy in the fourth quarter of 2023. A key underperformer for the year was the life science health care sector, which faced supply headwinds coupled with lower demand for space. Retail net lease was another underperformer due to the higher interest rate environment and narrowing investment spreads. Apartments also underperformed, as third quarter 2023 earnings results were below expectations and a deceleration in rents in September and October 2023 that was worse than anticipated.

•  The Fund's sector overweights to seniors housing health care and data centers, the sector underweight to life science health care, and security selection in apartments and storage were the top relative contributors for the year. Key relative performance detractors included security selection in the industrial sector, the underweight to skilled nursing health care, the overweight to and security selection within the retail net lease sector, and the weighting to apartments.

Management Strategies

•  The team uses internal proprietary research to invest in public real estate companies that we believe offer the best value relative to their underlying assets and growth prospects. The team combines a bottom-up approach, assessing the intrinsic value, equity multiples and growth prospects of each security, with a top-down view that incorporates fundamental inflection points, macroeconomic considerations, and geopolitical risk. By incorporating both an equity market valuation and a more traditional real estate valuation with a top-down overlay, we believe the Fund will be better prepared to identify securities with the best expected total returns.

•  Given the stabilization in interest rates across the globe and the increasing likelihood of interest rate cuts, forecasted returns for the asset class have improved. Moreover, we believe relative strength in cash flows can be expected given the unique nature of listed real estate. Specifically, the contracted rental streams with inflation-linked escalations and the necessity-based nature of real estate — the listed real estate market evolves and grows with the broader needs of society and the economy and sits at the epicenter of how people live, work, shop and communicate — coupled with limited new real estate supply additions in the vast majority of sectors, should result in cash flow growth. Additionally, we believe the relative valuation of real estate securities is attractive, specifically when compared to direct property investment and the broader equities market, and is presenting an interesting pricing arbitrage opportunity for investors.

 

(i)​  One basis point = 0.01%


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

U.S. Real Estate Portfolio

*  Minimum Investment for Class I shares

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, L, C, R6 and IR shares will vary from the performance of Class I shares based upon their different inception dates and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the FTSE Nareit Equity REITs Index(1) and the Lipper Real Estate Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(10)
 
Fund — Class I Shares
w/o sales charges(4)
   

14.69

%

   

2.62

%

   

4.39

%

   

9.50

%

 
Fund — Class A Shares
w/o sales charges(5)
   

14.46

     

2.30

     

4.07

     

8.72

   
Fund — Class A Shares
with maximum 5.25%
sales charges(5)
   

8.42

     

1.19

     

3.51

     

8.51

   
Fund — Class L Shares
w/o sales charges(6)
   

13.75

     

1.76

     

3.52

     

4.36

   
Fund — Class C Shares
w/o sales charges(8)
   

13.51

     

1.50

     

     

0.97

   
Fund — Class C Shares
with maximum 1.00%
deferred sales charges(8)
   

12.51

     

1.50

     

     

0.97

   
Fund — Class R6 Shares
w/o sales charges(7)
   

14.77

     

2.70

     

4.47

     

4.37

   
Fund — Class IR Shares
w/o sales charges(9)
   

14.77

     

2.70

     

     

1.35

   

FTSE Nareit Equity REITs Index

   

13.73

     

7.39

     

7.65

     

9.62

   

Lipper Real Estate Funds Index

   

11.98

     

7.30

     

7.19

     

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The FTSE Nareit (National Association of Real Estate Investment Trusts) Equity REITs Index is free float-adjusted market capitalization weighted index of tax-qualified REITs listed on the New York Stock Exchange, NYSE Amex and the NASDAQ National Market Systems. Effective December 20, 2010, the FTSE Nareit Equity REITs Index will not include "Timber REITs". The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Real Estate Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Real Estate Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Real Estate Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

U.S. Real Estate Portfolio

(4)​  Commenced operations on February 24, 1995.

(5)​  Commenced offering on January 2, 1996.

(6)​  Commenced offering on November 11, 2011.

(7)​  Commenced offering on September 13, 2013.

(8)​  Commenced offering on April 30, 2015. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

(9)​  Commenced offering on June 15, 2018.

(10)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of Class I of the Fund, not the inception of the Index.


6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

U.S. Real Estate Portfolio

   

Shares

  Value
(000)
 

Common Stocks (98.1%)

 

Apartments (10.1%)

 

AvalonBay Communities, Inc. REIT

   

6,953

   

$

1,302

   

Essex Property Trust, Inc. REIT

   

4,436

     

1,100

   

Mid-America Apartment Communities, Inc. REIT

   

4,973

     

668

   
     

3,070

   

Data Centers (12.9%)

 

Digital Realty Trust, Inc. REIT

   

10,875

     

1,464

   

Equinix, Inc. REIT

   

3,052

     

2,458

   
     

3,922

   

Free Standing (7.0%)

 

Agree Realty Corp. REIT

   

10,871

     

685

   

NETSTREIT Corp. REIT

   

13,743

     

245

   

Realty Income Corp. REIT

   

21,130

     

1,213

   
     

2,143

   

Gaming (4.0%)

 

VICI Properties, Inc. REIT

   

38,553

     

1,229

   

Health Care (9.5%)

 

CareTrust REIT, Inc.

   

23,818

     

533

   

Ventas, Inc. REIT

   

6,171

     

307

   

Welltower, Inc. REIT

   

22,822

     

2,058

   
     

2,898

   

Industrial (15.1%)

 

Americold Realty Trust, Inc. REIT

   

15,289

     

463

   

EastGroup Properties, Inc. REIT

   

3,124

     

573

   

Prologis, Inc. REIT

   

22,411

     

2,988

   

Rexford Industrial Realty, Inc. REIT

   

9,970

     

559

   
     

4,583

   

Lodging/Resorts (2.7%)

 

Hilton Worldwide Holdings, Inc.

   

1,190

     

217

   

Host Hotels & Resorts, Inc. REIT

   

30,790

     

599

   
     

816

   

Manufactured Homes (2.5%)

 

Sun Communities, Inc. REIT

   

5,783

     

773

   

Office (5.1%)

 

Alexandria Real Estate Equities, Inc. REIT

   

6,773

     

858

   

Kilroy Realty Corp. REIT

   

17,762

     

708

   
     

1,566

   

Regional Malls (4.7%)

 

Simon Property Group, Inc. REIT

   

9,921

     

1,415

   

Self Storage (9.8%)

 

Extra Space Storage, Inc. REIT

   

8,814

     

1,413

   

Public Storage REIT

   

5,195

     

1,585

   
     

2,998

   

Shopping Centers (6.5%)

 

Federal Realty Investment Trust REIT

   

4,373

     

451

   

Kimco Realty Corp. REIT

   

36,915

     

787

   
   

Shares

  Value
(000)
 

Kite Realty Group Trust REIT

   

19,100

   

$

436

   

Urban Edge Properties REIT

   

16,611

     

304

   
     

1,978

   

Single Family Homes (4.0%)

 

American Homes 4 Rent Class A REIT

   

33,493

     

1,204

   

Specialty (2.8%)

 

Iron Mountain, Inc. REIT

   

12,042

     

843

   

Telecommunications REITs (1.4%)

 

American Tower Corp. REIT

   

1,981

     

428

   

Total Common Stocks (Cost $25,598)

   

29,866

   

Short-Term Investment (1.4%)

 

Investment Company (1.4%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Portfolio —
Institutional Class (See Note G)
(Cost $444)
   

443,684

     

444

   

Total Investments (99.5%) (Cost $26,042) (a)

   

30,310

   

Other Assets in Excess of Liabilities (0.5%)

   

143

   

Net Assets (100.0%)

 

$

30,453

   

(a)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $26,573,000. The aggregate gross unrealized appreciation is approximately $4,997,000 and the aggregate gross unrealized depreciation is approximately $1,261,000, resulting in net unrealized appreciation of approximately $3,736,000.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification

  Percentage of
Total Investments
 

Other*

   

23.6

%

 

Industrial

   

15.1

   

Data Centers

   

12.9

   

Apartments

   

10.1

   

Self Storage

   

9.9

   

Health Care

   

9.6

   

Free Standing

   

7.1

   

Shopping Centers

   

6.5

   

Office

   

5.2

   

Total Investments

   

100.0

%

 

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Real Estate Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value (Cost $25,598)

 

$

29,866

   

Investment in Security of Affiliated Issuer, at Value (Cost $444)

   

444

   

Total Investments in Securities, at Value (Cost $26,042)

   

30,310

   

Foreign Currency, at Value (Cost $—@)

   

@

 

Dividends Receivable

   

135

   

Due from Adviser

   

58

   

Receivable for Fund Shares Sold

   

2

   

Receivable from Affiliate

   

1

   

Other Assets

   

52

   

Total Assets

   

30,558

   

Liabilities:

 

Payable for Fund Shares Redeemed

   

46

   

Payable for Professional Fees

   

21

   

Payable for Transfer Agency Fees — Class I

   

3

   

Payable for Transfer Agency Fees — Class A

   

1

   

Payable for Transfer Agency Fees — Class L

   

1

   

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

1

   

Payable for Transfer Agency Fees — Class IR

   

@

 

Payable for Sub Transfer Agency Fees — Class I

   

4

   

Payable for Sub Transfer Agency Fees — Class A

   

1

   

Payable for Sub Transfer Agency Fees — Class L

   

@

 

Payable for Sub Transfer Agency Fees — Class C

   

@

 

Payable for Shareholder Services Fees — Class A

   

2

   

Payable for Distribution and Shareholder Services Fees — Class L

   

1

   

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Payable for Administration Fees

   

2

   

Payable for Custodian Fees

   

2

   

Other Liabilities

   

20

   

Total Liabilities

   

105

   

Net Assets

 

$

30,453

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

30,902

   

Total Accumulated Loss

   

(449

)

 

Net Assets

 

$

30,453

   

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)

  December 31, 2023
(000)
 

CLASS I:

 

Net Assets

 

$

20,440

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

2,290,306

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.92

   

CLASS A:

 

Net Assets

 

$

8,339

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

988,139

   

Net Asset Value, Redemption Price Per Share

 

$

8.44

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.47

   

Maximum Offering Price Per Share

 

$

8.91

   

CLASS L:

 

Net Assets

 

$

1,437

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

170,572

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.42

   

CLASS C:

 

Net Assets

 

$

94

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

11,253

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.36

   

CLASS R6:

 

Net Assets

 

$

135

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

15,145

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.92

   

CLASS IR:

 

Net Assets

 

$

8

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

940

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

8.92

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Real Estate Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Securities of Unaffiliated Issuers

 

$

1,032

   

Dividends from Security of Affiliated Issuer (Note G)

   

14

   

Income from Securities Loaned — Net

   

@

 

Total Investment Income

   

1,046

   

Expenses:

 

Advisory Fees (Note B)

   

208

   

Professional Fees

   

156

   

Registration Fees

   

87

   

Transfer Agency Fees — Class I (Note E)

   

18

   

Transfer Agency Fees — Class A (Note E)

   

10

   

Transfer Agency Fees — Class L (Note E)

   

4

   

Transfer Agency Fees — Class C (Note E)

   

3

   

Transfer Agency Fees — Class R6 (Note E)

   

6

   

Transfer Agency Fees — Class IR (Note E)

   

2

   

Shareholder Services Fees — Class A (Note D)

   

21

   

Distribution and Shareholder Services Fees — Class L (Note D)

   

11

   

Distribution and Shareholder Services Fees — Class C (Note D)

   

2

   

Administration Fees (Note C)

   

24

   

Shareholder Reporting Fees

   

24

   

Sub Transfer Agency Fees — Class I

   

16

   

Sub Transfer Agency Fees — Class A

   

6

   

Sub Transfer Agency Fees — Class L

   

1

   

Sub Transfer Agency Fees — Class C

   

@

 

Custodian Fees (Note F)

   

6

   

Directors' Fees and Expenses

   

6

   

Pricing Fees

   

1

   

Other Expenses

   

13

   

Total Expenses

   

625

   

Waiver of Advisory Fees (Note B)

   

(208

)

 

