morgan stanley institutional fund, inc. management morgan stanley institutional fund, inc....

The second sentence of the fifth paragraph in the section of the Prospectus titled “Portfolio Summary—FocusGrowth Portfolio—Principal Investment Strategies” is hereby deleted and replaced with the following:

The Portfolio’s use of derivatives may involve the purchase and sale of derivative instruments such asfutures, options, swaps and structured investments, and other related instruments and techniques.

***

The second sentence of the fifth paragraph in the section of the Prospectus titled “Portfolio Summary—GlobalDiscovery Portfolio—Principal Investment Strategies” is hereby deleted and replaced with the following:

The Portfolio’s use of derivatives may involve the purchase and sale of derivative instruments such asfutures, swaps, contracts for difference (“CFDs”) and structured investments, and other relatedinstruments and techniques.

***

The second sentence of the fifth paragraph in the section of the Prospectus titled “Portfolio Summary—GrowthPortfolio—Principal Investment Strategies” is hereby deleted and replaced with the following:


***

The second sentence of the sixth paragraph in the section of the Prospectus titled “Portfolio Summary—SmallCompany Growth Portfolio—Principal Investment Strategies” is hereby deleted and replaced with the following:


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The third sentence of the fifth paragraph in the section of the Prospectus titled “Details of the Portfolios—FocusGrowth Portfolio—Process” is hereby deleted and replaced with the following:


***

The third sentence of the sixth paragraph in the section of the Prospectus titled “Details of thePortfolios—Global Discovery Portfolio—Process” is hereby deleted and replaced with the following:

The Portfolio’s use of derivatives may involve the purchase and sale of derivative instruments such asfutures, options, swaps, CFDs and structured investments, and other related instruments and techniques.

***

The third sentence of the fifth paragraph in the section of the Prospectus titled “Details of thePortfolios—Growth Portfolio—Process” is hereby deleted and replaced with the following:


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Morgan Stanley Institutional Fund, Inc.Supplement datedOctober 4, 2011 tothe Morgan StanleyInstitutional Fund, Inc.(the “Fund”)Prospectus datedApril 29, 2011 of:

Growth PortfoliosFocus GrowthPortfolioGlobal DiscoveryPortfolioGrowth Portfolio(formerly CapitalGrowth Portfolio)Small CompanyGrowth Portfolio

Prospectus Supplement

October 4, 2011

Merrill Corp - MS Institutional Fund Advantage Portfolios Pros Supp N-1A 33-023166 10-31-2011 ED | bjasper | 03-Oct-11 11:16 | 11-25411-22.ba | Sequence: 3CHKSUM Content: 60241 Layout: 42579 Graphics: No Graphics CLEAN

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The third sentence of the sixth paragraph in the section of the Prospectus titled “Details of the Portfolios—SmallCompany Growth Portfolio—Process” is hereby deleted and replaced with the following:


***

The following is hereby added after the fifth paragraph in the section of the Prospectus titled “AdditionalInformation about the Portfolios’ Investment Strategies and Related Risks—Derivatives”:

Options. If a Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specificamount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium paid by the Portfolio. If a Portfolio sells an option, itsells to another person the right to buy from or sell to the Portfolio a specific amount of the underlyinginstrument or futures contract on the underlying instrument at an agreed upon price typically inexchange for a premium received by the Portfolio. A decision as to whether, when and how to useoptions involves the exercise of skill and judgment and even a well-conceived option transaction maybe unsuccessful because of market behavior or unexpected events. The prices of options can be highlyvolatile and the use of options can lower total returns.

Please retain this supplement for future reference. MSIEQUSPT 9/11

Merrill Corp - MS Institutional Fund Advantage Portfolios Pros Supp N-1A 33-023166 10-31-2011 ED | bjasper | 03-Oct-11 11:16 | 11-25411-22.ba | Sequence: 4CHKSUM Content: 15813 Layout: 45712 Graphics: No Graphics CLEAN

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INVESTMENT MANAGEMENT

Morgan StanleyInstitutional Fund, Inc.

ProspectusApril 29, 2011

The Securities and Exchange Commission has not approved or disapprovedthese securities or passed upon the adequacy of this Prospectus. Anyrepresentation to the contrary is a criminal offense.

Growth PortfoliosFocus Growth PortfolioGlobal Discovery PortfolioGrowth Portfolio (formerly Capital Growth Portfolio)Small Company Growth Portfolio

Share Class and Ticker SymbolsPortfolio Class I Class P Class H Class LFocus Growth Portfolio MSAGX MAEBX — —

Global Discovery Portfolio MLDIX MGDPX MGDHX MGDLX

Growth Portfolio MSEQX MSEGX — —

Small Company Growth Portfolio MSSGX MSSMX — —

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | ajacksod | 27-Apr-11 01:20 | 10-22173-5.aa | Sequence: 1CHKSUM Content: 50633 Layout: 2686 Graphics: 53866 CLEAN

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Page

Portfolio SummaryFocus Growth Portfolio 1Global Discovery Portfolio 4Growth Portfolio 7Small Company Growth Portfolio 10

Details of the PortfoliosFocus Growth Portfolio 13Global Discovery Portfolio 15Growth Portfolio 17Small Company Growth Portfolio 19

Additional Information about the Portfolios’ InvestmentStrategies and Related Risks 21

Fund Management 25Shareholder Information 26Financial Highlights 33Focus Growth Portfolio 33Global Discovery Portfolio 35Growth Portfolio 39Small Company Growth Portfolio 41

Table of Contents

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | ajacksod | 27-Apr-11 01:20 | 10-22173-5.aa | Sequence: 2CHKSUM Content: 17594 Layout: 7861 Graphics: No Graphics CLEAN

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ObjectiveThe Focus Growth Portfolio seeks capital appreciation byinvesting primarily in growth-oriented equity securities oflarge capitalization companies.

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio. ThePortfolio does not charge any sales loads or other feeswhen you purchase or redeem shares.

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

Class I Class PAdvisory Fee* 0.50% 0.50%Distribution and/or Service (12b-1) Fee None 0.25%Other Expenses* 1.01% 1.01%Total Annual Portfolio Operating Expenses* 1.51% 1.76%Fee Waiver and/or Expense Reimbursement* 0.51% 0.51%Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement* 1.00% 1.25%

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

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

1 Year 3 Years 5 Years 10 YearsClass I $102 $318 $552 $1,225Class P $127 $397 $686 $1,511

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, will not exceed 1.00% for Class I and 1.25% forClass P. The fee waivers and/or expense reimbursementsare expected to continue for one year or until such time asthe Fund’s Board of Directors acts to discontinue all or aportion of such waivers and/or reimbursements when itdeems that such action is appropriate.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commis-sions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicatehigher transaction costs and may result in higher taxeswhen Portfolio shares are held in a taxable account.These costs, which are not reflected in Total AnnualPortfolio Operating Expenses or in the Example, affectPortfolio performance. During the most recent fiscal year,the Portfolio’s portfolio turnover rate was 79% of theaverage value of its portfolio.

Principal Investment StrategiesUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies withmarket capitalizations of $10 billion or more. ThePortfolio generally concentrates its holdings in a rela-tively small number of companies and may invest up to25% of its assets in a single issuer.

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

The Portfolio’s equity investments may include commonand preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase com-mon stocks, depositary receipts, exchange-traded funds(“ETFs”) and other specialty securities having equity fea-tures. The Portfolio may invest in privately placed andrestricted securities.

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

The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management orto earn income. The Portfolio’s use of derivatives mayinvolve the purchase and sale of derivative instrumentssuch as futures, swaps and structured investments, andother related instruments and techniques. The Portfoliomay utilize forward foreign currency exchange con-tracts, which are also derivatives, in connection with itsinvestments in foreign securities.

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

• Equity Securities. In general, prices of equity securi-ties are more volatile than those of fixed income

Focus Growth Portfolio

Morgan Stanley Institutional Fund, Inc. Prospectus

Portfolio Summary

1

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securities. The prices of equity securities will rise andfall in response to a number of different factors,including events that affect particular issuers as wellas events that affect entire financial markets or indus-tries. To the extent that the Portfolio invests in convertible securities, and the convertible security’sinvestment value is greater than its conversion value,its price will be likely to increase when interest ratesfall and decrease when interest rates rise. If the conversion value exceeds the investment value, theprice of the convertible security will tend to fluctuatedirectly with the price of the underlying equity security.

• Foreign and Emerging Market Securities.Investments in foreign markets entail special riskssuch as currency, political, economic and marketrisks. There also may be greater market volatility, lessreliable financial information, higher transaction andcustody costs, decreased market liquidity and lessgovernment and exchange regulation associated withinvestments in foreign markets. The risks of investingin emerging market countries are greater than risksassociated with investments in foreign developedcountries. In addition, the Portfolio’s investmentsmay be denominated in foreign currencies and there-fore, changes in the value of a country’s currencycompared to the U.S. dollar may affect the value ofthe Portfolio’s investments. Hedging the Portfolio’scurrency risks through forward foreign currencyexchange contracts involves the risk of mismatchingthe Portfolio’s objectives under a forward foreign cur-rency exchange contract with the value of securitiesdenominated in a particular currency. There is addi-tional risk that such transactions reduce or precludethe opportunity for gain and that currency contractscreate exposure to currencies in which the Portfolio’ssecurities are not denominated.

• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increas-ing the level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer these secu-rities due to restrictions on transfers or on the abilityto find buyers interested in purchasing the securities.The illiquidity of the market may also adverselyaffect the ability of the Fund’s Directors to arrive at afair value for certain securities at certain times.

• Derivatives Risk. A derivative instrument often hasrisks similar to its underlying instrument and mayhave additional risks, including imperfect correlationbetween the value of the derivative and the underly-ing instrument, risks of default by the counterpartyto certain transactions, magnification of lossesincurred due to changes in the market value of thesecurities, instruments, indices or interest rates towhich they relate and risks that the transactions maynot be liquid. Certain derivative transactions may

give rise to a form of leverage. Leverage magnifies thepotential for gain and the risk of loss.