Reimbursement of Transfer Agent and Sub Transfer Agent Fees (Note B)

   

(89

)

 

Expenses Reimbursed by Adviser (Note B)

   

(72

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(21

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class L (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(6

)

 

Reimbursement of Class Specific Expenses — Class IR (Note B)

   

(2

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(1

)

 

Net Expenses

   

218

   

Net Investment Income

   

828

   

Realized Loss:

 

Investments Sold

   

(2,365

)

 

Foreign Currency Translation

   

(—

@)

 

Net Realized Loss

   

(2,365

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

5,670

   

Foreign Currency Translation

   

@

 

Net Change in Unrealized Appreciation (Depreciation)

   

5,670

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

3,305

   

Net Increase in Net Assets Resulting from Operations

 

$

4,133

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Real Estate Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income

 

$

828

   

$

1,307

   

Net Realized Loss

   

(2,365

)

   

(2,466

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

5,670

     

(12,229

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

4,133

     

(13,388

)

 

Dividends and Distributions to Shareholders:

 

Class I

   

(488

)

   

(2,080

)

 

Class A

   

(182

)

   

(842

)

 

Class L

   

(27

)

   

(146

)

 

Class C

   

(3

)

   

(15

)

 

Class R6*

   

(3

)

   

(13

)

 

Class IR

   

(—

@)

   

(1

)

 

Total Dividends and Distributions to Shareholders

   

(703

)

   

(3,097

)

 
Capital Share Transactions, including direct exchanges pursuant to share class conversions
for all periods presented, were as follows:(1)
 

Class I:

 

Subscribed

   

388

     

11,273

   

Distributions Reinvested

   

475

     

2,055

   

Redeemed

   

(3,922

)

   

(12,670

)

 

Class A:

 

Subscribed

   

344

     

663

   

Distributions Reinvested

   

179

     

822

   

Redeemed

   

(1,506

)

   

(1,994

)

 

Class L:

 

Exchanged

   

@

   

120

   

Distributions Reinvested

   

26

     

144

   

Redeemed

   

(297

)

   

(104

)

 

Class C:

 

Subscribed

   

33

     

76

   

Distributions Reinvested

   

3

     

15

   

Redeemed

   

(127

)

   

(180

)

 

Class R6:*

 

Subscribed

   

9

     

30

   

Distributions Reinvested

   

3

     

13

   

Redeemed

   

(30

)

   

(41

)

 

Class IR:

 

Distributions Reinvested

   

@

   

1

   

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions

   

(4,422

)

   

223

   

Total Decrease in Net Assets

   

(992

)

   

(16,262

)

 

Net Assets:

 

Beginning of Period

   

31,445

     

47,707

   

End of Period

 

$

30,453

   

$

31,445

   

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

48

     

994

   

Shares Issued on Distributions Reinvested

   

57

     

244

   

Shares Redeemed

   

(472

)

   

(1,259

)

 

Net Decrease in Class I Shares Outstanding

   

(367

)

   

(21

)

 

Class A:

 

Shares Subscribed

   

44

     

69

   

Shares Issued on Distributions Reinvested

   

23

     

103

   

Shares Redeemed

   

(193

)

   

(216

)

 

Net Decrease in Class A Shares Outstanding

   

(126

)

   

(44

)

 

Class L:

 

Shares Exchanged

   

@@

   

14

   

Shares Issued on Distributions Reinvested

   

3

     

18

   

Shares Redeemed

   

(39

)

   

(12

)

 

Net Increase (Decrease) in Class L Shares Outstanding

   

(36

)

   

20

   

Class C:

 

Shares Subscribed

   

4

     

8

   

Shares Issued on Distributions Reinvested

   

@@

   

2

   

Shares Redeemed

   

(16

)

   

(19

)

 

Net Decrease in Class C Shares Outstanding

   

(12

)

   

(9

)

 

Class R6:*

 

Shares Subscribed

   

1

     

3

   

Shares Issued on Distributions Reinvested

   

@@

   

2

   

Shares Redeemed

   

(3

)

   

(4

)

 

Net Increase (Decrease) in Class R6 Shares Outstanding

   

(2

)

   

1

   

Class IR:

 

Shares Issued on Distributions Reinvested

   

@@

   

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class I

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

$

10.82

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.24

     

0.35

     

0.05

     

0.13

     

0.26

   

Net Realized and Unrealized Gain (Loss)

   

0.91

     

(3.46

)

   

3.35

     

(2.18

)

   

1.69

   

Total from Investment Operations

   

1.15

     

(3.11

)

   

3.40

     

(2.05

)

   

1.95

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.20

)

   

(0.13

)

   

(0.12

)

   

(0.20

)

   

(0.40

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.20

)

   

(0.83

)

   

(0.28

)

   

(0.24

)

   

(1.69

)

 

Net Asset Value, End of Period

 

$

8.92

   

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

Total Return(2)

   

14.69

%(3)

   

(26.39

)%

   

38.96

%

   

(18.05

)%

   

18.40

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

20,440

   

$

21,174

   

$

31,909

   

$

33,708

   

$

134,856

   

Ratio of Expenses Before Expense Limitation

   

1.92

%

   

1.60

%

   

1.42

%

   

1.19

%

   

1.02

%

 

Ratio of Expenses After Expense Limitation

   

0.59

%(4)(5)(6)

   

0.90

%(6)

   

0.90

%(6)

   

0.90

%(6)

   

0.90

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.90

%(6)

   

0.90

%(6)

   

0.90

%(6)

   

N/A

   

Ratio of Net Investment Income

   

2.89

%(5)(6)

   

3.45

%(6)

   

0.50

%(6)

   

1.52

%(6)

   

2.18

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Performance was positively impacted by approximately 0.26% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 14.43%. Refer to Note B in the Notes to Financial Statements.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.70% for Class I shares. Prior to December 11, 2023, the maximum ratio was 0.90% for Class I shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.89

%

   

2.59

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class A

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.54

   

$

11.33

   

$

8.38

   

$

10.56

   

$

10.38

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.20

     

0.30

     

0.03

     

0.09

     

0.22

   

Net Realized and Unrealized Gain (Loss)

   

0.88

     

(3.29

)

   

3.18

     

(2.06

)

   

1.61

   

Total from Investment Operations

   

1.08

     

(2.99

)

   

3.21

     

(1.97

)

   

1.83

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.18

)

   

(0.10

)

   

(0.10

)

   

(0.17

)

   

(0.36

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.18

)

   

(0.80

)

   

(0.26

)

   

(0.21

)

   

(1.65

)

 

Net Asset Value, End of Period

 

$

8.44

   

$

7.54

   

$

11.33

   

$

8.38

   

$

10.56

   

Total Return(2)

   

14.46

%(3)

   

(26.69

)%

   

38.46

%

   

(18.28

)%

   

18.02

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8,339

   

$

8,403

   

$

13,121

   

$

11,043

   

$

32,596

   

Ratio of Expenses Before Expense Limitation

   

2.20

%

   

1.87

%

   

1.66

%

   

1.52

%

   

1.31

%

 

Ratio of Expenses After Expense Limitation

   

0.93

%(4)(5)(6)

   

1.25

%(6)

   

1.18

%(6)

   

1.25

%(6)

   

1.22

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.25

%(6)

   

1.18

%(6)

   

1.25

%(6)

   

N/A

   

Ratio of Net Investment Income

   

2.54

%(5)(6)

   

3.13

%(6)

   

0.26

%(6)

   

1.09

%(6)

   

1.91

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Performance was positively impacted by approximately 0.27% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 14.19%. Refer to Note B in the Notes to Financial Statements.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.05% for Class A shares. Prior to December 11, 2023, the maximum ratio was 1.25% for Class A shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.23

%

   

2.24

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class L

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.53

   

$

11.31

   

$

8.36

   

$

10.55

   

$

10.37

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.16

     

0.26

     

(0.03

)

   

0.09

     

0.16

   

Net Realized and Unrealized Gain (Loss)

   

0.87

     

(3.29

)

   

3.18

     

(2.11

)

   

1.61

   

Total from Investment Operations

   

1.03

     

(3.03

)

   

3.15

     

(2.02

)

   

1.77

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.14

)

   

(0.05

)

   

(0.04

)

   

(0.13

)

   

(0.30

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.14

)

   

(0.75

)

   

(0.20

)

   

(0.17

)

   

(1.59

)

 

Net Asset Value, End of Period

 

$

8.42

   

$

7.53

   

$

11.31

   

$

8.36

   

$

10.55

   

Total Return(2)

   

13.75

%(3)

   

(27.02

)%

   

37.78

%

   

(18.77

)%

   

17.43

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

1,437

   

$

1,553

   

$

2,101

   

$

1,586

   

$

2,164

   

Ratio of Expenses Before Expense Limitation

   

2.82

%

   

2.46

%

   

2.31

%

   

2.11

%

   

1.88

%

 

Ratio of Expenses After Expense Limitation

   

1.45

%(4)(5)(6)

   

1.75

%(6)

   

1.75

%(6)

   

1.75

%(6)

   

1.75

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

1.75

%(6)

   

1.75

%(6)

   

1.75

%(6)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

2.04

%(5)(6)

   

2.76

%(6)

   

(0.30

)%(6)

   

1.41

%(6)

   

1.42

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Performance was positively impacted by approximately 0.27% for Class L shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class L shares would have been 13.48%. Refer to Note B in the Notes to Financial Statements.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.55% for Class L shares. Prior to December 11, 2023, the maximum ratio was 1.75% for Class L shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class L shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.73

%

   

1.76

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class C

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.47

   

$

11.24

   

$

8.31

   

$

10.48

   

$

10.31

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(1)

   

0.13

     

0.21

     

(0.05

)

   

0.09

     

0.14

   

Net Realized and Unrealized Gain (Loss)

   

0.87

     

(3.25

)

   

3.16

     

(2.10

)

   

1.59

   

Total from Investment Operations

   

1.00

     

(3.04

)

   

3.11

     

(2.01

)

   

1.73

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.11

)

   

(0.03

)

   

(0.02

)

   

(0.12

)

   

(0.27

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.11

)

   

(0.73

)

   

(0.18

)

   

(0.16

)

   

(1.56

)

 

Net Asset Value, End of Period

 

$

8.36

   

$

7.47

   

$

11.24

   

$

8.31

   

$

10.48

   

Total Return(2)

   

13.51

%(3)

   

(27.30

)%

   

37.50

%

   

(18.91

)%

   

17.07

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

94

   

$

170

   

$

365

   

$

206

   

$

232

   

Ratio of Expenses Before Expense Limitation

   

4.79

%

   

3.54

%

   

3.28

%

   

3.39

%

   

2.92

%

 

Ratio of Expenses After Expense Limitation

   

1.82

%(4)(5)(6)

   

2.00

%(6)

   

2.00

%(6)

   

2.00

%(6)

   

2.00

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

2.00

%(6)

   

2.00

%(6)

   

2.00

%(6)

   

N/A

   

Ratio of Net Investment Income (Loss)

   

1.67

%(5)(6)

   

2.18

%(6)

   

(0.54

)%(6)

   

1.20

%(6)

   

1.18

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(3)  Performance was positively impacted by approximately 0.40% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 13.11%. Refer to Note B in the Notes to Financial Statements.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.80% for Class C shares. Prior to December 11, 2023, the maximum ratio was 2.00% for Class C shares.

(5)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

1.99

%

   

1.50

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

$

10.82

   

Income (Loss) from Investment Operations:

 

Net Investment Income(2)

   

0.24

     

0.36

     

0.07

     

0.09

     

0.25

   

Net Realized and Unrealized Gain (Loss)

   

0.92

     

(3.46

)

   

3.34

     

(2.13

)

   

1.71

   

Total from Investment Operations

   

1.16

     

(3.10

)

   

3.41

     

(2.04

)

   

1.96

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

(0.14

)

   

(0.13

)

   

(0.21

)

   

(0.41

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.21

)

   

(0.84

)

   

(0.29

)

   

(0.25

)

   

(1.70

)

 

Net Asset Value, End of Period

 

$

8.92

   

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

Total Return(3)

   

14.77

%(4)

   

(26.33

)%

   

39.06

%

   

(17.98

)%

   

18.48

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

135

   

$

138

   

$

201

   

$

121

   

$

12,307

   

Ratio of Expenses Before Expense Limitation

   

6.08

%

   

4.36

%

   

4.18

%

   

1.20

%

   

1.04

%

 

Ratio of Expenses After Expense Limitation

   

0.52

%(5)(6)(7)

   

0.83

%(7)

   

0.83

%(7)

   

0.83

%(7)

   

0.83

%(7)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.83

%(7)

   

0.83

%(7)

   

0.83

%(7)

   

N/A

   

Ratio of Net Investment Income

   

2.95

%(6)(7)

   

3.64

%(7)

   

0.64

%(7)

   

1.00

%(7)

   

2.09

%(7)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

   

0.00

%(8)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Per share amount is based on average shares outstanding.

(3)  Calculated based on the net asset value as of the last business day of the period.

(4)  Performance was positively impacted by approximately 0.39% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 14.38%. Refer to Note B in the Notes to Financial Statements.

(5)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.65% for Class R6 shares. Prior to December 11, 2023, the maximum ratio was 0.83% for Class R6 shares.

(6)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.82

%

   

2.65

%

 

(7)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(8)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

U.S. Real Estate Portfolio

   

Class IR

 
   

Year Ended December 31,

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

2021

 

2020

 

2019

 

Net Asset Value, Beginning of Period

 

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

$

10.82

   

Income (Loss) from Investment Operations:

 

Net Investment Income(1)

   

0.25

     

0.37

     

0.05

     

0.20

     

0.33

   

Net Realized and Unrealized Gain (Loss)

   

0.91

     

(3.47

)

   

3.36

     

(2.24

)

   

1.63

   

Total from Investment Operations

   

1.16

     

(3.10

)

   

3.41

     

(2.04

)

   

1.96

   

Distributions from and/or in Excess of:

 

Net Investment Income

   

(0.21

)

   

(0.14

)

   

(0.13

)

   

(0.21

)

   

(0.41

)

 

Net Realized Gain

   

     

(0.70

)

   

(0.16

)

   

     

(1.29

)

 

Paid-in-Capital

   

     

     

     

(0.04

)

   

   

Total Distributions

   

(0.21

)

   

(0.84

)

   

(0.29

)

   

(0.25

)

   

(1.70

)

 

Net Asset Value, End of Period

 

$

8.92

   

$

7.97

   

$

11.91

   

$

8.79

   

$

11.08

   

Total Return(2)

   

14.77

%(3)

   

(26.33

)%

   

39.06

%

   

(17.98

)%

   

18.48

%

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

8

   

$

7

   

$

10

   

$

7

   

$

9

   

Ratio of Expenses Before Expense Limitation

   

28.89

%

   

24.77

%

   

26.04

%

   

30.10

%

   

23.80

%

 

Ratio of Expenses After Expense Limitation

   

0.49

%(4)(5)(6)

   

0.83

%(6)

   

0.83

%(6)

   

0.83

%(6)

   

0.83

%(6)

 

Ratio of Expenses After Expense Limitation Excluding Interest Expenses

   

N/A

     

0.83

%(6)

   

0.83

%(6)

   

0.83

%(6)

   

N/A

   

Ratio of Net Investment Income

   

2.98

%(5)(6)

   

3.71

%(6)

   

0.46

%(6)

   

2.40

%(6)

   

2.70

%(6)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

   

0.00

%(7)

 

Portfolio Turnover Rate

   

53

%

   

82

%

   

132

%

   

39

%

   

21

%

 

(1)  Per share amount is based on average shares outstanding.

(2)  Calculated based on the net asset value as of the last business day of the period.

(3)  Performance was positively impacted by approximately 0.39% for Class IR shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class IR shares would have been 14.38%. Refer to Note B in the Notes to Financial Statements.

(4)  Effective December 11, 2023, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.65% for Class IR shares. Prior to December 11, 2023, the maximum ratio was 0.83% for Class IR shares.

(5)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income, would have been as follows for Class IR shares:

Period Ended

  Expense
Ratio
  Net Investment
Income Ratio
 

December 31, 2023

   

0.82

%

   

2.65

%

 

(6)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

(7)  Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements.
18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued

The accompanying financial statements relates to the U.S. Real Estate Portfolio. The Fund seeks to provide above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts ("REITs"). The Fund has a capital subscription commitment to an investee company for this same purpose, the details of which are disclosed in the Unfunded Commitments note.

The Fund has issued six classes of shares — Class I, Class A, Class L, Class C, Class R6 and Class IR. Class C shares will automatically convert to Class A shares eight years after the end of the calendar month in which the shares were purchased. On April 30, 2015, the Fund suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. In addition, Class L shares of the Fund may be exchanged for Class L shares of any Morgan Stanley Multi-Class Fund, even though Class L shares are closed to investors. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued

at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; (5) foreign exchange transactions ("spot contracts") and foreign exchange forward contracts ("forward contracts") are valued daily using an independent pricing vendor at the spot and forward rates, respectively, as of the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee. The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

The Fund invests a significant portion of its assets in securities of REITs. The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Fund.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an

asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

$

29,866

(1)

 

$

   

$

   

$

29,866

   

Short-Term Investment

 

Investment Company

   

444

     

     

     

444

   

Total Assets

 

$

30,310

   

$

   

$

   

$

30,310

   

(1) The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. The change in unrealized currency gains (losses) on foreign currency transactions for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in U.S. companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares.

4.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

At December 31, 2023, the Fund did not have any outstanding securities on loan.

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid quarterly. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can

be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Fund owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500
million
  Next $500
million
  Over $1
billion
 
  0.70

%

   

0.65

%

   

0.60

%

 

Effective December 11, 2023, the Adviser provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500
million
  Next $500
million
  Over $1
billion
 
  0.55

%

   

0.50

%

   

0.45

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I shares, 1.25% for Class A shares, 1.75% for Class L shares, 2.00% for Class C shares, 0.83% for Class R6 shares and 0.83% for Class IR shares. Effective December 11, 2023, the Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses will not exceed 0.70% for Class I shares, 1.05% for Class A shares, 1.55% for Class L shares, 1.80% for Class C shares and 0.65% for Class R6 shares and 0.65% for Class IR shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $208,000 of advisory fees were waived and approximately $109,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class L shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid

monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to approximately $3,000.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $15,890,000 and $20,117,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by approximately $1,000 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

1,166

   

$

5,585

   

$

6,307

   

$

14

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain
(Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

444

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued

based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023 Distributions
Paid From:
Ordinary Income
(000)
  2022 Distributions
Paid From:
Ordinary Income
(000)
 
$

703

   

$

3,097

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, due to a prior year tax return adjustment, resulted in the following reclassifications among the components of net assets at December 31, 2023:

Total
Accumulated
Loss
(000)
  Paid-in-
Capital
(000)
 
$

69

   

$

(69

)

 


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

96

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $2,441,000 and $1,828,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 62.0%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or

quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of U.S. Real Estate Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of U.S. Real Estate Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Federal Tax Notice (unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions paid by the Fund during its taxable year ended December 31, 2023.

The Fund designated approximately $688,000 of its distributions paid as qualified business income.

In January, the Fund provides tax information to shareholders for the preceding calendar year.


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


32


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


33


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


34


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


35


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


36


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


37


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


38


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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSREAANN
6338467 EXP 02.28.25


Morgan Stanley Institutional Fund, Inc.

Vitality Portfolio

Annual Report

December 31, 2023


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Table of Contents (unaudited)

Shareholders' Letter

   

2

   

Expense Example

   

3

   

Investment Overview

   

4

   

Portfolio of Investments

   

6

   

Statement of Assets and Liabilities

   

7

   

Statement of Operations

   

8

   

Statements of Changes in Net Assets

   

9

   

Financial Highlights

   

10

   

Notes to Financial Statements

   

14

   

Report of Independent Registered Public Accounting Firm

   

21

   

Liquidity Risk Management Program

   

22

   

Important Notices

   

23

   

U.S. Customer Privacy Notice

   

24

   

Directors and Officers Information

   

27

   

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Fund of Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information ("SAI"), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations and describes in detail each of the Fund's investment policies to the prospective investor, please call toll free 1 (800) 869-6397. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access information about the Fund, including performance, characteristics and investment team commentary, through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

Market forecasts provided in this report may not necessarily come to pass. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. There is no assurance that a fund will achieve its investment objective. Funds are subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.


1


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this annual report, in which you will learn how your investment in Vitality Portfolio (the "Fund") performed during the 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 financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

January 2024


2


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Expense Example (unaudited)

Vitality Portfolio

As a shareholder of the Fund, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2023 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

    Beginning
Account
Value
7/1/23
  Actual Ending
Account
Value
12/31/23
  Hypothetical
Ending Account
Value
  Actual
Expenses
Paid
During
Period*
  Hypothetical
Expenses Paid
During Period*
  Net
Expense
Ratio
During
Period**
 

Vitality Portfolio Class I

 

$

1,000.00

   

$

968.10

   

$

1,023.84

   

$

1.34

   

$

1.38

     

0.27

%

 

Vitality Portfolio Class A

   

1,000.00

     

966.60

     

1,022.03

     

3.12

     

3.21

     

0.63

   

Vitality Portfolio Class C

   

1,000.00

     

963.40

     

1,018.30

     

6.78

     

6.97

     

1.37

   

Vitality Portfolio Class R6

   

1,000.00

     

968.20

     

1,024.10

     

1.09

     

1.12

     

0.22

   

*  Expenses are calculated using each Fund Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period and multiplied by 184/365 (to reflect the most recent one-half year period).

  Refer to Note B in the Notes to Financial Statements for discussion of prior period transfer agency and sub transfer agency fees that were reimbursed in the current period.

**  Annualized.


3


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited)

Vitality Portfolio

The Fund Seeks long-term capital appreciation.

Performance

For the fiscal year ended December 31, 2023, the Fund's Class I shares had a total return based on net asset value and reinvestment of distributions per share of 9.25%, net of fees. The Fund's Class I shares outperformed the Fund's benchmark, the Russell 3000® Health Care Net Index (the "Index"), which returned 2.40%.

Factors Affecting Performance

•  Surprised by the economy's resilience amid rising interest rates and persistently high (but falling) inflation, U.S. stocks performed well in 2023. The year saw its share of uncertainty, with recession fears dominating the start of the year, a regional banking crisis triggered by high interest rates, concerns about the U.S. government's debt levels and budget, and multiple geopolitical flashpoints. However, by year-end, the U.S. Federal Reserve signaled it was likely finished lifting interest rates after pausing the hiking cycle halfway through the year. This triggered a stock market rally and retreat in long-term bond yields in the final two months of 2023. Additionally, excitement about artificial intelligence drove a narrow group of mega-cap technology stocks to significantly outperform, adding meaningfully to the broader market's gain in the year.

•  The health care sector advanced over the year, as measured by the Index. The top performing industries were personal care products, electronic equipment & instruments, and health care distributors. The Index's weakest performing industries were diversified support services, environmental & facilities services, and managed health care, which had negative performance in the year.

•  Counterpoint Global makes long-term investments in unique companies whose market value can increase significantly for underlying fundamental reasons. The team's portfolios are typically focused and differentiated from their benchmarks, with securities weighted based on an assessment of the quality of the company and the level of conviction.

•  The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of

performance deviation from the benchmark and peers. The Fund outperformed the Index in this reporting period primarily due to favorable stock selection.

•  The greatest contributors to the Fund's relative performance were stock selection in life sciences tools & services, pharmaceuticals and health care technology. The top contributor within these sub-industries and across the portfolio was a life science tools company focused on single cell sequencing. Its shares advanced as the company reported better-than-expected revenue growth and management subsequently raised revenue guidance.

•  Stock selection in biotechnology and other specialty retail and an average overweight to life sciences tools & services were the largest detractors from relative performance. Among individual holdings the greatest detractor was a commercial developer of sleep apnea medical devices. Despite overall healthy results, its shares underperformed due to fears that the growing use of GLP-1 drugs to manage diabetes and weight loss could adversely impact demand for sleep apnea treatments.