Shares of the Portfolio are not bank deposits and arenot guaranteed or insured by the FDIC or any othergovernment agency.

Performance InformationThe bar chart and table below provide some indicationof the risks of investing in the Portfolio by showingchanges in the Portfolio’s Class I shares’ performancefrom year-to-year and by showing how the Portfolio’saverage annual returns for the past one, five and 10year periods compare with those of a broad measure ofmarket performance, as well as an index that representsa group of similar mutual funds, over time. The per-formance of the other Class will differ because theClass has different ongoing fees. The Portfolio’s pastperformance, before and after taxes, is not necessarilyan indication of how the Portfolio will perform in thefuture. Updated performance information is availableonline at www.morganstanley.com/im.

Annual Total Returns—Calendar Years

High Quarter (Q2 ‘09) 21.33%Low Quarter (Q4 ‘08) –33.73%

Average Annual Total Returns(for the calendar periods ended December 31, 2010)

Past Past PastOne Year Five Years Ten Years

Class IReturn before Taxes 28.23% 5.92% 2.87% Return after Taxes on Distributions 28.23% 5.90% 2.80% Return after Taxes on Distributions and Sale of Portfolio Shares 18.35% 5.11% 2.45% Class PReturn before Taxes 27.86% 5.64% 2.61% Russell 1000® Growth Index (reflects no deduction for fees, expenses or taxes)1 16.71% 3.75% 0.02% Lipper Large-Cap Growth Funds Index (reflects no deduction for taxes)2 15.13% 2.38% –1.01%

1 The Russell 1000® Growth Index measures the performanceof the large-cap growth segment of the U.S. equity universe.It includes those Russell 1000® Index companies with higherprice-to-book ratios and higher forecasted growth values. The

-60%

-40%

-20%

0%

20%

40%

60%

80%

‘05 ‘10‘09‘08‘06‘04‘03‘022001 ‘07

-15.22

-28.81

24.02

70.61

28.2330.99

7.0017.60

2.77

-52.19

Focus Growth Portfolio (Cont’d)

2

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | ajacksod | 27-Apr-11 01:20 | 10-22173-5.ba | Sequence: 2CHKSUM Content: 50764 Layout: 36522 Graphics: 62162 CLEAN

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Russell 1000® Index is an index of approximately 1,000 ofthe largest U.S. companies based on a combination ofmarket capitalization and current index membership. It is notpossible to invest directly in an index.

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

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

Investment AdviserAdviser. Morgan Stanley Investment Management Inc.

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

Date Began Title with Managing

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

Purchase and Sale of Fund SharesThe minimum initial investment generally is$5,000,000 for Class I shares and $1,000,000 forClass P shares. The minimum initial investment will bewaived for certain investments. For more information,please refer to the “Shareholder Information—How ToPurchase Class I, Class P and Class L Shares” sectionbeginning on page 26 of this Prospectus.

Class I and Class P shares of the Portfolio may be pur-chased or sold on any day the New York Stock Exchange(“NYSE”) is open for business directly through MorganStanley Institutional Fund, Inc. (the “Fund”) by mail(c/o Morgan Stanley Services Company Inc., P.O. Box219804, Kansas City, MO 64121-9804) or by telephone(1-800-548-7786) or by contacting your financial inter-mediary. You may also purchase Portfolio shares bywiring Federal Funds to State Street Bank and TrustCompany (the “Custodian”).

For more information, please refer to the “ShareholderInformation—How To Purchase Class I, Class P andClass L Shares” and “—How To Redeem Class I, Class Pand Class L Shares” sections beginning on pages 26and 29, respectively, of this Prospectus.

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

Payments to Broker-Dealers and Other FinancialIntermediariesIf you purchase the Portfolio through a broker-dealer orother financial intermediary (such as a bank), the Adviserand/or the Portfolio’s distributor may pay the intermedi-ary for the sale of Portfolio shares and related services.These payments, which may be significant in amount,may create a conflict of interest by influencing the broker-dealer or other intermediary and your salespersonto recommend the Portfolio over another investment.Ask your salesperson or visit your financial intermediary’sweb site for more information.



Portfolio Summary

3



ObjectiveThe Global Discovery Portfolio seeks long-term capitalappreciation.

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio. Forshareholders of Class H shares, you may qualify for salescharge discounts if you and your family invest, or agreeto invest in the future, at least $50,000 in a portfolio ofthe Fund or a portfolio of Morgan Stanley InstitutionalFund Trust. More information about these and otherdiscounts is available from your financial adviser and inthe “Shareholder Information—How To PurchaseClass H Shares” section on page 27 of this Prospectus.

Shareholder Fees (fees paid directly from your investment)Class I Class P Class H Class L

Maximum sales charge (load) imposed on purchases (as a percentage of offering price) None None 4.75%† None


Class I Class P Class H Class LAdvisory Fee* 0.90% 0.90% 0.90% 0.90%Distribution and/or Service (12b-1) Fee None 0.25% 0.25% 0.75%Other Expenses*‡ 4.27% 4.27% 4.27% 4.27%Total Annual Portfolio Operating Expenses* 5.17% 5.42% 5.42% 5.92%Fee Waiver and/or ExpenseReimbursement* 3.82% 3.82% 3.82% 3.82%Total Annual Portfolio Operating Expenses After Fee Waiver and/or ExpenseReimbursement* 1.35% 1.60% 1.60% 2.10%

ExampleThis example is intended to help you compare the costof investing in the Portfolio with the cost of investing inother mutual funds.

The example assumes that you invest $10,000 in thePortfolio, your investment has a 5% return each year,and that the Portfolio’s operating expenses remain the

same. Although your actual costs may be higher orlower, based on these assumptions your costs would be:

1 Year 3 YearsClass I $137 $428Class P $163 $505Class H $630 $956Class L $213 $658

† The sales charge is calculated as a percentage of theoffering price. The sales charge is reduced for purchases of$50,000 and over. See “Shareholder Information—How ToPurchase Class H Shares.”

‡ Other expenses have been estimated for the current fiscalyear.

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, will not exceed 1.35% for Class I, 1.60% forClass P, 1.60% for Class H and 2.10% for Class L. The feewaivers and/or expense reimbursements are expected tocontinue for one year or until such time as the Fund’s Boardof Directors acts to discontinue all or a portion of suchwaivers and/or reimbursements when it deems that suchaction is appropriate.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commis-sions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicatehigher transaction costs and may result in higher taxeswhen Portfolio shares are held in a taxable account.These costs, which are not reflected in Total AnnualPortfolio Operating Expenses or in the Example, affectPortfolio performance. During the period ofDecember 28, 2010 through December 31, 2010, thePortfolio’s portfolio turnover rate was 0% of the averagevalue of its portfolio.

Principal Investment StrategiesUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging franchise compa-nies located throughout the world, with capitalizationswithin the range of companies included in the MSCI AllCountry World Index. The Adviser emphasizes a bot-tom-up stock selection process, seeking attractive invest-ments on an individual company basis. In selecting secu-rities for investment, the Adviser seeks to invest in fran-chises with sustainable competitive advantages. TheAdviser typically favors companies with one or more ofthe following: strong cash generation, attractive returnson capital, hard-to-replicate assets and a favorablerisk/reward. The Adviser generally considers selling aportfolio holding when it determines that the holdingno longer satisfies its investment criteria.

The Portfolio’s equity investments may include com-mon and preferred stocks, convertible securities andequity-linked securities, rights and warrants to purchase

Global Discovery Portfolio

4



common stocks, depositary receipts, ETFs and otherspecialty securities having equity features. The Portfoliomay invest in privately placed and restricted securities.

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

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

The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management orto earn income. The Portfolio’s use of derivatives mayinvolve the purchase and sale of derivative instrumentssuch as futures, swaps, contracts for difference(“CFDs”) and structured investments, and other relat-ed instruments and techniques. The Portfolio may uti-lize forward foreign currency exchange contracts, whichare also derivatives, in connection with its investmentsin foreign securities.

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

• Equity Securities. In general, prices of equity securi-ties are more volatile than those of fixed income secu-rities. The prices of equity securities will rise and fallin response to a number of different factors, includ-ing events that affect particular issuers as well asevents that affect entire financial markets or indus-tries. To the extent that the Portfolio invests in con-vertible securities, and the convertible security’sinvestment value is greater than its conversion value,its price will be likely to increase when interest ratesfall and decrease when interest rates rise. If the conver-sion value exceeds the investment value, the price ofthe convertible security will tend to fluctuate directlywith the price of the underlying equity security.

• Small and Medium Capitalization Companies.Investments in small and medium capitalization com-panies may involve greater risk than investments inlarger, more established companies. The securitiesissued by small and medium capitalization companiesmay be less liquid and their prices subject to moreabrupt or erratic price movements.

• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increas-ing the level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer thesesecurities due to restrictions on transfers or on theability to find buyers interested in purchasing thesecurities. The illiquidity of the market may alsoadversely affect the ability of the Fund’s Directors toarrive at a fair value for certain securities at certaintimes.

• Foreign and Emerging Market Securities.Investments in foreign markets entail special riskssuch as currency, political, economic and marketrisks. There also may be greater market volatility,less reliable financial information, higher transactionand custody costs, decreased market liquidity andless government and exchange regulation associatedwith investments in foreign markets. The risks ofinvesting in emerging market countries are greaterthan risks associated with investments in foreigndeveloped countries. In addition, the Portfolio’sinvestments may be denominated in foreign curren-cies and therefore, changes in the value of a coun-try’s currency compared to the U.S. dollar mayaffect the value of the Portfolio’s investments.Hedging the Portfolio’s currency risks through for-ward foreign currency exchange contracts involves therisk of mismatching the Portfolio’s objectives under aforward foreign currency exchange contract with thevalue of securities denominated in a particular cur-rency. There is additional risk that such transactionsreduce or preclude the opportunity for gain and thatcurrency contracts create exposure to currencies inwhich the Portfolio’s securities are not denominated.

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

• Derivatives Risk. A derivative instrument often hasrisks similar to its underlying instrument and mayhave additional risks, including imperfect correlationbetween the value of the derivative and the underly-ing instrument, risks of default by the counterpartyto certain transactions, magnification of lossesincurred due to changes in the market value of thesecurities, instruments, indices or interest rates towhich they relate and risks that the transactions maynot be liquid. Certain derivative transactions maygive rise to a form of leverage. Leverage magnifies thepotential for gain and the risk of loss.

Global Discovery Portfolio (Cont’d)

5


Portfolio Summary




Performance InformationAs of the date hereof, the Portfolio has not yet complet-ed a full calendar year of investment operations. Uponthe completion of a full calendar year of investmentoperations by the Portfolio, this section will includecharts that show annual total returns, highest and lowestquarterly returns and average annual total returns (beforeand after taxes) compared to a benchmark index selectedfor the Portfolio. Performance information for thePortfolio is available online atwww.morganstanley.com/im.


Portfolio Managers. The Portfolio is managed by members of the Growth team. Information about themember primarily responsible for the day-to-day man-agement of the Portfolio is shown below:


Name Adviser PortfolioBurak Alici Vice President December 2010

Purchase and Sale of Fund SharesThe minimum initial investment generally is$5,000,000 for Class I shares, $1,000,000 for Class Pshares and $25,000 for each of Class H and Class Lshares of the Portfolio. The minimum initial investmentwill be waived for certain investments. For more infor-mation, please refer to the “Shareholder Information—How To Purchase Class I, Class P and Class L Shares”and “—How To Purchase Class H Shares” sectionsbeginning on pages 26 and 27, respectively, of thisProspectus.

Class I, Class P and Class L shares of the Portfolio maybe purchased or sold on any day the NYSE is open forbusiness directly through the Fund by mail (c/o MorganStanley Services Company Inc., P.O. Box 219804,Kansas City, MO 64121-9804) or by telephone(1-800-548-7786) or by contacting your financial intermediary. You may also purchase Portfolio shares bywiring Federal Funds to the Custodian.

For more information, please refer to the “ShareholderInformation—How To Purchase Class I, Class P andClass L Shares” and “—How To Redeem Class I,Class P and Class L Shares” sections beginning onpages 26 and 29, respectively, of this Prospectus.

Class H shares of the Portfolio may be purchased orredeemed by contacting your authorized financial representative.


Payments to Broker-Dealers and Other FinancialIntermediariesIf you purchase the Portfolio through a broker-dealeror other financial intermediary (such as a bank), theAdviser and/or the Portfolio’s distributor may pay theintermediary for the sale of Portfolio shares and relatedservices. These payments, which may be significant inamount, may create a conflict of interest by influencingthe broker-dealer or other intermediary and yoursalesperson to recommend the Portfolio over anotherinvestment. Ask your salesperson or visit your financialintermediary’s web site for more information.


6



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

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio. ThePortfolio does not charge any sales loads or other feeswhen you purchase or redeem shares.





1 Year 3 Years 5 Years 10 YearsClass I $75 $233 $406 $906Class P $100 $312 $542 $1,201

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, will not exceed 0.80% for Class I and 1.05% forClass P. The fee waivers and/or expense reimbursements areexpected to continue for one year or until such time as theFund’s Board of Directors acts to discontinue all or a portionof such waivers and/or reimbursements when it deems thatsuch action is appropriate.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commis-sions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicatehigher transaction costs and may result in higher taxeswhen Portfolio shares are held in a taxable account.These costs, which are not reflected in Total AnnualPortfolio Operating Expenses or in the Example, affect

Portfolio performance. During the most recent fiscalyear, the Portfolio’s portfolio turnover rate was 35% ofthe average value of its portfolio.

Principal Investment StrategiesUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies, withcapitalizations within the range of companies includedin the Russell 1000® Growth Index. As of December 31,2010, these market capitalizations ranged between $752million to $372.7 billion.

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

The Portfolio’s equity investments may include commonand preferred stocks, convertible securities and equity-linked securities, rights and warrants to purchase com-mon stocks, depositary receipts, ETFs and other special-ty securities having equity features. The Portfolio mayinvest in privately placed and restricted securities.

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

The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management or toearn income. The Portfolio’s use of derivatives mayinvolve the purchase and sale of derivative instrumentssuch as futures, swaps and structured investments, andother related instruments and techniques. The Portfoliomay utilize forward foreign currency exchange contracts,which are also derivatives, in connection with its invest-ments in foreign securities.

Principal RisksThere is no assurance that the Portfolio will achieve itsinvestment objective and you can lose money investing


Portfolio Summary

7

Growth Portfolio (formerly Capital

Growth Portfolio)



in this Portfolio. The principal risks of investing in thePortfolio include:

• Equity Securities. In general, prices of equity securi-ties are more volatile than those of fixed income securities. The prices of equity securities will rise andfall in response to a number of different factors,including events that affect particular issuers as wellas events that affect entire financial markets or indus-tries. To the extent that the Portfolio invests in convertible securities, and the convertible security’sinvestment value is greater than its conversion value,its price will be likely to increase when interest ratesfall and decrease when interest rates rise. If the conversion value exceeds the investment value, theprice of the convertible security will tend to fluctuatedirectly with the price of the underlying equity security.


• Privately Placed and Restricted Securities. ThePortfolio’s investments may also include privatelyplaced securities, which are subject to resale restric-tions. These securities will have the effect of increas-ing the level of Portfolio illiquidity to the extent thePortfolio may be unable to sell or transfer these secu-rities due to restrictions on transfers or on the abilityto find buyers interested in purchasing the securities.The illiquidity of the market may also adverselyaffect the ability of the Fund’s Directors to arrive at afair value for certain securities at certain times.

• Derivatives Risk. A derivative instrument often hasrisks similar to its underlying instrument and mayhave additional risks, including imperfect correlation

between the value of the derivative and the underly-ing instrument, risks of default by the counterpartyto certain transactions, magnification of lossesincurred due to changes in the market value of thesecurities, instruments, indices or interest rates towhich they relate and risks that the transactions maynot be liquid. Certain derivative transactions maygive rise to a form of leverage. Leverage magnifies thepotential for gain and the risk of loss.


Performance InformationThe bar chart and table below provide some indicationof the risks of investing in the Portfolio by showingchanges in the Portfolio’s Class I shares’ performancefrom year-to-year and by showing how the Portfolio’saverage annual returns for the past one, five and 10 yearperiods compare with those of a broad measure of mar-ket performance, as well as an index that represents agroup of similar mutual funds, over time. The perform-ance of the other Class will differ because the Class hasdifferent ongoing fees. The Portfolio’s past performance,before and after taxes, is not necessarily an indication ofhow the Portfolio will perform in the future. Updatedperformance information is available online atwww.morganstanley.com/im.



-60%

-40%

-20%

0%

20%

40%

60%

80%

-14.97

-27.64

‘05 ‘10‘09‘08‘06‘04‘03‘022001

22.29

62.97

23.1126.41

7.7515.72

‘07

4.07

-50.47

8


Growth Portfolio) (Cont’d)


JOB: 10-22173-5 CYCLE#;BL#: 25; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, Black2, ~note-color 2 GRAPHICS: 22173-5 cap gro bar.eps V1.5



Class IReturn before Taxes 23.11% 4.81% 2.07%Return after Taxes on Distributions 23.11% 4.76% 2.00%Return after Taxes on Distributions and Sale ofPortfolio Shares 15.02% 4.13% 1.76%Class PReturn before Taxes 22.79% 4.57% 1.82%Russell 1000® Growth Index (reflects no deduction for fees, expenses or taxes)1 16.71% 3.75% 0.02%Lipper Large-Cap Growth Funds Index (reflects no deduction for taxes)2 15.13% 2.38% –1.01%

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

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

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


Portfolio Managers. The Portfolio is managed by mem-bers of the Growth team. Information about the

members jointly and primarily responsible for the day-to-day management of the Portfolio is shown below:


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

Purchase and Sale of Fund SharesThe minimum initial investment generally is$5,000,000 for Class I shares and $1,000,000 forClass P shares. The minimum initial investment will bewaived for certain investments. For more information,please refer to the “Shareholder Information—How ToPurchase Class I, Class P and Class L Shares” sectionbeginning on page 26 of this Prospectus.

Class I and Class P shares of the Portfolio may be pur-chased or sold on any day the NYSE is open for busi-ness directly through the Fund by mail (c/o MorganStanley Services Company Inc., P.O. Box 219804,Kansas City, MO 64121-9804) or by telephone(1-800-548-7786) or by contacting your financialintermediary. You may also purchase Portfolio sharesby wiring Federal Funds to the Custodian.

For more information, please refer to the “ShareholderInformation—How To Purchase Class I, Class P andClass L Shares” and “—How To Redeem Class I,Class P and Class L Shares” sections beginning onpages 26 and 29, respectively, of this Prospectus.




Portfolio Summary

9


Growth Portfolio) (Cont’d)



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

Fees and ExpensesThe table below describes the fees and expenses that youmay pay if you buy and hold shares of the Portfolio.