Management Strategies

•  We seek to invest primarily in securities of companies in the United States principally engaged in the discovery, development, production, or distribution of products or services related to advances in health care, and that we believe have sustainable competitive advantages, strong research and development and productive new product flow, financial strength, and an attractive risk/reward profile.


4


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Investment Overview (unaudited) (cont'd)

Vitality Portfolio

*  Minimum Investment for Class I shares

**  Commenced Operations on December 31, 2021.

In accordance with SEC regulations, the Fund's performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class A, C and R6 shares will vary from the performance of Class I shares and will be negatively impacted by additional fees assessed to those classes (if applicable).

Performance Compared to the Russell 3000 Health Care Net Index(1)​ and the Lipper Health/Biotechnology Funds Index(2)

    Period Ended December 31, 2023
Total Returns(3)
 
       

Average Annual

 
    One
Year
  Five
Years
  Ten
Years
  Since
Inception(5)
 
Fund — Class I Shares
w/o sales charges(4)
   

9.25

%

   

     

     

–18.93

%

 
Fund — Class A Shares
w/o sales charges(4)
   

8.90

     

     

     

–19.20

   
Fund — Class A Shares with
maximum 5.25% sales charges(4)
   

3.25

     

     

     

–21.34

   
Fund — Class C Shares
w/o sales charges(4)
   

8.03

     

     

     

–19.79

   
Fund — Class C Shares with
maximum 1.00% deferred
sales charges(4)
   

7.03

     

     

     

–19.79

   
Fund — Class R6 Shares
w/o sales charges(4)
   

9.42

     

     

     

–18.84

   

Russell 3000 Health Care Net Index

   

2.40

     

     

     

–2.15

   
Lipper Health/Biotechnology
Funds Index
   

5.24

     

     

     

–4.28

   

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. Performance assumes that all dividends and distributions, if any, were reinvested. For the most recent month-end performance figures, please visit www.morganstanley.com/im/shareholderreports. Investment return and principal value will fluctuate so that Fund shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of share classes will vary due to difference in sales charges and expenses. Fund's total returns are calculated based on the net asset value as of the last business day of the period.

(1)​  The Russell 3000 Health Care Net Index is a capitalization-weighted index of companies involved in medical services or health care. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)​  The Lipper Health/Biotechnology Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Health/Biotechnology Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 10 funds represented in this Index. As of the date of this report, the Fund was in the Lipper Health/Biotechnology Funds classification.

(3)​  Total returns for the Fund reflect fees waived and expenses reimbursed, if applicable, by the Adviser (as defined herein). Without such waivers and reimbursements, total returns would have been lower.

(4)​  Commenced operations on December 31, 2021.

(5)​  For comparative purposes, average annual since inception returns listed for the Indexes refer to the inception date of the Fund, not the inception of the Index.


5


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Portfolio of Investments

Vitality Portfolio

   

Shares

  Value
(000)
 

Common Stocks (90.8%)

 

Biotechnology (27.8%)

 

4D Molecular Therapeutics, Inc. (a)

   

1,273

   

$

26

   

Alnylam Pharmaceuticals, Inc. (a)

   

419

     

80

   

Altimmune, Inc. (a)(b)

   

4,159

     

47

   

Argenx SE ADR (Belgium) (a)

   

279

     

106

   

Ascendis Pharma AS ADR (Denmark) (a)

   

261

     

33

   

Beam Therapeutics, Inc. (a)(b)

   

1,368

     

37

   

Exact Sciences Corp. (a)

   

1,207

     

89

   

Fate Therapeutics, Inc. N (a)

   

1,572

     

6

   

Intellia Therapeutics, Inc. (a)

   

1,593

     

49

   

Moderna, Inc. (a)

   

372

     

37

   

Relay Therapeutics, Inc. N (a)

   

1,230

     

14

   

Vertex Pharmaceuticals, Inc. (a)

   

276

     

112

   
     

636

   

Health Care Equipment & Supplies (12.2%)

 

Align Technology, Inc. (a)

   

210

     

58

   

IDEXX Laboratories, Inc. (a)

   

94

     

52

   

Inspire Medical Systems, Inc. (a)

   

324

     

66

   

Intuitive Surgical, Inc. (a)

   

306

     

103

   
     

279

   

Health Care Providers & Services (6.9%)

 

Agilon Health, Inc. (a)

   

2,814

     

35

   

UnitedHealth Group, Inc.

   

232

     

122

   
     

157

   

Health Care Technology (5.5%)

 

Doximity, Inc., Class A (a)

   

1,353

     

38

   

Schrodinger, Inc. (a)

   

1,098

     

39

   

Veeva Systems, Inc., Class A (a)

   

259

     

50

   
     

127

   

Life Sciences Tools & Services (24.2%)

 

10X Genomics, Inc., Class A (a)

   

1,763

     

99

   

AbCellera Biologics, Inc. Canada N (Canada) (a)(b)

   

3,223

     

19

   

Evotec SE ADR (Germany) (a)

   

3,481

     

41

   

Illumina, Inc. (a)

   

289

     

40

   

MaxCyte, Inc. (a)

   

14,540

     

68

   

SomaLogic, Inc. (a)

   

29,999

     

76

   

Stevanato Group SpA Italy N (Italy)

   

1,793

     

49

   

Thermo Fisher Scientific, Inc.

   

213

     

113

   

West Pharmaceutical Services, Inc.

   

143

     

50

   
     

555

   

Pharmaceuticals (13.1%)

 

ATAI Life Sciences NV (a)

   

8,904

     

13

   

Eli Lilly & Co.

   

294

     

171

   

GH Research PLC (a)

   

958

     

6

   

Royalty Pharma PLC, Class A

   

1,579

     

44

   

Zoetis, Inc.

   

340

     

67

   
     

301

   

Specialty Retail (1.1%)

 

Chewy, Inc., Class A (a)

   

1,010

     

24

   

Total Common Stocks (Cost $2,543)

   

2,079

   
   

Shares

  Value
(000)
 

Short-Term Investments (9.4%)

 

Investment Company (4.6%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G) (Cost $105)
   

104,910

   

$

105

   

Securities held as Collateral on Loaned Securities (4.8%)

 

Investment Company (4.0%)

 
Morgan Stanley Institutional Liquidity
Funds — Treasury Securities Portfolio —
Institutional Class (See Note G)
   

91,295

     

91

   
    Face
Amount
(000)
     

Repurchase Agreements (0.8%)

 
Citigroup, Inc., (5.33%, dated 12/29/23,
due 1/2/24; proceeds $7; fully collateralized
by U.S. Government obligations; 0.25% - 3.00%
due 5/15/24 - 11/15/49; valued at $7)
 

$

7

     

7

   
HSBC Securities USA, Inc., (5.33%, dated
12/29/23, due 1/2/24; proceeds $6; fully
collateralized by a U.S. Government obligation;
0.00% due 8/15/27; valued at $7)
   

6

     

6

   
Merrill Lynch & Co., Inc., (5.31%, dated 12/29/23,
due 1/2/24; proceeds $7; fully collateralized
by a U.S. Government obligation; 4.75% due
11/15/53; valued at $7)
   

7

     

7

   
     

20

   
Total Securities held as Collateral on Loaned
Securities (Cost $111)
   

111

   

Total Short-Term Investments (Cost $216)

   

216

   
Total Investments (100.2%) (Cost $2,759)
Including $102 of Securities Loaned (c)
   

2,295

   

Liabilities in Excess of Other Assets (–0.2%)

   

(5

)

 

Net Assets (100.0%)

 

$

2,290

   

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at December 31, 2023.

(c)  At December 31, 2023, the aggregate cost for federal income tax purposes is approximately $2,759,000. The aggregate gross unrealized appreciation is approximately $223,000 and the aggregate gross unrealized depreciation is approximately $687,000, resulting in net unrealized depreciation of approximately $464,000.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification

  Percentage of
Total Investments
 

Biotechnology

   

29.1

%

 

Life Sciences Tools & Services

   

25.4

   

Pharmaceuticals

   

13.8

   

Health Care Equipment & Supplies

   

12.8

   

Health Care Providers & Services

   

7.2

   

Other**

   

5.9

   

Health Care Technology

   

5.8

   

Total Investments

   

100.0

%

 

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of December 31, 2023.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Vitality Portfolio

Statement of Assets and Liabilities

  December 31, 2023
(000)
 

Assets:

 

Investments in Securities of Unaffiliated Issuers, at Value(1)​ (Cost $2,563)

 

$

2,099

   

Investment in Security of Affiliated Issuer, at Value (Cost $196)

   

196

   

Total Investments in Securities, at Value (Cost $2,759)

   

2,295

   

Due from Adviser

   

87

   

Receivable from Affiliate

   

1

   

Receivable from Securities Lending Income

   

@

 

Dividends Receivable

   

@

 

Other Assets

   

45

   

Total Assets

   

2,428

   

Liabilities:

 

Collateral on Securities Loaned, at Value

   

111

   

Payable for Professional Fees

   

20

   

Payable for Custodian Fees

   

1

   

Payable for Administration Fees

   

@

 

Payable for Transfer Agency Fees — Class I

   

@

 

Payable for Transfer Agency Fees — Class A

   

@

 

Payable for Transfer Agency Fees — Class C

   

@

 

Payable for Transfer Agency Fees — Class R6

   

@

 

Payable for Sub Transfer Agency Fees — Class A

   

@

 

Payable for Shareholder Services Fees — Class A

   

@

 

Payable for Distribution and Shareholder Services Fees — Class C

   

@

 

Other Liabilities

   

6

   

Total Liabilities

   

138

   

Net Assets

 

$

2,290

   

Net Assets Consist of:

 

Paid-in-Capital

 

$

3,315

   

Total Accumulated Loss

   

(1,025

)

 

Net Assets

 

$

2,290

   

CLASS I:

 

Net Assets

 

$

2,190

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

343,220

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

6.38

   

CLASS A:

 

Net Assets

 

$

35

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,603

   

Net Asset Value, Redemption Price Per Share

 

$

6.36

   

Maximum Sales Load

   

5.25

%

 

Maximum Sales Charge

 

$

0.35

   

Maximum Offering Price Per Share

 

$

6.71

   

CLASS C:

 

Net Assets

 

$

32

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,090

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

6.32

   

CLASS R6:

 

Net Assets

 

$

33

   
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)    

5,154

   

Net Asset Value, Offering and Redemption Price Per Share

 

$

6.39

   
(1)​ Including:
Securities on Loan, at Value:
 

$

102

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
7


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Vitality Portfolio

Statement of Operations

  Year Ended
December 31, 2023
(000)
 

Investment Income:

 

Dividends from Security of Affiliated Issuer (Note G)

 

$

7

   

Dividends from Securities of Unaffiliated Issuers (Net of $—@ of Foreign Taxes Withheld)

   

6

   

Income from Securities Loaned — Net

   

1

   

Total Investment Income

   

14

   

Expenses:

 

Professional Fees

   

180

   

Registration Fees

   

57

   

Advisory Fees (Note B)

   

16

   

Offering Costs (Note A-8)

   

13

   

Shareholder Reporting Fees

   

12

   

Transfer Agency Fees — Class I (Note E)

   

4

   

Transfer Agency Fees — Class A (Note E)

   

2

   

Transfer Agency Fees — Class C (Note E)

   

2

   

Transfer Agency Fees — Class R6 (Note E)

   

2

   

Custodian Fees (Note F)

   

4

   

Directors' Fees and Expenses

   

4

   

Pricing Fees

   

3

   

Administration Fees (Note C)

   

2

   

Shareholder Services Fees — Class A (Note D)

   

@

 

Distribution and Shareholder Services Fees — Class C (Note D)

   

@

 

Sub Transfer Agency Fees — Class I

   

@

 

Sub Transfer Agency Fees — Class A

   

@

 

Sub Transfer Agency Fees — Class C

   

@

 

Other Expenses

   

6

   