Shareholder Fees (fees paid directly from your investment)

Class I Class PRedemption Fee (as a percentage of the amount redeemed on redemptions made within 30 days of purchase) 2.00% 2.00%





1 Year 3 Years 5 Years 10 YearsClass I $107 $334 $579 $1,283Class P $132 $412 $713 $1,568

* The Portfolio’s “Adviser,” Morgan Stanley InvestmentManagement Inc., has agreed to reduce its advisory feeand/or reimburse the Portfolio so that Total Annual PortfolioOperating Expenses, excluding certain investment relatedexpenses, will not exceed 1.05% for Class I and 1.30% forClass P. The fee waivers and/or expense reimbursementsare expected to continue for one year or until such time asthe Fund’s Board of Directors acts to discontinue all or aportion of such waivers and/or reimbursements when itdeems that such action is appropriate.

Portfolio TurnoverThe Portfolio pays transaction costs, such as commis-sions, when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicatehigher transaction costs and may result in higher taxeswhen Portfolio shares are held in a taxable account.These costs, which are not reflected in Total AnnualPortfolio Operating Expenses or in the Example, affect

Portfolio performance. During the most recent fiscalyear, the Portfolio’s portfolio turnover rate was 26% ofthe average value of its portfolio.

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

Under normal circumstances, at least 80% of thePortfolio’s assets will be invested in equity securities ofsmall capitalization companies. A company is consideredto be a small capitalization company if it has a total mar-ket capitalization at the time of purchase of $4 billion orless.

The Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality companies itbelieves have sustainable competitive advantages and theability to redeploy capital at high rates of return. TheAdviser typically favors companies with rising returns oninvested capital, above average business visibility, strongfree cash flow generation and an attractive risk/reward.The Adviser generally considers selling an investmentwhen it determines the company no longer satisfies itsinvestment criteria.



The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management or toearn income. The Portfolio’s use of derivatives mayinvolve the purchase and sale of derivative instrumentssuch as futures, swaps and structured investments, andother related instruments and techniques. The Portfoliomay utilize forward foreign currency exchange contracts,which are also derivatives, in connection with its invest-ments in foreign securities.

Principal RisksThere is no assurance that the Portfolio will achieve itsinvestment objective and you can lose money investing

Small Company Growth Portfolio

10



in this Portfolio. The principal risks of investing in thePortfolio include:

• Equity Securities. In general, prices of equity securitiesare more volatile than those of fixed income securities.The prices of equity securities will rise and fall inresponse to a number of different factors, includingevents that affect particular issuers as well as eventsthat affect entire financial markets or industries. Tothe extent that the Portfolio invests in convertiblesecurities, and the convertible security’s investmentvalue is greater than its conversion value, its price willbe likely to increase when interest rates fall anddecrease when interest rates rise. If the conversionvalue exceeds the investment value, the price of theconvertible security will tend to fluctuate directly withthe price of the underlying equity security.


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

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

• Derivatives Risk. A derivative instrument often hasrisks similar to its underlying instrument and mayhave additional risks, including imperfect correlationbetween the value of the derivative and the underly-ing instrument, risks of default by the counterpartyto certain transactions, magnification of lossesincurred due to changes in the market value of thesecurities, instruments, indices or interest rates towhich they relate and risks that the transactions maynot be liquid. Certain derivative transactions maygive rise to a form of leverage. Leverage magnifies thepotential for gain and the risk of loss.


Performance InformationThe bar chart and table below provide some indication ofthe risks of investing in the Portfolio by showing changesin the Portfolio’s Class I shares’ performance from year-to-year and by showing how the Portfolio’s average annu-al returns for the past one, five and 10 year periods com-pare with those of a broad measure of market perform-ance, as well as an index that represents a group ofsimilar mutual funds, over time. The performance of theother Class will differ because the Class has differentongoing fees. The Portfolio’s past performance, beforeand after taxes, is not necessarily an indication of how thePortfolio will perform in the future. Updated perform-ance information is available online at www.morganstanley.com/im.



-60%

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0%

20%

40%

60%

‘05 ‘10‘09‘08‘06‘04‘03‘022001 ‘07

-12.18-22.28

3.04

47.92

27.20

44.13

19.7113.55 11.90

-41.84

Small Company Growth Portfolio (Cont’d)


Portfolio Summary

11


JOB: 10-22173-5 CYCLE#;BL#: 25; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, Black2, ~HTML color, ~HTML color 2, ~note-color 2 GRAPHICS: 22173-5 sm co gro bar.eps V1.5



Class IReturn before Taxes 27.20% 4.76% 5.32% Return after Taxes on Distributions 27.20% 4.34% 4.87% Return after Taxes on Distributions and Sale of Portfolio Shares 17.68% 4.05% 4.56% Class PReturn before Taxes 26.86% 4.47% 5.06% Russell 2000® Growth Index (reflects no deduction for fees, expenses or taxes)1 29.09% 5.30% 3.78% Lipper Small-Cap Growth Funds Index (reflects no deduction for taxes)2 26.08% 3.92% 2.58%

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

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

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


Portfolio Managers. The Portfolio is managed by mem-bers of the Growth team. Information about the mem-

bers jointly and primarily responsible for the day-to-daymanagement of the Portfolio is shown below:


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

Purchase and Sale of Fund SharesThe Fund suspended offering Class I and Class P shares ofthe Portfolio to new investors. The Fund will continue tooffer Class I and Class P shares of the Portfolio to existingshareholders. The Fund may recommence offering Class Iand Class P shares of the Portfolio to new investors in thefuture. Any such offerings of the Portfolio’s shares may belimited in amount and may commence and terminatewithout any prior notice.

The minimum initial investment generally is$5,000,000 for Class I shares and $1,000,000 forClass P shares. The minimum initial investment will bewaived for certain investments. For more information,please refer to the “Shareholder Information—How ToPurchase Class I, Class P and Class L Shares” sectionbeginning on page 26 of this Prospectus.

Class I and Class P shares of the Portfolio may be pur-chased or sold on any day the NYSE is open for businessdirectly through the Fund by mail (c/o Morgan StanleyServices Company Inc., P.O. Box 219804, Kansas City,MO 64121-9804) or by telephone (1-800-548-7786) orby contacting your financial intermediary. You may alsopurchase Portfolio shares by wiring Federal Funds to theCustodian.

For more information, please refer to the “ShareholderInformation—How To Purchase Class I, Class P andClass L Shares” and “—How To Redeem Class I, Class Pand Class L Shares” sections beginning on pages 26 and29, respectively, of this Prospectus.




12



ObjectiveThe Focus Growth Portfolio seeks capital appreciation byinvesting primarily in growth-oriented equity securities oflarge capitalization companies.

ApproachUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies withmarket capitalizations of $10 billion or more. ThePortfolio generally concentrates its holdings in a relative-ly small number of companies and may invest up to25% of its assets in a single issuer.

ProcessThe Adviser emphasizes a bottom-up stock selectionprocess, seeking attractive investments on an individualcompany basis. In selecting securities for investment, theAdviser seeks to invest in high quality it believes havesustainable competitive advantages and the ability toredeploy capital at high rates of return. The Advisertypically favors companies with rising returns oninvested capital, above average business visibility, strongfree cash flow generation and an attractive risk/reward.

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


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

The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management or toearn income. Derivatives are financial instruments whosevalue is based on the value of an underlying asset, inter-est rate, index or financial instrument. The Portfolio’suse of derivatives may involve the purchase and sale ofderivative instruments such as futures, swaps and struc-tured investments, and other related instruments andtechniques. The Portfolio may utilize forward foreigncurrency exchange contracts, which are also derivatives,in connection with its investments in foreign securities.Derivative instruments used by the Portfolio will becounted toward the Portfolio’s exposure in the types of

securities listed above to the extent they have economiccharacteristics similar to such securities.

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

Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in equity securities. In general, prices of equitysecurities are more volatile than those of fixed incomesecurities. The prices of equity securities will rise and fallin response to a number of different factors. In particu-lar, equity securities will respond to events that affectentire financial markets or industries (changes in infla-tion or consumer demand, for example) and to eventsthat affect particular issuers (news about the success orfailure of a new product, for example). In addition, attimes, large capitalization growth-oriented equity securi-ties may underperform relative to the overall market.

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

Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. These same events will not necessarily have aneffect on the U.S. economy or similar issuers located inthe United States. In addition, the Portfolio’s invest-ments in foreign issuers may be denominated in foreigncurrencies. As a result, changes in the value of a coun-try’s currency compared to the U.S. dollar may affect thevalue of the Portfolio’s investments. These changes mayoccur separately from and in response to events that donot otherwise affect the value of the security in theissuer’s home country.

The risks of investing in the Portfolio may be intensifiedbecause the Portfolio is non-diversified, which meansthat it may invest in securities of a limited number ofissuers. As a result, the performance of a particularinvestment or a small group of investments may affectthe Portfolio’s performance more than if the Portfoliowere diversified.

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restrictions.These securities will have the effect of increasing thelevel of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due torestrictions on transfers or on the ability to find buyersinterested in purchasing the securities. The illiquidity of



Details of the Portfolio s

13

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | ajacksod | 27-Apr-11 01:20 | 10-22173-5.ca | Sequence: 1CHKSUM Content: 46701 Layout: 8919 Graphics: No Graphics CLEAN


the market may also adversely affect the ability of theFund’s Directors to arrive at a fair value for certain secu-rities at certain times.

A derivative instrument often has risks similar to itsunderlying instrument and may have additional risks,including imperfect correlation between the value of thederivative and the underlying instrument, risks of defaultby the other party to certain transactions, magnificationof losses incurred due to changes in the market value ofthe securities, instruments, indices or interest rates to

which they relate, and risks that the transactions maynot be liquid. Certain derivative transactions may giverise to a form of leverage. Leverage magnifies the poten-tial for gain and the risk of loss.

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


14



ObjectiveThe Global Discovery Portfolio seeks long-term capital appreciation.

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

ApproachThe Adviser, Morgan Stanley Investment ManagementInc., seeks to achieve the Portfolio’s investment objectiveby investing primarily in established and emerging fran-chise companies located throughout the world, with cap-italizations within the range of companies included inthe MSCI All Country World Index.

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

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

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


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

The Portfolio may, but it is not required to, use deriv-ative instruments for a variety of purposes, including

hedging, risk management, portfolio management orto earn income. Derivatives are financial instrumentswhose value is based on the value of an underlyingasset, interest rate, index or financial instrument. ThePortfolio’s use of derivatives may involve the purchaseand sale of derivative instruments such as futures,swaps, CFDs and structured investments, and otherrelated instruments and techniques. The Portfolio mayutilize forward foreign currency exchange contracts,which are also derivatives, in connection with itsinvestments in foreign securities.

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


Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in a portfolio of equity securities of issuerslocated throughout the world, including emerging mar-ket or developing countries. In general, prices of equitysecurities are more volatile than those of fixed incomesecurities. The prices of equity securities will rise and fallin response to a number of different factors. In particu-lar, prices of equity securities will respond to events thataffect entire financial markets or industries (changes ininflation or consumer demand, for example) and toevents that affect particular issuers (news about the suc-cess or failure of a new product, for example).


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

Global Discovery Portfolio


Details of the Portfolios

15



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

In addition, the Portfolio’s investments in foreign issuersgenerally will be denominated in foreign currencies. As aresult, changes in the value of a country’s currency com-pared to the U.S. dollar may affect the value of thePortfolio’s investments. These changes may occur separate-ly from and in response to events that do not otherwiseaffect the value of the security in the issuer’s home country.

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

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

A derivative instrument often has risks similar to itsunderlying instrument and may have additional risks,including imperfect correlation between the value ofthe derivative and the underlying instrument, risks ofdefault by the other party to certain transactions,magnification of losses incurred due to changes in themarket value of the securities, instruments, indices orinterest rates to which they relate, and risks that thetransactions may not be liquid. Certain derivativetransactions may give rise to a form of leverage.Leverage magnifies the potential for gain and the riskof loss.



16



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

ApproachUnder normal market conditions, the Adviser seeks toachieve the Portfolio’s investment objective by investingprimarily in established and emerging companies, withcapitalizations within the range of companies includedin the Russell 1000® Growth Index. As of December 31,2010, these market capitalizations ranged between$752 million to $372.7 billion. The Portfolio deems anissuer to be a U.S. issuer if (i) its principal securitiestrading market (i.e., a U.S. stock exchange or over-the-counter (“OTC”) markets) is in the United States;(ii) alone or on a consolidated basis it derives 50% ormore of its annual revenue from either goods produced,sales made or services performed in the United States; or(iii) it is organized under the laws of, or has a principaloffice in the United States. The Portfolio invests primari-ly in companies that the Adviser believes exhibit, amongother things, strong free cash flow and compelling busi-ness strategies. The Adviser emphasizes individual securi-ty selection.

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


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


The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management or

to earn income. Derivatives are financial instrumentswhose value is based on the value of an underlyingasset, interest rate, index or financial instrument. ThePortfolio’s use of derivatives may involve the purchaseand sale of derivative instruments such as futures,swaps and structured investments, and other relatedinstruments and techniques. The Portfolio may utilizeforward foreign currency exchange contracts, which arealso derivatives, in connection with its investments inforeign securities. Derivative instruments used by thePortfolio will be counted toward the Portfolio’s exposurein the types of securities listed above to the extent theyhave economic characteristics similar to such securities.


Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in equity securities. In general, prices of equitysecurities are more volatile than those of fixed incomesecurities. The prices of equity securities will rise and fallin response to a number of different factors. In particular,prices of equity securities will respond to events that affectentire financial markets or industries (changes in inflationor consumer demand, for example) and to events thataffect particular issuers (news about the success or failureof a new product, for example). In addition, at times,large capitalization growth-oriented equity securities mayunderperform relative to the overall market.


Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. The value of the Portfolio’s shares may varywidely in response to political and economic factorsaffecting companies in foreign countries. These sameevents will not necessarily have an effect on the U.S.economy or similar issuers located in the United States.In addition, the Portfolio’s investments in foreign issuersmay be denominated in foreign currencies. As a result,changes in the value of a country’s currency compared tothe U.S. dollar may affect the value of the Portfolio’sinvestments. These changes may occur separately fromand in response to events that do not otherwise affectthe value of the security in the issuer’s home country.

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restrictions.



17

Growth Portfolio



These securities will have the effect of increasing thelevel of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due torestrictions on transfers or on the ability to find buyersinterested in purchasing the securities. The illiquidity ofthe market may also adversely affect the ability of theFund’s Directors to arrive at a fair value for certain secu-rities at certain times.

A derivative instrument often has risks similar to itsunderlying instrument and may have additional risks,including imperfect correlation between the value ofthe derivative and the underlying instrument, risks of

default by the other party to certain transactions, mag-nification of losses incurred due to changes in the mar-ket value of the securities, instruments, indices or interest rates to which they relate, and risks that thetransactions may not be liquid. Certain derivativetransactions may give rise to a form of leverage.Leverage magnifies the potential for gain and the riskof loss.


Growth Portfolio (Cont’d)

18



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

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

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

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




The Portfolio may, but it is not required to, use deriva-tive instruments for a variety of purposes, includinghedging, risk management, portfolio management orto earn income. Derivatives are financial instrumentswhose value is based on the value of an underlyingasset, interest rate, index or financial instrument. ThePortfolio’s use of derivatives may involve the purchaseand sale of derivative instruments such as futures,swaps and structured investments, and other relatedinstruments and techniques. The Portfolio may utilizeforward foreign currency exchange contracts, which arealso derivatives, in connection with its investments inforeign securities. Derivative instruments used by thePortfolio will be counted toward the 80% policy dis-cussed above to the extent they have economic charac-teristics similar to the securities included within thatpolicy.


Investing in the Portfolio may be appropriate for you ifyou are willing to accept the risks and uncertainties ofinvesting in the equity securities of growth-orientedsmall companies. In general, prices of equity securitiesare more volatile than those of fixed income securities.The prices of equity securities will rise and fall inresponse to a number of different factors. In particular,equity securities will respond to events that affect entirefinancial markets or industries (changes in inflation orconsumer demand, for example) and to events thataffect particular issuers (news about the success or failureof a new product, for example). In addition, at times,small capitalization growth-oriented equity securitiesmay underperform relative to the overall market.


Investing in the securities of foreign issuers, particularlythose located in emerging market or developing coun-tries, entails the risk that news and events unique to acountry or region will affect those markets and theirissuers. The value of the Portfolio’s shares may varywidely in response to political and economic factorsaffecting companies in foreign countries. These sameevents will not necessarily have an effect on the U.S.economy or similar issuers located in the United States.In addition, the Portfolio’s investments in foreign issuersmay be denominated in foreign currencies. As a result,changes in the value of a country’s currency compared tothe U.S. dollar may affect the value of the Portfolio’sinvestments. These changes may occur separately from

Small Company Growth Portfolio



19



and in response to events that do not otherwise affectthe value of the security in the issuer’s home country.

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

The Portfolio’s investments may also include privatelyplaced securities, which are subject to resale restrictions.These securities will have the effect of increasing thelevel of Portfolio illiquidity to the extent the Portfoliomay be unable to sell or transfer these securities due torestrictions on transfers or on the ability to find buyers

interested in purchasing the securities. The illiquidity ofthe market may also adversely affect the ability of theFund’s Directors to arrive at a fair value for certain secu-rities at certain times.

A derivative instrument often has risks similar to itsunderlying instrument and may have additional risks,including imperfect correlation between the value ofthe derivative and the underlying instrument, risks ofdefault by the other party to certain transactions, magnification of losses incurred due to changes in themarket value of the securities, instruments, indices orinterest rates to which they relate, and risks that thetransactions may not be liquid. Certain derivativetransactions may give rise to a form of leverage.Leverage magnifies the potential for gain and the riskof loss.



20



21

Equity SecuritiesEquity securities include common stock, preferred stock,convertible securities, depositary receipts, rights and war-rants. The Portfolios may invest in equity securities thatare publicly-traded on securities exchanges or over-the-counter or in equity securities that are not publicly traded.Securities that are not publicly traded may be more diffi-cult to sell and their value may fluctuate more dramati-cally than other securities.

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

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

Foreign InvestingTo the extent that a Portfolio invests in foreign issuers,there is the risk that news and events unique to a countryor region will affect those markets and their issuers. Thesesame events will not necessarily have an effect on the U.S.economy or similar issuers located in the United States. Inaddition, some of the Portfolios’ securities, includingunderlying securities represented by depositary receipts,

generally will be denominated in foreign currencies. As aresult, changes in the value of a country’s currency com-pared to the U.S. dollar may affect the value of aPortfolio’s investments. These changes may happen sepa-rately from, and in response to, events that do not other-wise affect the value of the security in the issuer’s homecountry. These risks may be intensified for a Portfolio’sinvestments in securities of issuers located in emergingmarket or developing countries.

Foreign SecuritiesForeign issuers generally are subject to different account-ing, auditing and financial reporting standards than U.S.issuers. There may be less information available to thepublic about foreign issuers. Securities of foreign issuerscan be less liquid and experience greater price move-ments. In some foreign countries, there is also the risk ofgovernment expropriation, excessive taxation, political orsocial instability, the imposition of currency controls ordiplomatic developments that could affect a Portfolio’sinvestment. There also can be difficulty obtaining andenforcing judgments against issuers in foreign countries.Foreign stock exchanges, broker-dealers and listed issuersmay be subject to less government regulation and over-sight. The cost of investing in foreign securities, includ-ing brokerage commissions and custodial expenses, canbe higher than in the United States.