Total Expenses

   

307

   

Expenses Reimbursed by Adviser (Note B)

   

(263

)

 

Waiver of Advisory Fees (Note B)

   

(16

)

 

Reimbursement of Class Specific Expenses — Class I (Note B)

   

(3

)

 

Reimbursement of Class Specific Expenses — Class A (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class C (Note B)

   

(2

)

 

Reimbursement of Class Specific Expenses — Class R6 (Note B)

   

(2

)

 

Reimbursement of Transfer Agency and Sub Transfer Agency Fees (Note B)

   

(7

)

 

Rebate from Morgan Stanley Affiliate (Note G)

   

(—

@)

 

Net Expenses

   

12

   

Net Investment Income

   

2

   

Realized Loss:

 

Investments Sold

   

(144

)

 

Change in Unrealized Appreciation (Depreciation):

 

Investments

   

327

   

Net Realized Loss and Change in Unrealized Appreciation (Depreciation)

   

183

   

Net Increase in Net Assets Resulting from Operations

 

$

185

   

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Vitality Portfolio

Statements of Changes in Net Assets

  Year Ended
December 31, 2023
(000)
  Year Ended
December 31, 2022
(000)
 

Increase (Decrease) in Net Assets:

 

Operations:

 

Net Investment Income (Loss)

 

$

2

   

$

(13

)

 

Net Realized Loss

   

(144

)

   

(419

)

 

Net Change in Unrealized Appreciation (Depreciation)

   

327

     

(745

)

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   

185

     

(1,177

)

 

Dividends and Distributions to Shareholders:

 

Paid-in-Capital:

 

Class I

   

     

(57

)

 

Class A

   

     

(1

)

 

Class C

   

     

(1

)

 

Class R6*

   

     

(1

)

 

Total Dividends and Distributions to Shareholders

   

     

(60

)

 

Capital Share Transactions:(1)

 

Class I:

 

Subscribed

   

122

     

244

   

Distributions Reinvested

   

     

57

   

Class A:

 

Subscribed

   

     

5

   

Distributions Reinvested

   

     

1

   

Redeemed

   

(1

)

   

(—

@)

 

Class C:

 

Distributions Reinvested

   

     

1

   

Class R6:*

 

Distributions Reinvested

   

     

1

   

Net Increase in Net Assets Resulting from Capital Share Transactions

   

121

     

309

   

Total Increase (Decrease) in Net Assets

   

306

     

(928

)

 

Net Assets:

 

Beginning of Period

   

1,984

     

2,912

   

End of Period

 

$

2,290

   

$

1,984

   

(1)   Capital Share Transactions:

 

Class I:

 

Shares Subscribed

   

20

     

34

   

Shares Issued on Distributions Reinvested

   

     

9

   

Net Increase in Class I Shares Outstanding

   

20

     

43

   

Class A:

 

Shares Subscribed

   

     

1

   

Shares Issued on Distributions Reinvested

   

     

@@

 

Shares Redeemed

   

(—

@@)

   

(—

@@)

 

Net Increase (Decrease) in Class A Shares Outstanding

   

(—

@@)

   

1

   

Class C:

 

Shares Issued on Distributions Reinvested

   

     

@@

 

Class R6:*

 

Shares Issued on Distributions Reinvested

   

     

@@

 

*  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
9


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Vitality Portfolio

   

Class I

 
   

Year Ended December 31,

 

Period Ended

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021(1)

 

Net Asset Value, Beginning of Period

 

$

5.84

   

$

9.85

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.00

)(3)

   

(0.04

)

   

(0.00

)(3)

 

Net Realized and Unrealized Gain (Loss)

   

0.54

     

(3.79

)

   

(0.15

)

 

Total from Investment Operations

   

0.54

     

(3.83

)

   

(0.15

)

 

Distributions from and/or in Excess of:

 

Paid-in-Capital

   

     

(0.18

)

   

   

Net Asset Value, End of Period

 

$

6.38

   

$

5.84

   

$

9.85

   

Total Return

   

9.25

%(4)(5)

   

(39.84

)%(4)

   

(1.50

)%(6)(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

2,190

   

$

1,891

   

$

2,765

   

Ratio of Expenses Before Expense Limitation

   

13.74

%

   

12.50

%

   

595.07

%(8)

 

Ratio of Expenses After Expense Limitation

   

0.60

%(9)(10)

   

0.94

%(10)

   

0.95

%(8)

 

Ratio of Net Investment Loss

   

(0.02

)%(9)(10)

   

(0.58

)%(10)

   

(0.95

)%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

N/A

   

Portfolio Turnover Rate

   

13

%

   

22

%

   

0

%(7)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.34% for Class I shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class I shares would have been 8.91%. Refer to Note B in the Notes to Financial Statements.

(6)  Calculated using the NAV for US GAAP financial reporting purposes.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class I shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.94

%

   

(0.36

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
10


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Vitality Portfolio

   

Class A

 
   

Year Ended December 31,

 

Period Ended

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021(1)

 

Net Asset Value, Beginning of Period

 

$

5.84

   

$

9.85

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.02

)

   

(0.06

)

   

(0.00

)(3)

 

Net Realized and Unrealized Gain (Loss)

   

0.54

     

(3.79

)

   

(0.15

)

 

Total from Investment Operations

   

0.52

     

(3.85

)

   

(0.15

)

 

Distributions from and/or in Excess of:

 

Paid-in-Capital

   

     

(0.16

)

   

   

Net Asset Value, End of Period

 

$

6.36

   

$

5.84

   

$

9.85

   

Total Return

   

8.90

%(4)(5)

   

(40.06

)%(4)

   

(1.50

)%(6)(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

35

   

$

33

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

20.21

%

   

18.13

%

   

598.74

%(8)

 

Ratio of Expenses After Expense Limitation

   

0.96

%(9)(10)

   

1.29

%(10)

   

1.30

%(8)

 

Ratio of Net Investment Loss

   

(0.38

)%(9)(10)

   

(0.93

)%(10)

   

(1.30

)%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

N/A

   

Portfolio Turnover Rate

   

13

%

   

22

%

   

0

%(7)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.34% for Class A shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class A shares would have been 8.56%. Refer to Note B in the Notes to Financial Statements.

(6)  Calculated using the NAV for US GAAP financial reporting purposes. Does not reflect the deduction of sales charge.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class A shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

1.29

%

   

(0.71

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
11


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Vitality Portfolio

   

Class C

 
   

Year Ended December 31,

 

Period Ended

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021(1)

 

Net Asset Value, Beginning of Period

 

$

5.85

   

$

9.85

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Loss(2)

   

(0.07

)

   

(0.11

)

   

(0.00

)(3)

 

Net Realized and Unrealized Gain (Loss)

   

0.54

     

(3.78

)

   

(0.15

)

 

Total from Investment Operations

   

0.47

     

(3.89

)

   

(0.15

)

 

Distributions from and/or in Excess of:

 

Paid-in-Capital

   

     

(0.11

)

   

   

Net Asset Value, End of Period

 

$

6.32

   

$

5.85

   

$

9.85

   

Total Return

   

8.03

%(4)(5)

   

(40.45

)%(4)

   

(1.50

)%(6)(7)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

32

   

$

30

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

21.67

%

   

19.32

%

   

599.49

%(8)

 

Ratio of Expenses After Expense Limitation

   

1.71

%(9)(10)

   

2.04

%(10)

   

2.05

%(8)

 

Ratio of Net Investment Loss

   

(1.13

)%(9)(10)

   

(1.68

)%(10)

   

(2.05

)%(8)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

N/A

   

Portfolio Turnover Rate

   

13

%

   

22

%

   

0

%(7)

 

(1)  Commencement of Operations.

(2)  Per share amount is based on average shares outstanding.

(3)  Amount is less than $0.005 per share.

(4)  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

(5)  Performance was positively impacted by approximately 0.34% for Class C shares due to the reimbursement of transfer agency and sub transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class C shares would have been 7.69%. Refer to Note B in the Notes to Financial Statements.

(6)  Calculated using the NAV for US GAAP financial reporting purposes. Does not reflect the deduction of sales charge.

(7)  Not annualized.

(8)  Annualized.

(9)  If the Fund had not received the reimbursement of transfer agency and sub transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class C shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

2.04

%

   

(1.46

)%

 

(10)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
12


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Financial Highlights

Vitality Portfolio

   

Class R6(1)

 
   

Year Ended December 31,

 

Period Ended

 

Selected Per Share Data and Ratios

 

2023

 

2022

 

December 31, 2021(2)

 

Net Asset Value, Beginning of Period

 

$

5.84

   

$

9.85

   

$

10.00

   

Income (Loss) from Investment Operations:

 

Net Investment Income (Loss)(3)

   

0.00

(4)

   

(0.04

)

   

(0.00

)(4)

 

Net Realized and Unrealized Gain (Loss)

   

0.55

     

(3.78

)

   

(0.15

)

 

Total from Investment Operations

   

0.55

     

(3.82

)

   

(0.15

)

 

Distributions from and/or in Excess of:

 

Paid-in-Capital

   

     

(0.19

)

   

   

Net Asset Value, End of Period

 

$

6.39

   

$

5.84

   

$

9.85

   

Total Return

   

9.42

%(5)(6)

   

(39.81

)%(5)

   

(1.50

)%(7)(8)

 

Ratios to Average Net Assets and Supplemental Data:

 

Net Assets, End of Period (Thousands)

 

$

33

   

$

30

   

$

49

   

Ratio of Expenses Before Expense Limitation

   

20.55

%

   

18.29

%

   

598.49

%(9)

 

Ratio of Expenses After Expense Limitation

   

0.55

%(10)(11)

   

0.89

%(11)

   

0.90

%(9)

 

Ratio of Net Investment Income (Loss)

   

0.03

%(10)(11)

   

(0.54

)%(11)

   

(0.90

)%(9)

 

Ratio of Rebate from Morgan Stanley Affiliates

   

0.01

%

   

0.01

%

   

N/A

   

Portfolio Turnover Rate

   

13

%

   

22

%

   

0

%(8)

 

(1)  Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

(2)  Commencement of Operations.

(3)  Per share amount is based on average shares outstanding.

(4)  Amount is less than $0.005 per share.

(5)  Calculated based on the net asset value as of the last business day of the period.

(6)  Performance was positively impacted by approximately 0.34% for Class R6 shares due to the reimbursement of transfer agency fees from prior years. Had this reimbursement not occurred, the total return for Class R6 shares would have been 9.08%. Refer to Note B in the Notes to Financial Statements.

(7)  Calculated using the NAV for US GAAP financial reporting purposes.

(8)  Not annualized.

(9)  Annualized.

(10)  If the Fund had not received the reimbursement of transfer agency fees from the Adviser, the Ratio of Expenses After Expense Limitation and Ratio of Net Investment Loss, would have been as follows for Class R6 shares:

Period Ended

  Expense
Ratio
  Net Investment
Loss Ratio
 

December 31, 2023

   

0.89

%

   

(0.31

)%

 

(11)  The Ratio of Expenses After Expense Limitation and Ratio of Net Investment Income (Loss) reflect the rebate of certain Fund expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates."

The accompanying notes are an integral part of the financial statements.
13


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements

Morgan Stanley Institutional Fund, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Company is comprised of thirty-three separate, active, diversified and non-diversified funds (individually referred to as a "Fund," collectively as the "Funds").

The Company applies investment company accounting and reporting guidance Accounting Standards Codification ("ASC") Topic 946. In the preparation of these financial statements, management has evaluated subsequent events occurring after the date of the Fund's Statement of Assets and Liabilities through the date that the financial statements were issued.

The accompanying financial statements relates to the Vitality Portfolio. The Fund seeks long-term capital appreciation.