In connection with their investments in foreign securi-ties, certain Portfolios also may enter into contracts withbanks, brokers or dealers to purchase or sell securities orforeign currencies at a future date. A forward foreigncurrency exchange contract is a negotiated agreementbetween the contracting parties to exchange a specifiedamount of currency at a specified future time at a speci-fied rate. The rate can be higher or lower than the spotrate between the currencies that are the subject of thecontract. Forward foreign currency exchange contractsmay be used to protect against uncertainty in the level offuture foreign currency exchange rates or to gain ormodify exposure to a particular currency. In addition, aPortfolio may use cross currency hedging or proxy hedg-ing with respect to currencies in which the Portfolio hasor expects to have portfolio or currency exposure. Crosscurrency hedges involve the sale of one currency againstthe positive exposure to a different currency and may beused for hedging purposes or to establish an active expo-sure to the exchange rate between any two currencies.Hedging a Portfolio’s currency risks involves the risk ofmismatching the Portfolio’s objectives under a forwardor futures contract with the value of securities denomi-nated in a particular currency. Furthermore, such trans-actions reduce or preclude the opportunity for gain ifthe value of the currency should move in the directionopposite to the position taken. There is an additionalrisk to the effect that currency contracts create exposureto currencies in which a Portfolio’s securities are notdenominated. Unanticipated changes in currency pricesmay result in poorer overall performance for a Portfoliothan if it had not entered into such contracts.

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


Additional Information about the Portfolios’ Investment Strategies and Related Risks

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | cmashak | 27-Apr-11 17:19 | 10-22173-5.da | Sequence: 1CHKSUM Content: 25181 Layout: 26432 Graphics: No Graphics CLEAN


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

Foreign CurrencyThe investments of the Portfolios generally will bedenominated in foreign currencies. The value of foreigncurrencies may fluctuate relative to the value of the U.S.dollar. Since the Portfolios may invest in such non-U.S.dollar-denominated securities, and therefore may convertthe value of such securities into U.S. dollars, changes incurrency exchange rates can increase or decrease the U.S.dollar value of the Portfolios’ assets. The Adviser may usederivatives to reduce this risk. The Adviser may in itsdiscretion choose not to hedge against currency risk. Inaddition, certain market conditions may make it impos-sible or uneconomical to hedge against currency risk.

DerivativesCertain Portfolios may, but are not required to, usederivative instruments for a variety of purposes, includ-ing hedging, risk management, portfolio management orto earn income. Derivatives are financial instrumentswhose value is based on the value of an underlying asset,interest rate, index or financial instrument.

A derivative instrument often has risks similar to itsunderlying instrument and may have additional risks,including imperfect correlation between the value of thederivative and the underlying instrument, risks ofdefault by the counterparty to certain transactions, mag-nification of losses incurred due to changes in the mar-ket value of the securities, instruments, indices or inter-est rates to which they relate, and risks that the transac-tions may not be liquid. The use of derivatives involvesrisks that are different from, and possibly greater than,the risks associated with other portfolio investments.Derivatives may involve the use of highly specializedinstruments that require investment techniques and riskanalyses different from those associated with other port-folio investments.

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

The derivative instruments and techniques that certainPortfolios may principally use include:

Futures. A futures contract is a standardized agreement tobuy or sell a specific quantity of an underlying instru-ment at a specific price at a specific future time. Thevalue of a futures contract tends to increase and decreasein tandem with the value of the underlying instrument.Depending on the terms of the particular contract,futures contracts are settled through either physicaldelivery of the underlying instrument on the settlementdate or by payment of a cash settlement amount on thesettlement date. A decision as to whether, when and howto use futures involves the exercise of skill and judgmentand even a well-conceived futures transaction may beunsuccessful because of market behavior or unexpectedevents. In addition to the derivatives risks discussedabove, the prices of futures can be highly volatile, usingfutures can lower total return, and the potential lossfrom futures can exceed a Portfolio’s initial investment insuch contracts.

Swaps. A swap contract is an agreement between twoparties pursuant to which the parties exchange paymentsat specified dates on the basis of a specified notionalamount, with the payments calculated by reference tospecified securities, indexes, reference rates, currencies orother instruments. Most swap agreements provide thatwhen the period payment dates for both parties are thesame, the payments are made on a net basis (i.e., the twopayment streams are netted out, with only the netamount paid by one party to the other). A Portfolio’sobligations or rights under a swap contract entered intoon a net basis will generally be equal only to the netamount to be paid or received under the agreement,based on the relative values of the positions held by eachcounterparty. Swap agreements currently are not enteredinto or traded on exchanges and there is no central clear-ing or guaranty function for swaps. Therefore, swaps aresubject to credit risk or the risk of default or non-per-formance by the counterparty. Swaps could result in loss-es if interest rate or foreign currency exchange rates orcredit quality changes are not correctly anticipated by aPortfolio or if the reference index, security or investmentsdo not perform as expected.



23

CFDs. A CFD is a privately negotiated contractbetween two parties, buyer and seller, stipulating thatthe seller will pay to or receive from the buyer the dif-ference between the nominal value of the underlyinginstrument at the opening of the contract and thatinstrument’s value at the end of the contract. Theunderlying instrument may be a single security, stockbasket or index. A CFD can be set up to take either ashort or long position on the underlying instrument.The buyer and seller are both required to post margin,which is adjusted daily. The buyer will also pay to theseller a financing rate on the notional amount of thecapital employed by the seller less the margin deposit.In addition to the general risks of derivatives, CFDsmay be subject to liquidity risk and counterparty risk.

Structured Investments. The Portfolios also may invest aportion of their assets in structured investments. Astructured investment is a derivative security designedto offer a return linked to a particular underlying secu-rity, currency or market. Structured investments maycome in various forms including notes, warrants andoptions to purchase securities. The Portfolios will typi-cally use structured investments to gain exposure to apermitted underlying security, currency or marketwhen direct access to a market is limited or inefficientfrom a tax or cost standpoint. Investments in struc-tured investments involve risks including counterpartyrisk and market risk. Holders of structured investmentsbear risks of the underlying investment and are subjectto counterparty risk because a Portfolio is relying onthe creditworthiness of such counterparty and has norights with respect to the underlying investment.Certain structured investments may be thinly traded orhave a limited trading market and may have the effectof increasing a Portfolio’s illiquidity to the extent thatthe Portfolio, at a particular point in time, may beunable to find qualified buyers for these securities.

Initial Public OfferingsCertain Portfolios may purchase shares issued as part of,or a short period after, a company’s initial public offering(“IPOs”), and may at times dispose of those shares shortly after their acquisition. A Portfolio’s purchase ofshares issued in IPOs exposes it to the risks associatedwith companies that have little operating history as pub-lic companies, as well as to the risks inherent in thosesectors of the market where these new issuers operate.The market for IPO issuers has been volatile, and shareprices of newly-public companies have fluctuated signifi-cantly over short periods of time. IPOs may producehigh, double-digit returns. Such returns are highlyunusual and may not be sustainable.

Real Estate Investment Trusts and Foreign Real EstateCompaniesInvesting in real estate investment trusts (“REITs”) andforeign real estate companies exposes investors to the

risks of owning real estate directly, as well as to risksthat relate specifically to the way in which REITs andforeign real estate companies are organized and operated.REITs and foreign real estate companies generally investdirectly in real estate, in mortgages or in some combina-tion of the two. Operating REITs and foreign real estatecompanies requires specialized management skills and aPortfolio may indirectly bear management expensesalong with the direct expenses of the Portfolio.Individual REITs and foreign real estate companies mayown a limited number of properties and may concen-trate in a particular region or property type.

REITs also must satisfy specific requirements of theInternal Revenue Code of 1986, as amended (the“Code”), in order to qualify for the tax-free pass throughof income. Foreign real estate companies may be subjectto laws, rules and regulations governing those entitiesand their failure to comply with those laws, rules andregulations could negatively impact the performance ofthose entities. In addition, REITs and foreign real estatecompanies, like mutual funds, have expenses, includingmanagement and administration fees, that are paid bytheir shareholders. Operating REITs requires specializedmanagement skills and the Portfolio indirectly bearsREIT management expenses along with the directexpenses of the Portfolio.

Exchange-Traded FundsCertain Portfolios may invest in shares of various ETFs.ETFs seek to track the performance of various portionsor segments of the equity markets. Shares of ETFs havemany of the same risks as direct investments in commonstocks or bonds and their market value is expected torise and fall as the value of the underlying index risesand falls. The market value of their shares may differfrom the net asset value of the particular underlyingsecurities. As a shareholder in an ETF, the Portfoliowould bear its ratable share of that entity’s expenses. Atthe same time, the Portfolio would continue to pay itsown investment management fees and other expenses.As a result, the Portfolio and its shareholders, in effect,will be absorbing duplicate levels of fees with respect toinvestments in ETFs.

Investment DiscretionIn pursuing the Portfolios’ investment objectives, theAdviser has considerable leeway in deciding whichinvestments it buys, holds or sells on a day-to-day basis,and which trading strategies it uses. For example, theAdviser in its discretion may determine to use some per-mitted trading strategies while not using others. Thesuccess or failure of such decisions will affect thePortfolios’ performance.

Temporary Defensive InvestmentsWhen the Adviser believes that changes in economic,financial or political conditions warrant, each Portfolio


Additional Information about the Portfolios’ Investment Strategies and Related Risks



24

may invest without limit in certain short- and medium-term fixed income securities for temporary defensivepurposes that may be inconsistent with a Portfolio’sprincipal investment strategies. If the Adviser incorrectlypredicts the effects of these changes, such defensiveinvestments may adversely affect a Portfolio’s perform-ance and the Portfolio may not achieve its investmentobjective.

Portfolio TurnoverConsistent with its investment policies, a Portfolio willpurchase and sell securities without regard to the effecton portfolio turnover. Higher portfolio turnover(e.g., over 100% per year) will cause a Portfolio to incuradditional transaction costs and may result in taxablegains being passed through to shareholders. ThePortfolios may engage in frequent trading of securities toachieve their investment objectives.