The Fund has issued four classes of shares — Class I, Class A, Class C and Class R6. Effective April 29, 2022, Class IS shares were renamed Class R6 shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Company in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-thecounter ("OTC") market quotations are readily available

are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers/dealers; (3) fixed income securities may be valued by an outside pricing service/vendor approved by the Company's Board of Directors (the "Directors"). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. If Morgan Stanley Investment Management Inc. (the "Adviser"), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/ vendor does not reflect the security's fair value or is unable to provide a price, prices from reputable brokers/dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from reputable brokers/dealers; (4) when market quotations are not readily available, as defined by Rule 2a-5 under the Act, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures approved by and under the general supervision of the Directors. Each business day, the Fund uses a third-party pricing service approved by the Directors to assist with the valuation of foreign equity securities. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities to more accurately reflect their fair value as of the close of regular trading on the NYSE; and (5) investments in mutual funds, including the Morgan


14


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

In connection with Rule 2a-5 of the Act, the Directors have designated the Company's Adviser as its valuation designee.The valuation designee has responsibility for determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Company's Adviser, as valuation designee, has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Company's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Company to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") ASC 820, "Fair Value Measurement" ("ASC 820"), defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs); and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below:

•  Level 1 – unadjusted quoted prices in active markets for identical investments

•  Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•  Level 3 – significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used to value the Fund's investments as of December 31, 2023:

Investment Type

  Level 1
Unadjusted
quoted
prices
(000)
  Level 2
Other
significant
observable
inputs
(000)
  Level 3
Significant
unobservable
inputs
(000)
  Total
(000)
 

Assets:

 

Common Stocks

 

$

2,079

(1)

 

$

   

$

   

$

2,079

   

Short-Term Investments

 

Investment Company

   

196

     

     

     

196

   

Repurchase Agreements

   

     

20

     

     

20

   
Total Short-Term
Investments
   

196

     

20

     

     

216

   

Total Assets

 

$

2,275

   

$

20

   

$

   

$

2,295

   

(1) The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes.

3.  Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that


15


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Securities Lending: The Fund lends securities to qualified financial institutions, such as broker/dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Fund has the right under the securities lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of December 31, 2023:

Gross Amounts Not Offset in the Statement of Assets and Liabilities

 
Gross Asset
Amounts
Presented in the
Statement of
Assets and
Liabilities
(000)
  Financial
Instrument
(000)
  Collateral
Received
(000)
  Net Amount
(not less
than $0)
(000)
 
$

102

(a)

 

$

   

$

(102

)(b)(c)

 

$

0

   

(a)  Represents market value of loaned securities at year end.

(b)  The Fund received cash collateral of approximately $111,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments.

(c)  The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB ASC 860, "Transfers & Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowings.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged and the remaining contractual maturity of those transactions as of December 31, 2023:

Remaining Contractual Maturity of the Agreements

 
    Overnight and
Continuous
(000)
  <30 days
(000)
  Between
30 &
90 days
(000)
  >90 Days
(000)
  Total
(000)
 
Securities Lending
Transactions
 

Common Stocks

 

$

111

   

$

   

$

   

$

   

$

111

   

Total Borrowings

 

$

111

   

$

   

$

   

$

   

$

111

   
Gross amount of
recognized liabilities
for securities lending
transactions
                 

$

111

   

5.  Indemnifications: The Company enters into contracts that contain a variety of indemnification clauses. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

6.  Dividends and Distributions to Shareholders: Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.


16


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes. Non-cash dividends received in the form of stock, if any, are recognized on the ex-dividend date and recorded as non-cash dividend income at fair value. Interest income is recognized on the accrual basis (except where collection is in doubt) net of applicable withholding taxes. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Company can be directly attributed to a particular Fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency, co-transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

8.  Offering Cost: Offering costs are accounted for as a deferred charge until operations begin and thereafter are amortized to expense over twelve months on a straight-line basis.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Fund with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500
million
  Over $500
million
 
  0.75

%

   

0.70

%

 

For the year ended December 31, 2023, the advisory fee rate (net of waiver/rebate) was equivalent to an annual effective rate of 0.00% of the Fund's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Fund so that total annual Fund operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.95% for Class I shares, 1.30% for Class A shares, 2.05% for Class C shares and 0.90% for Class R6 shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus or until such time as the Directors act to discontinue all or a portion of

such waivers and/or reimbursements when they deem such action is appropriate. For the year ended December 31, 2023, approximately $16,000 of advisory fees were waived and approximately $272,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser agreed to reimburse the Fund for prior years overpayment of transfer agency and sub transfer agency fees. This was reflected as "Reimbursement of Transfer Agency and Sub Transfer Agency Fees" in the Statement of Operations.

C. Administration Fees: The Adviser also serves as Administrator to the Company and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Fund's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Company. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Company's Distributor of Fund shares pursuant to a Distribution Agreement. The Company has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Fund pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class A shares.

The Company has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Fund pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Fund's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing distribution-related and/or shareholder support services to investors who purchase Class A and Class C shares.


17


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

E. Dividend Disbursing and Transfer/Co-Transfer Agent: The Company's dividend disbursing and transfer agent is SS&C Global Investor & Distribution Solutions, Inc. ("SS&C GIDS"). Pursuant to a Transfer Agency Agreement, the Company pays SS&C GIDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Company.

Eaton Vance Management ("EVM"), an affiliate of Morgan Stanley, provides co-transfer agency and related services to the Fund pursuant to a Co-Transfer Agency Services Agreement. For the year ended December 31, 2023, co-transfer agency fees and expenses incurred to EVM, included in "Transfer Agency Fees" in the Statement of Operations, amounted to less than $500.

F. Custodian Fees: State Street (the "Custodian") also serves as Custodian for the Company in accordance with a Custodian Agreement. The Custodian holds cash, securities and other assets of the Company as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the year ended December 31, 2023, purchases and sales of investment securities for the Fund, other than long-term U.S. Government securities and short-term investments were approximately $258,000 and $342,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2023.

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Fund"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended December 31, 2023, advisory fees paid were reduced by less than $500 relating to the Fund's investment in the Liquidity Fund.

A summary of the Fund's transactions in shares of affiliated investments during the year ended December 31, 2023 is as follows:

Affiliated
Investment
Company
  Value
December 31,
2022
(000)
  Purchases
at Cost
(000)
  Proceeds
from Sales
(000)
  Dividend
Income
(000)
 

Liquidity Fund

 

$

116

   

$

583

   

$

503

   

$

7

   
Affiliated
Investment
Company (cont'd)
  Realized
Gain (Loss)
(000)
  Change in
Unrealized
Appreciation
(Depreciation)
(000)
  Value
December 31,
2023
(000)
 

Liquidity Fund

 

$

   

$

   

$

196

   

The Fund is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the year ended December 31, 2023, the Fund did not engage in any cross-trade transactions.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Fund.

H. Federal Income Taxes: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for federal income taxes is required in the financial statements.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, "Income Taxes — Overall", sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of


18


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

Operations. The Fund files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the three-year period ended December 31, 2023 remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown for GAAP purposes due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2023 and 2022 was as follows:

2023
Distributions
Paid From:
  2022
Distributions
Paid From:
 
Ordinary
Income
(000)
  Paid-in-
Capital
(000)
  Ordinary
Income
(000)
  Paid-in-
Capital
(000)
 
$

   

$

   

$

   

$

60

   

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

The Fund had no permanent differences causing reclassifications among the components of net assets for the year ended December 31, 2023.

At December 31, 2023, the components of distributable earnings for the Fund on a tax basis were as follows:

Undistributed
Ordinary
Income
(000)
  Undistributed
Long-Term
Capital Gain
(000)
 
$

1

   

$

   

At December 31, 2023, the Fund had available for federal income tax purposes unused short-term and long-term capital losses of approximately $416,000 and $147,000, respectively, that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Credit Facility: The Company and other Morgan Stanley funds participated in a $300,000,000 committed, unsecured revolving line of credit facility (the "Facility") with State Street. Effective April 17, 2023, the committed line amount

increased to $500,000,000. This Facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate for any funds drawn will be based on the federal funds rate or overnight bank funding rate plus a spread. The Facility also has a commitment fee of 0.25% per annum based on the unused portion of the Facility, which is allocated among participating funds based on relative net assets. During the year ended December 31, 2023, the Fund did not have any borrowings under the Facility.

J. Other: At December 31, 2023, the Fund had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Fund. The aggregate percentage of such owners was 55.2%.

K. Market Risk: The value of an investment in the Fund is based on the values of the Fund's investments, which change due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The risks associated with these developments may be magnified if certain social, political, economic and other conditions and events adversely interrupt the global economy and financial markets. Securities in the Fund's portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters and extreme weather events, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political (including geopolitical) discord and tensions or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). These events may negatively impact broad segments of businesses and populations and have a significant and rapid negative impact on the performance of the Fund's investments, and exacerbate pre-existing risks to the Fund. The occurrence, duration and extent of these or other types of adverse economic and market conditions and uncertainty over the long term cannot be reasonably projected or estimated at this time. The ultimate impact of public health emergencies or other adverse economic or market developments and the extent to which the associated conditions impact the Fund and its investments will also depend on other future developments, which are highly uncertain, difficult to accurately predict and subject to change at any time. The financial performance of the Fund's


19


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Notes to Financial Statements (cont'd)

investments (and, in turn, the Fund's investment results) as well as their liquidity may be adversely affected because of these and similar types of factors and developments, which may in turn impact valuation, the Fund's ability to sell securities and/or its ability to meet redemptions.


20


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders of Vitality Portfolio and the Board of Directors of
Morgan Stanley Institutional Fund, Inc.

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Vitality Portfolio (the "Fund") (one of the funds constituting Morgan Stanley Institutional Fund, Inc. (the "Company")), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the two years in the period then ended and the period from December 31, 2021 (commencement of operations) through December 31, 2021 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the funds constituting Morgan Stanley Institutional Fund, Inc.) at December 31, 2023, 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 then ended and its financial highlights for each of the two years in the period then ended and the period from December 31, 2021 (commencement of operations) through December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the auditor of one or more Morgan Stanley investment companies since 2000.
Boston, Massachusetts
February 29, 2024


21


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Liquidity Risk Management Program (unaudited)

In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the "Liquidity Rule"), the Fund has adopted and implemented a liquidity risk management program (the "Program"), which is reasonably designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors' interests in the Fund (i.e., liquidity risk). The Fund's Board of Directors (the "Board") previously approved the designation of the Liquidity Risk Subcommittee (the "LRS") as Program administrator. The LRS is comprised of representatives from various divisions within Morgan Stanley Investment Management.

At a meeting held on March 1-2, 2023, the Board reviewed a written report prepared by the LRS that addressed the Program's operation and assessed its adequacy, and effectiveness of implementation for the period from January 1, 2022, through December 31, 2022, as required under the Liquidity Rule. The report concluded that the Program operated effectively and was adequately and effectively implemented in all material aspects, and that the relevant controls and safeguards were appropriately designed to enable the LRS to administer the Program in compliance with the Liquidity Rule.

In accordance with the Program, the LRS assessed each Fund's liquidity risk no less frequently than annually taking into consideration certain factors, as applicable, such as (i) investment strategy and liquidity of portfolio investments, (ii) short-term and long-term cash flow projections and (iii) holdings of cash and cash equivalents and borrowing arrangements and other funding sources. Certain factors are considered under both normal and reasonably foreseeable stressed conditions.

Each Fund portfolio investment is classified into one of four liquidity categories, which classification is assessed at least monthly by the LRS. The classification is based on a determination of the number of days it is reasonably expected to take to convert the investment into cash, or sell or dispose of the investment, in current market conditions without significantly changing the market value of the investment. Liquidity classification determinations take into account various market, trading and investment-specific considerations, as well as market depth, and in some cases utilize third-party vendor data.

The Liquidity Rule limits a fund's investments in illiquid investments to 15% of its net assets and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund's net assets to be invested in highly liquid investments (highly liquid investment minimum or "HLIM"). The LRS believes that the Program includes provisions reasonably designed to review, monitor and comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement, as applicable.

There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to the Fund's prospectus for more information regarding the Fund's exposure to liquidity risk and other risks to which it may be subject.