Fund Management


25

Portfolio ManagementFocus Growth Portfolio,Growth Portfolio andSmall Company Growth PortfolioEach Portfolio is managed by members of the Growthteam. The team consists of portfolio managers and analysts. Current members of the team jointly and primarily responsible for the day-to-day managementof each Portfolio are Dennis P. Lynch, David S. Cohen,Sam G. Chainani, Alexander T. Norton, Jason C.Yeung and Armistead B. Nash.

Mr. Lynch has been associated with the Adviser in aninvestment management capacity since 1998. Mr. Cohenhas been associated with the Adviser in an investmentmanagement capacity since 1993. Mr. Chainani has beenassociated with the Adviser in an investment managementcapacity since 1996. Mr. Norton has been associatedwith the Adviser in an investment management capacitysince 2000. Mr. Yeung has been associated with theAdviser in an investment management capacity since2002. Mr. Nash has been associated with the Adviser inan investment management capacity since 2002.

Mr. Lynch is the lead portfolio manager of the Portfolio.Messrs. Cohen, Chainani, Norton, Yeung and Nash areco-portfolio managers. Members of the team collaborateto manage the assets of the Portfolio.

Global Discovery PortfolioThe Portfolio is managed by members of the Growthteam. The team consists of portfolio managers and

analysts. Burak Alici is the lead portfolio manager andis primarily responsible for the day-to-day managementof the Portfolio. Mr. Alici has been associated withthe Adviser in an investment management capacitysince 2007. Prior to 2007, Mr. Alici managed a multi-strategy investment partnership in Istanbul for highnet worth individuals from October 2002 toMarch 2005. From June 1999 to August 2002,Mr. Alici developed and implemented equity invest-ments strategies at Ernst Research & Management.

Additional InformationThe Fund’s SAI provides additional information aboutthe portfolio managers’ compensation structure, otheraccounts managed by the portfolio managers and theportfolio managers’ ownership of securities in thePortfolios.

The composition of each team may change from time totime.

A discussion regarding the Board of Directors’ approvalof the Investment Advisory Agreement is available in theFund’s Semiannual Report to Shareholders for the periodended June 30, 2010, except with respect to the GlobalDiscovery Portfolio which is available in the Fund’sAnnual Report to Shareholders for the period endedDecember 31, 2010.

Adviser’s Rates of Compensation(as a percentage of average net assets)

*For the period of December 28, 2010 (commencement of operations) through December 31, 2010.

Small Company Growth Portfolio 0.82%

Focus Growth Portfolio 0.00%

Growth Portfolio 0.50%

Global Discovery Portfolio* 0.00%

Advisory FeesFor the fiscal year ended December 31, 2010, theAdviser received from each Portfolio the advisory fee(net of fee waivers and/or expense reimbursements) setforth in the table below.

Morgan Stanley Investment Management Inc., withprincipal offices at 522 Fifth Avenue, New York,NY 10036, conducts a worldwide portfolio managementbusiness and provides a broad range of portfolio man-agement services to customers in the United States andabroad. Morgan Stanley is the direct parent of theAdviser and the indirect parent of Morgan StanleyDistribution, Inc. (“Morgan Stanley Distribution”), the

Fund’s Distributor. Morgan Stanley is a preeminentglobal financial services firm engaged in securities trad-ing and brokerage activities, as well as providing invest-ment banking, research and analysis, financing andfinancial advisory services. As of March 31, 2011, theAdviser, together with its affiliated asset managementcompanies, had approximately $275.8 billion in assetsunder management or supervision.

Investment Adviser



26

Share ClassThis Prospectus offers Class I and Class P shares of eachof the Portfolios and Class H and Class L shares of theGlobal Discovery Portfolio. Neither Class I, Class P norClass L shares are subject to a sales charge, and Class Ishares are not subject to a shareholder services fee. BothClass I and Class P shares generally require investmentsin minimum amounts that are substantially higher thanClass H and Class L shares.

Distribution of Portfolio SharesMorgan Stanley Distribution is the exclusive Distributorof Class I, Class P, Class H and Class L shares of eachPortfolio, as applicable. Morgan Stanley Distributionreceives no compensation from the Fund for distributingClass I shares of the Portfolios. The Fund has adopted aShareholder Services Plan with respect to the Class Pshares of each Portfolio, a Shareholder Services Plan withrespect to the Class H shares of the Global DiscoveryPortfolio and a Distribution and Shareholder ServicesPlan with respect to the Class L shares of the GlobalDiscovery Portfolio (the “Plans”) pursuant to Rule 12b-1under the Investment Company Act of 1940. Under thePlans, each Portfolio pays the Distributor a shareholderservices fee of up to 0.25% of the average daily net assetsof the Class P shares on an annualized basis, and theGlobal Discovery Portfolio pays the Distributor a share-holder services fee of up to 0.25% of the average dailynet assets of each of the Class H shares and Class Lshares on an annualized basis and a distribution fee of upto 0.50% of the average net assets of Class L shares onan annualized basis. The Distributor may compensateother parties for providing distribution-related and/orshareholder support services to investors who purchaseClass P, Class H and Class L shares. Such fees relate solelyto the Class P, Class H and Class L shares and will reducethe net investment income and total return of theClass P, Class H and Class L shares, respectively.

The Adviser and/or Distributor may pay compensationto certain brokers or other service providers in connec-tion with the sale, distribution, marketing and retentionof a Portfolio’s shares and/or shareholder servicing. Suchcompensation may be significant in amount and theprospect of receiving any such additional compensationmay provide affiliated or unaffiliated entities with anincentive to favor sales of shares of the Portfolios overother investment options. Any such payments will notchange the net asset value (“NAV”) or the price of aPortfolio’s shares. For more information, please see thePortfolios’ SAI.

About Net Asset ValueThe NAV per share of a class of shares of a Portfolio isdetermined by dividing the total of the value of thePortfolio’s investments and other assets attributable tothe class, less any liabilities attributable to the class, bythe total number of outstanding shares of that class ofthe Portfolio. In making this calculation, each Portfoliogenerally values securities at market price. If marketprices are unavailable or may be unreliable because of

events occurring after the close of trading, including cir-cumstances under which the Adviser determines that asecurity’s market price is not accurate, fair value pricesmay be determined in good faith using methodsapproved by the Board of Directors.

In addition, with respect to securities that primarily arelisted on foreign exchanges, when an event occurs afterthe close of such exchanges that is likely to have changedthe value of the securities (e.g., a percentage change invalue of one or more U.S. securities indices in excess ofspecified thresholds), such securities will be valued attheir fair value, as determined under procedures estab-lished by the Fund’s Board of Directors. Securities alsomay be fair valued in the event of a significant develop-ment affecting a country or region or an issuer-specificdevelopment which is likely to have changed the valueof the security. In these cases, a Portfolio’s NAV willreflect certain portfolio securities’ fair value rather thantheir market price. To the extent a Portfolio invests inopen-end management companies that are registeredunder the Investment Company Act of 1940, thePortfolio’s NAV is calculated based upon the NAV ofsuch funds. The prospectuses for such funds explain thecircumstances under which they will use fair value pric-ing and its effects.

Fair value pricing involves subjective judgments and it ispossible that the fair value determined for a security ismaterially different than the value that could be realizedupon the sale of that security. With respect to securitiesthat are primarily listed on foreign exchanges, the valuesof a Portfolio’s investment securities may change on dayswhen you will not be able to purchase or sell your shares.

Pricing of Portfolio SharesYou may buy or sell (redeem) Class I, Class P and Class Lshares of the applicable Portfolios at the NAV nextdetermined for the class after receipt of your order, plusany applicable sales charge. The Fund determines theNAV per share for the Portfolios as of the close of theNYSE (normally 4:00 p.m. Eastern Time) on each daythat the NYSE is open for business (the “Pricing Time”).

Portfolio HoldingsA description of the Fund’s policies and procedures withrespect to the disclosure of each Portfolio’s securities isavailable in the Portfolios’ SAI.

How To Purchase Class I, Class P and Class L SharesThe Fund suspended offering Class I and Class P sharesof the Small Company Growth Portfolio to newinvestors.The Fund will continue to offer Class I andClass P shares of the Portfolio to existing shareholders.The Fund may recommence offering Class I and Class Pshares of the Portfolio to new investors in the future.Any such offerings of the Small Company GrowthPortfolio’s shares may be limited in amount and maycommence and terminate without any prior notice.

You may purchase Class I, Class P and Class L shares ofthe applicable Portfolio directly from the Fund, from the

Shareholder Information





Shareholder Information (Cont’d)

Distributor or through certain third parties (“FinancialIntermediaries”) on each day that the Portfolios are openfor business.

Investors purchasing Class I, Class P and Class L sharesthrough a Financial Intermediary may be charged atransaction-based or other fee by the FinancialIntermediary for its services. If you are purchasingClass I, Class P or Class L shares through a FinancialIntermediary, please consult your Financial Intermediaryfor purchase instructions.

The minimum initial investment generally is$5,000,000 for Class I shares, $1,000,000 for Class Pshares and $25,000 for Class L shares of a Portfolio. Theminimum initial investment will be waived for certaininvestments, including sales through banks, broker-dealersand other financial institutions (including registeredinvestment advisers and financial planners) purchasingshares on behalf of their clients in (i) discretionary andnon-discretionary advisory programs, (ii) fund supermar-kets, (iii) asset allocation programs or (iv) other pro-grams in which the client pays an asset-based fee foradvice or for executing transactions in Portfolio shares orfor otherwise participating in the program; certain retire-ment plans (with plan assets of at least $5 million forClass I and Class P shares) investing directly with theFund; retirement plans investing through certain retire-ment plan platforms; certain endowments, foundationsand other not for profit entities (with at least $5 millionof investable assets for Class I and Class P shares) invest-ing directly with the Fund; certain unit investment trustssponsored by Morgan Stanley or any of its affiliates;other registered investment companies advised byMorgan Stanley Investment Management or any of itsaffiliates; Morgan Stanley Investment Management andits affiliates with respect to shares held in connectionwith certain retirement and deferred compensation pro-grams established for their employees; the independentDirectors of the Fund; and clients who owned Portfolioshares as of December 31, 2007. If the value of youraccount falls below the minimum initial investmentamount for Class I, Class P or Class L shares as a resultof share redemptions or you no longer meet one of thewaiver criteria set forth above, your account may be sub-ject to involuntary conversion or involuntary redemp-tion. You will be notified prior to any such conversionsor redemptions.