22


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Important Notices (unaudited)

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and annual reports are filed electronically with the Securities and Exchange Commission ("SEC") on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley makes these reports available on its public website, www.morganstanley.com/im. Each Morgan Stanley non-money market fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters as an attachment to Form N-PORT and monthly holding for each money market fun on Form N-MFP. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, but makes the complete schedule of portfolio holdings for the fund's first and third fiscal quarters available on its public website. The holdings for each money market fund are also posted to the Morgan Stanley public website. You may, however, obtain Form N-PORT filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's website, www.sec.gov. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov).

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Company's Proxy Voting Policy and Procedures and information regarding how the Company voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 869-6397 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable fund of Morgan Stanley Institutional Fund, Inc., which describes in detail the fund's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Fund, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 869-6397.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling 1 (800) 869-6397, 8:00 a.m. to 6:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Tailored Shareholder Reports

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Morgan Stanley Funds.


23


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited)  April 2021

FACTS

 

WHAT DOES MSIM DO WITH YOUR PERSONAL INFORMATION?

 

Why?

 

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

 

What?

  The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and income
investment experience and risk tolerance
checking account number and wire transfer instructions
 

How?

 

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons MSIM chooses to share; and whether you can limit this sharing.

 

 

Reasons we can share your personal information

 

Does MSIM share?

 

Can you limit this sharing?

 
For our everyday business purposes —
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
 

Yes

 

No

 
For our marketing purposes —
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies

 

No

 

We don't share

 
For our investment management affiliates' everyday business purposes —
information about your transactions, experiences, and creditworthiness
 

Yes

 

Yes

 
For our affiliates' everyday business purposes —
information about your transactions and experiences
 

Yes

 

No

 
For our affiliates' everyday business purposes —
information about your creditworthiness
 

No

 

We don't share

 

For our investment management affiliates to market to you

 

Yes

 

Yes

 

For our affiliates to market to you

 

No

 

We don't share

 

For non-affiliates to market to you

 

No

 

We don't share

 


24


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

To limit our sharing

  Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.
 

Questions?

 

Call toll-free (844) 312-6327 or email: imprivacyinquiries@morganstanley.com

 

Who we are

Who is providing this notice?

  Morgan Stanley Investment Management Inc. and its investment management affiliates ("MSIM") (see Investment Management Affiliates definition below)  

What we do

How does MSIM protect my personal information?

 

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.

 

How does MSIM collect my personal information?

  We collect your personal information, for example, when you
open an account or make deposits or withdrawals from your account
buy securities from us or make a wire transfer
give us your contact information
We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
 

Why can't I limit all sharing?

  Federal law gives you the right to limit only
sharing for affiliates' everyday business purposes — information about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.
 


25


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

U.S. Customer Privacy Notice (unaudited) (cont'd)  April 2021

Definitions

Investment Management Affiliates

 

MSIM Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds in the Investment Management Division. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

 

Affiliates

  Companies related by common ownership or control. They can be financial and non-financial companies.
Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
 

Non-affiliates

  Companies not related by common ownership or control. They can be financial and non-financial companies.
MSIM does not share with non-affiliates so they can market to you.
 

Joint marketing

  A formal agreement between non-affiliated financial companies that together market financial products or services to you.
MSIM doesn't jointly market
 

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Non-affiliates unless you provide us with your written consent to share such information.

California: Except as permitted by law, we will not share personal information we collect about California residents with Non-affiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.


26


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited)

Independent Directors:

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Frank L. Bowman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1944
 

Director

 

Since August 2006

 

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Morgan Stanley Funds (since August 2006); Chairperson of the Compliance and Insurance Committee (since October 2015); formerly, Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (2007-2015); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996) and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; awarded the Officier de l'Orde National du Mèrite by the French Government; elected to the National Academy of Engineering (2009).

 

87

 

Director of Naval and Nuclear Technologies LLP; Director Emeritus of the Armed Services YMCA; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a former member of the CNA Military Advisory Board; Chairman of the Board of Trustees of Fairhaven United Methodist Church; Member of the Board of Advisors of the Dolphin Scholarship Foundation; Director of other various nonprofit organizations; formerly, Director of BP, plc (November 2010-May 2019).

 
Frances L. Cashman
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1961
 

Director

 

Since February 2022

 

Chief Executive Officer, Asset Management Portfolio, Delinian Ltd. (financial information) (May 2021-Present); Executive Vice President and various other roles, Legg Mason & Co. (asset management) (2010-2020); Managing Director, Stifel Nicolaus (2005-2010).

 

88

 

Formerly, Trustee and Investment Committee Member, GeorgiaTech Foundation (since June 2019); Trustee and Chair of Marketing Committee, and Member of Investment Committee, Loyola Blakefield (2017-2023); Trustee, MMI Gateway Foundation (2017-2023); Director and Investment Committee Member, Catholic Community Foundation Board (2012-2018); Director and Investment Committee Member, St. Ignatius Loyola Academy (2011-2017).

 
Kathleen A. Dennis
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1953
 

Director

 

Since August 2006

 

Chairperson of the Governance Committee (since January 2021), Chairperson of the Liquidity and Alternatives Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006); Senior Vice President, Chase Bank (1984-1993).

 

87

 

Board Member, University of Albany Foundation (2012-present); Board Member, Mutual Funds Directors Forum (2014-present); Director of various non-profit organizations.

 


27


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Nancy C. Everett
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since January 2015

 

Chairperson of the Equity Investment Committee (since January 2021); Director or Trustee of various Morgan Stanley Funds (since January 2015); Chief Executive Officer, Virginia Commonwealth University Investment Company (since November 2015); Owner, OBIR, LLC (institutional investment management consulting) (since June 2014); formerly, Managing Director, BlackRock, Inc. (February 2011-December 2013) and Chief Executive Officer, General Motors Asset Management (a/k/a Promark Global Advisors, Inc.) (June 2005-May 2010).

 

88

 

Formerly, Member of Virginia Commonwealth University School of Business Foundation (2005-2016); Member of Virginia Commonwealth University Board of Visitors (2013-2015); Member of Committee on Directors for Emerging Markets Growth Fund, Inc. (2007-2010); Chairperson of Performance Equity Management, LLC (2006-2010); and Chairperson, GMAM Absolute Return Strategies Fund, LLC (2006-2010).

 
Eddie A. Grier
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1955
 

Director

 

Since February 2022

 

Dean, Santa Clara University Leavey School of Business (since July 2021); Dean, Virginia Commonwealth University School of Business (2010-2021); President and various other roles, Walt Disney Company (entertainment and media) (1981-2010).

 

88

 

Director, Witt/Keiffer, Inc. (executive search) (since 2016); Director, NuStar GP, LLC (energy) (since August 2021); Director, Sonida Senior Living, Inc. (residential community operator) (2016-2021); Director, NVR, Inc. (homebuilding) (2013-2020); Director, Middleburg Trust Company (wealth management) (2014-2019); Director, Colonial Williamsburg Company (2012-2021); Regent, University of Massachusetts Global (since 2021); Director and Chair, ChildFund International (2012-2021); Trustee, Brandman University (2010-2021); Director, Richmond Forum (2012-2019).

 


28


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Jakki L. Haussler
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1957
 

Director

 

Since January 2015

 

Chairperson of the Audit Committee (since January 2023) and Director or Trustee of various Morgan Stanley Funds (since January 2015); Chairman, Opus Capital Group (since 1996); formerly, Chief Executive Officer, Opus Capital Group (1996-2019); Director, Capvest Venture Fund, LP (May 2000-December 2011); Partner, Adena Ventures, LP (July 1999-December 2010); Director, The Victory Funds (February 2005-July 2008).

 

88

 

Director, Vertiv Holdings Co. (VRT) (since August 2022); Director of Cincinnati Bell Inc. and Member, Audit Committee and Chairman, Governance and Nominating Committee (2008-2021); Director of Service Corporation International and Member, Audit Committee and Investment Committee; Director, Barnes Group Inc. (since July 2021); Member of Chase College of Law Center for Law and Entrepreneurship Board of Advisors; Director of Best Transport (2005-2019); Director of Chase College of Law Board of Visitors; formerly, Member, University of Cincinnati Foundation Investment Committee.

 
Dr. Manuel H. Johnson
c/o Johnson Smick
International, Inc.
220 I Street, NE
Suite 200
Washington, D.C. 20002
Birth Year: 1949
 

Director

 

Since July 1991

 

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Fixed Income, Liquidity and Alternatives Investment Committee (since January 2021), Chairperson of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since July 1991); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

 

87

 

Director of NVR, Inc. (home construction).

 
Joseph J. Kearns
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1942
 

Director

 

Since August 1994 (Retired December 31, 2023)

 

Senior Adviser, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (2006-2022) and Director or Trustee of various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006); CFO of the J. Paul Getty Trust (1982-1999).

 

88

 

Director, Rubicon Investments (since February 2019); Prior to August 2016, Director of Electro Rent Corporation (equipment leasing); Prior to December 31, 2013, Director of The Ford Family Foundation.

 


29


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Independent Directors: (cont'd)

Name, Address and Birth
Year of Independent Director
  Position(s)
Held with
Registrant
  Length of Time
Served*
  Principal Occupation(s) During Past 5 Years and Other
Relevant Professional Experience
  Number of
Funds in
Fund Complex
Overseen by
Independent
Director**
  Other Directorships
Held by Independent
Director During
Past 5 Years***
 
Michael F. Klein
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1958
 

Director

 

Since August 2006

 

Chairperson of the Risk Committee (since January 2021); Managing Director, Aetos Alternatives Management, LP (since March 2000); Co-President, Aetos Alternatives Management, LP (since January 2004) and Co-Chief Executive Officer of Aetos Alternatives Management, LP (since August 2013); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (2006-2020) and Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management and President, various Morgan Stanley Funds (June 1998-March 2000); Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

 

87

 

Director of certain investment funds managed or sponsored by Aetos Alternatives Management, LP; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

 
Patricia A. Maleski
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1960
 

Director

 

Since January 2017

 

Director or Trustee of various Morgan Stanley Funds (since January 2017); Managing Director, JPMorgan Asset Management (2004-2016); Oversight and Control Head of Fiduciary and Conflicts of Interest Program (2015-2016); Chief Control Officer — Global Asset Management (2013-2015); President, JPMorgan Funds (2010-2013); Chief Administrative Officer (2004-2013); various other positions including Treasurer and Board Liaison (since 2001).

 

88

 

Formerly, Trustee (January 2022 to March 2023), Treasurer (January 2023 to March 2023), and Finance Committee (January 2022 to March 2023).

 
W. Allen Reed
c/o Perkins Coie LLP
Counsel to the Independent Directors
1155 Avenue of the Americas
22nd Floor
New York, NY 10036
Birth Year: 1947
 

Chair of the Board and Director

 

Chair of the Board since August 2020 and Director since August 2006

 

Chair of the Boards of various Morgan Stanley Funds (since August 2020); Director or Trustee of various Morgan Stanley Funds (since August 2006); formerly, Vice Chair of the Boards of various Morgan Stanley Funds (January 2020-August 2020); President and Chief Executive Officer of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

 

87

 

Formerly, Director of Legg Mason, Inc. (2006-2019); and Director of the Auburn University Foundation (2010-2015).

 

*  This is the earliest date the Director began serving the Morgan Stanley Funds. Each Director serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2023) 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 Directors at any time during the past five years.


30


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Directors and Officers Information (unaudited) (cont'd)

Executive Officers:

Name, Address and
Birth Year of Executive Officer
  Position(s) Held
with
Registrant
  Length of Time
Served*
 

Principal Occupation(s) During Past 5 Years

 
John H. Gernon
1585 Broadway
New York, NY 10036
Birth Year: 1963
 

President and Principal Executive Officer

 

Since September 2013

 

President and Principal Executive Officer of the Equity and Fixed Income Funds and the Morgan Stanley AIP Funds (since September 2013) and the Liquidity Funds and various money market funds (since May 2014) in the Fund Complex; Managing Director of the Adviser.

 
Deidre A. Downes
1633 Broadway
New York, NY 10019
Birth Year: 1977
 

Chief Compliance Officer

 

Since November 2021

 

Executive Director of the Adviser (since January 2021) and Chief Compliance Officer of various Morgan Stanley Funds (since November 2021). Formerly, Vice President and Corporate Counsel at PGIM and Prudential Financial (October 2016-December 2020).

 
Francis J. Smith
750 Seventh Avenue
New York, NY 10019
Birth Year: 1965
 

Treasurer and Principal Financial Officer

 

Treasurer since July 2003 and Principal Financial Officer since September 2002

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer (since July 2003) and Principal Financial Officer of various Morgan Stanley Funds (since September 2002).

 
Mary E. Mullin
1633 Broadway
New York, NY 10019
Birth Year: 1967
 

Secretary

 

Since June 1999

 

Managing Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

 
Michael J. Key
1585 Broadway
New York, NY 10036
Birth Year: 1979
 

Vice President

 

Since June 2017

 

Vice President of the Equity and Fixed Income Funds, Liquidity Funds, various money market funds and the Morgan Stanley AIP Funds in the Fund Complex (since June 2017); Managing Director of the Adviser; Head of Product Development for Equity and Fixed Income Funds (since August 2013).

 

The Fund's statement of additional information includes further information about the Fund's Directors and Officers, and is available without charge by visiting www.morganstanley.com/im or upon request by calling 1 (800) 869-6397.

*  This is the earliest date the officer began serving the Morgan Stanley Funds. Each officer serves an indefinite term, until his or her successor is elected.


31


Morgan Stanley Institutional Fund, Inc.

Annual Report — December 31, 2023

Adviser and Administrator

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

Distributor

Morgan Stanley Distribution, Inc.
1585 Broadway
New York, New York 10036

Dividend Disbursing and Transfer Agent

SS&C Global Investor & Distribution Solutions, Inc.
P.O. Box 219804
Kansas City, Missouri 64121-9804

Co-Transfer Agent

Eaton Vance Management
Two International Place
Boston, Massachusetts 02110

Custodian

State Street Bank and Trust Company
One Congress Street
Boston, Massachusetts 02114

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Perkins Coie LLP
1155 Avenue of the Americas,
22nd Floor
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116


32


Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
1585 Broadway
New York, New York 10036

© 2024 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIVITANN
6338653 EXP 02.28.25


Item 2. Code of Ethics.

 

(a) The registrant has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

(b) No information need be disclosed pursuant to this paragraph.

 

(c) Not applicable.

 

(d) Not applicable.

 

(e) Not applicable.

 

(f) 

 

  (1) The registrant’s Code of Ethics is attached hereto as Exhibit 13 A.

 

  (2) Not applicable.

 

  (3) Not applicable.

 

Item 3. Audit Committee Financial Expert.

 

The registrant's Board of Directors has determined that Jakki L. Haussler, an “independent” Trustee, is an “audit committee financial expert" serving on its audit committee. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Directors in the absence of such designation or identification.

 

 1 

 

 

Item 4. Principal Accountant Fees and Services.

 

(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:

 

2023    

 

   Registrant   Covered Entities(1)   
Audit Fees  $1,768,833      N/A 
Non-Audit Fees          
Audit-Related Fees  $(2)  $(2)
Tax Fees  $(3)  $(4)
All Other Fees  $   $1,627,962(5)
Total Non-Audit Fees  $   $1,627,962 
Total  $1,768,833   $1,627,962 

 

2022

 

   Registrant   Covered Entities(1)   
Audit Fees  $1,753,833            N/A 
Non-Audit Fees          
Audit-Related Fees  $(2)  $(2)
Tax Fees  $(3)  $(4)
All Other Fees  $   $5,778,872(5)
Total Non-Audit Fees  $   $5,778,872 
Total  $1,753,833   $5,778,872 

 

N/A- Not applicable, as not required by Item 4.

 

(1)Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant.

 

(2)Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities' and funds advised by the Adviser or its affiliates, specifically data verification and agreed-upon procedures related to asset securitizations and agreed-upon procedures engagements.

 

(3)Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the preparation and review of the Registrant’s tax returns.

 

(4)Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the review of Covered Entities' tax returns.

 

(5)The fees included under “All Other Fees” are for services provided by Ernst & Young LLP related to surprise examinations for certain investment accounts to satisfy SEC Custody Rules and consulting services related to merger integration for sister entity to the Adviser.

 

(e)(1) The audit committee’s pre-approval policies and procedures are as follows:

 

 2 

 

 

AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY FUNDS

 

AS ADOPTED AND AMENDED JULY 23, 2004 AND JUNE 12 AND 13, 20193

 

1. Statement of Principles

 

The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor’s independence from the Fund.

 

The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee’s administration of the engagement of the independent auditor. The SEC’s rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee or its delegate (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.

 

The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

 

The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities to pre-approve services performed by the Independent Auditors to management.

 

The Fund’s Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors’ independence.

 

 

3 This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the “Policy”), adopted as of the date above, supersedes and replaces all prior versions that may have been adopted from time to time.

 

 3 

 

 

2. Delegation

 

As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

 

3. Audit Services

 

The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund’s financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items.

 

In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

 

The Audit Committee has pre-approved the Audit services in Appendix A. All other Audit services not listed in Appendix A must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

 

4. Audit-related Services

 

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements and, to the extent they are Covered Services, the Covered Entities or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-CEN and/or N-CSR.

 

The Audit Committee has pre-approved the Audit-related services in Appendix A. All other Audit-related services not listed in Appendix A must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

 

5. Tax Services

 

The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the Independent Auditors may provide such services.

 

Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix A. All Tax services in Appendix A must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

 

6. All Other Services

 

The Audit Committee believes, based on the SEC’s rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.

 

The Audit Committee has pre-approved the All Other services in Appendix A. Permissible All Other services not listed in Appendix A must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

 

7. Pre-Approval Fee Levels or Budgeted Amounts

 

Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services.

 

8. Procedures

 

All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund’s Principal Financial and Accounting Officer and must include a detailed description of the services to be rendered. The Fund’s Principal Financial and Accounting Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee or Chairperson of the Audit Committee will be submitted to the Audit Committee by the Fund’s Principal Financial and Accounting Officer, who, after consultation with the Independent Auditors, will discuss whether the request or application is consistent with the SEC’s rules on auditor independence.

 

 4 

 

 

The Audit Committee has designated the Fund’s Principal Financial and Accounting Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund’s Principal Financial and Accounting Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Fund’s Principal Financial and Accounting Officer and management will immediately report to the Chairperson of the Audit Committee any breach of this Policy that comes to the attention of the Fund’s Principal Financial and Accounting Officer or any member of management.

 

9. Additional Requirements

 

The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor’s independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with the PCAOB’s Ethics and Independence Rule 3526, and discussing with the Independent Auditors its methods and procedures for ensuring independence.

 

10. Covered Entities

 

Covered Entities include the Fund’s investment adviser(s) and any entity controlling, controlled by or under common control with the Fund’s investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund’s audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include:

 

Morgan Stanley Funds

 

 Morgan Stanley & Co. LLC

 

 Morgan Stanley Investment Management Inc.

 

 Morgan Stanley Investment Management Limited

 

 Morgan Stanley Investment Management Private Limited

 

 Morgan Stanley Asset & Investment Trust Management Co., Limited

 

 Morgan Stanley Investment Management Company

 

 Morgan Stanley Services Company, Inc.

 

 Morgan Stanley Distribution, Inc.

 

 Morgan Stanley AIP GP LP

 

 Morgan Stanley Alternative Investment Partners LP

 

 Morgan Stanley Smith Barney LLC

 

 Morgan Stanley Capital Management LLC

 

 Morgan Stanley Asia Limited

 

 Morgan Stanley Services Group

 

(e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee’s pre-approval policies and procedures (attached hereto).

 

(f) Not applicable.

 

(g) See table above.

 

(h) The audit committee of the Board of Directors has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors' independence in performing audit services.

 

 5 

 

 

APPENDIX A

 

Pre-Approved Audit Services

 

Service Range of Fees
  The Fund(s) Covered
Entities
Statutory audits or financial audits for the Funds For a complete list of fees, please contact the legal department ** N/A
Services associated with SEC registration statements (including new fund filings/seed audits), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end fund offerings, consents), and assistance in responding to SEC comment letters * *
Consultations by the Fund’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies (Note: Under SEC rules, some consultations may be “audit related” services rather than “audit” services) * *

 

Pre-Approved Audit-Related Services

 

Service Range of Fees
  The Fund(s) Covered
Entities
Attest procedures not required by statute or regulation * *
Due diligence services pertaining to potential fund mergers * *
Consultations by the Fund’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be “audit” services rather than “audit-related” services) * *
General assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the Sarbanes-Oxley Act * *

 

Pre-Approved Tax Services

 

Service Range of Fees
  The Fund(s) Covered
Entities
U.S. federal, state and local tax planning and advice * *
U.S. federal, state and local tax compliance * *
International tax planning and advice * *
International tax compliance * *
Review/preparation of federal, state, local and international income, franchise, and other tax returns $450,000
PwC
N/A
Identification of Passive Foreign Investment Companies $175,000
PwC
*
PwC ITV Tool – assist in determining which Fund holdings have foreign capital gains tax exposure $125,000
PwC
*
Foreign Tax Services - Preparation of local foreign tax returns and assistance with local tax compliance issues (including maintenance of transaction schedules, assistance in periodic tax remittances, tax registration, representing funds before foreign revenue authorities and assistance with assessment orders) $500,000
PwC
*
Assistance with tax audits and appeals before the IRS and similar state, local and foreign agencies * *
Tax advice and assistance regarding statutory, regulatory or administrative developments (e.g., excise tax reviews, evaluation of Fund’s tax compliance function) * *

 

 6 

 

 

Pre-Approved All Other Services

 

Service Range of Fees
  The Fund(s) Covered
Entities
Risk management advisory services, e.g., assessment and testing of security infrastructure controls * *

 

* Aggregate fees related to the pre-approved services will be limited to 10% of the 2023/2024 annual fees for audit and tax services.
** Audit and tax services for new funds/portfolios will be subject to the maximum audit and tax fee for a fund/portfolio on fee schedule distributed by the Auditors.

 

Prohibited Non-Audit Services

 

 Bookkeeping or other services related to the accounting records or financial statements of the audit client

 

 Financial information systems design and implementation

 

 Appraisal or valuation services, fairness opinions or contribution-in-kind reports

 

 Actuarial services

 

 Internal audit outsourcing services

 

 Management functions

 

 Human resources

 

 Broker-dealer, investment adviser or investment banking services

 

 Legal services

 

 Expert services unrelated to the audit

 

(i)Not Applicable.

 

(j)Not Applicable.

 

Item 5. Audit Committee of Listed Registrants.

 

(a) The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:

 

Joseph J. Kearns, Nancy C. Everett, Eddie A. Grier and Jakki L. Haussler.

 

(b) Not applicable.

 

Item 6. Schedule of Investments

 

(a) Refer to Item 1.

 

(b) Not applicable.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

Applicable only to reports filed by closed-end funds.

 

 7 

 

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies

 

Applicable only to reports filed by closed-end funds.

 

Item 9. Closed-End Fund Repurchases

 

Applicable only to reports filed by closed-end funds.

 

Item 10. Submission of Matters to a Vote of Security Holders

 

There have been no material changes to the procedures by which shareholders may recommend nominee to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.

 

Item 11. Controls and Procedures

 

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

 

(b) There were no changes in the registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

 

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

 

Not Applicable

 

Item 13. Exhibits

 

(a) The Code of Ethics for Principal Executive and Senior Financial Officers.

 

(b) A separate certification for each principal executive officer and principal financial officer of the registrant as part of EX-99.CERT.

 

(c) Section 906 Certification

 

 8 

 

 

SIGNATURES

 

 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Morgan Stanley Institutional Fund, Inc.

 

/s/ John H. Gernon  
John H. Gernon  
Principal Executive Officer  
February 20, 2024  

 

 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/s/ John H. Gernon  
John H. Gernon  
Principal Executive Officer  
February 20, 2024  

 

/s/ Francis J. Smith  
Francis J. Smith  
Principal Financial Officer  
February 20, 2024  

 

 9