Initial Purchase by MailYou may open an account, subject to acceptance by theFund, by completing and signing an AccountRegistration Form provided by Morgan Stanley ServicesCompany Inc. (“Morgan Stanley Services”), the Fund’stransfer agent, which you can obtain by callingMorgan Stanley Services at 1-800-548-7786 andmailing it to Morgan Stanley Institutional Fund, Inc.,c/o Morgan Stanley Services Company Inc.,P.O. Box 219804, Kansas City, MO 64121-9804together with a check payable to Morgan StanleyInstitutional Fund, Inc.

Please note that payments to investors who redeemClass I, Class P and Class L shares purchased by checkwill not be made until payment of the purchase has beencollected, which may take up to eight business days afterpurchase. You can avoid this delay by purchasing Class I,Class P and Class L shares by wire.

Initial Purchase by WireYou may purchase Class I, Class P and Class L shares ofeach Portfolio, as applicable, by wiring Federal Funds(monies credited by a Federal Reserve Bank) to theCustodian. You should forward a completed AccountRegistration Form to Morgan Stanley Services in advance ofthe wire. See the section above entitled “Pricing ofPortfolio Shares.” Instruct your bank to send a FederalFunds wire in a specified amount to the Custodian usingthe following wire instructions:

State Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111-2101ABA #011000028DDA #00575373Attn: Morgan Stanley Institutional Fund, Inc.Subscription AccountRef: (Portfolio Name, Account Number,Account Name)

Additional InvestmentsYou may purchase additional Class I, Class P andClass L shares for your account at any time by purchas-ing shares at NAV by any of the methods describedabove. For additional purchases directly from the Fund,your account name, account number, the Portfolio nameand the class selected must be specified in the letter toassure proper crediting to your account. In addition, youmay purchase additional shares by wire by followinginstructions under “Initial Purchase by Wire.”

How To Purchase Class H SharesClass H shares of the Global Discovery Portfolio may bepurchased by contacting your authorized financial repre-sentative who will assist you, step-by-step, with the pro-cedures to invest in Class H shares.

Class H shares are available to investors with a mini-mum investment of $25,000. If the value of youraccount falls below the minimum initial investmentamount for Class H shares as a result of share redemp-tions, your account may be subject to involuntaryredemption. You will be notified prior to any suchredemptions.

Class H shares are subject to a sales charge equal to amaximum of 4.75% calculated as a percentage of theoffering price on a single transaction as shown in thetable below. As shown below, the sales charge is reducedfor purchases of $50,000 and over. Class H shares aresubject to a monthly shareholder services fee at an annu-al rate of 0.25% of the Portfolio’s average daily net assetsattributable to Class H shares.

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Front End Sales Charge

Percentage of Approximate PercentageAmount of Single Transaction Public Offering Price of Net Amount Invested$25,000 but less than $50,000 4.75% 4.99%$50,000 but less than $100,000 4.00% 4.17%$100,000 but less than $250,000 3.00% 3.09%$250,000 but less than $500,000 2.50% 2.56%$500,000 but less than $1 million 2.00% 2.04%$1 million and over 0.00% 0.00%

28

You may benefit from a reduced sales charge schedule(i.e., breakpoint discount) for purchases of Class Hshares of the Global Discovery Portfolio, by combining,in a single transaction, your purchase with purchases ofClass H shares of the Global Discovery Portfolio by thefollowing related accounts:

• A single account (including an individual, trust orfiduciary account).

• A family member account (limited to spouse, andchildren under the age of 21).

• Pension, profit sharing or other employee benefitplans of companies and their affiliates.

• Employer sponsored and individual retirementaccounts (including IRAs, Keogh, 401(k), 403(b),408(k) and 457(b) Plans).

• Tax-exempt organizations.• Groups organized for a purpose other than to buy

mutual fund shares.

In addition to investments of $1 million or more, pur-chases of Class H shares are not subject to a front-endsales charge for accounts of employees of Morgan Stanleyand its subsidiaries, such persons’ family members (limit-ed to spouse, and children under the age of 21) and trustaccounts for which any such person is a beneficiary.

Combined Purchase PrivilegeYou will have the benefit of reduced sales charges bycombining purchases of Class H shares of the GlobalDiscovery Portfolio for any related account in a singletransaction with purchases of Class H shares of anotherportfolio of the Fund or of a portfolio of MorganStanley Institutional Fund Trust for the related accountor any other related account. For the purpose of thiscombined purchase privilege, a “related account” is:

• A single account (including an individual account, ajoint account and a trust account established solely forthe benefit of the individual).

• A family member account (limited to spouse, andchildren under the age of 21, but including trustaccounts established solely for the benefit of a spouse,or children under the age of 21).

• An IRA and single participant retirement account(such as a Keogh).

• An UGMA/UTMA account.

Right of AccumulationYou may benefit from a reduced sales charge if thecumulative net asset value of Class H shares of the

Global Discovery Portfolio purchased in a single transac-tion, together with the net asset value of all Class Hshares of a portfolio of the Fund or of a portfolio ofMorgan Stanley Institutional Fund Trust held in relatedaccounts, amounts to $50,000 or more. For the purpos-es of the right of accumulation privilege, a relatedaccount is any one of the accounts listed under“Combined Purchase Privilege” above.

NotificationYou must notify your authorized financial representativeat the time a purchase order is placed, that the purchasequalifies for a reduced sales charge under any of the priv-ileges discussed above. The reduced sales charge will notbe granted if: (i) notification is not furnished at the timeof the order; or (ii) a review of the records of MorganStanley Smith Barney LLC (“Morgan Stanley SmithBarney”) or your authorized financial representative orthe Fund’s transfer agent, Morgan Stanley Services, doesnot confirm your represented holdings.

In order to obtain a reduced sales charge under any ofthe privileges discussed above, it may be necessary at thetime of purchase for you to inform your authorizedfinancial representative of the existence of other accountsin which there are holdings eligible to be aggregated tomeet the sales load breakpoint and/or right of accumula-tion threshold. In order to verify your eligibility, youmay be required to provide account statements and/orconfirmations regarding Class H shares of a portfolio ofthe Fund or of a portfolio of Morgan StanleyInstitutional Fund Trust held in all related accountsdescribed above at your authorized financial representa-tive, as well as shares held by related parties, such asmembers of the same family or household, in order todetermine whether you have met the sales load break-point and/or right of accumulation threshold.

Letter of IntentThe above schedule of reduced sales charges for largerpurchases also will be available to you if you enter into awritten “Letter of Intent.” A Letter of Intent provides forthe purchase of Class H shares of a portfolio of the Fundor of a portfolio of Morgan Stanley Institutional FundTrust within a 13-month period. The initial purchaseunder a Letter of Intent must be at least 5% of the stat-ed investment goal. The Letter of Intent does not pre-clude the Global Discovery Portfolio from discontinuingsales of its shares. To determine the applicable salescharge reduction, you may also include (1) the cost ofother Class H shares which were previously purchased at




29

a price including a front-end sales charge during the90-day period prior to the Distributor receiving theLetter of Intent and (2) the historical cost of Class Hshares of other portfolios of the Fund or of portfolios ofMorgan Stanley Institutional Fund Trust you currentlyown acquired in exchange for shares of other portfoliosof the Fund or other Morgan Stanley Institutional Fundspurchased during that period at a price including afront-end sales charge. You may combine purchases andexchanges by family members (limited to spouse, andchildren under the age of 21) during the period refer-enced above. You should retain any records necessary tosubstantiate historical costs because the Fund, MorganStanley Services and your authorized financial represen-tative may not maintain this information. You canobtain a Letter of Intent by contacting your authorizedfinancial representative. If you do not achieve the statedinvestment goal within the 13-month period, you arerequired to pay the difference between the sales chargesotherwise applicable and sales charges actually paid,which may be deducted from your investment. Sharesacquired through reinvestment of distributions are notaggregated to achieve the stated investment goal.

Additional InvestmentsYou may purchase additional Class H shares for youraccount at any time by purchasing shares at NAV, plusany applicable sales charge.

Order Processing FeesYour financial intermediary may charge processing orother fees in connection with the purchase or sale ofClass H shares. For example, the Morgan Stanley channelof Morgan Stanley Smith Barney charges clients an orderprocessing fee of $6.00 (except in certain circumstances,including, but not limited to, activity in fee-basedaccounts, exchanges, dividend reinvestments and system-atic investment and withdrawal plans) when a client buysor redeems Class H shares of the Global DiscoveryPortfolio. Please consult your authorized financial repre-sentative for more information regarding any such fee.

GeneralClass I, Class P, Class H and Class L shares may, in theFund’s discretion, be purchased with investment securities(in lieu of or, in conjunction with, cash) acceptable to theFund. The securities would be accepted by the Fund attheir market value in return for Portfolio shares of equalvalue, taking into account any applicable sales charge.

To help the Government fight the funding of terrorismand money laundering activities, federal law requires allfinancial institutions to obtain, verify and record infor-mation that identifies each person who opens anaccount. What this means to you: when you open anaccount, we will ask your name, address, date of birthand other information that will allow us to identify you.If we are unable to verify your identity, we reserve theright to restrict additional transactions and/or liquidateyour account at the next calculated NAV after youraccount is closed (less any applicable sales/accountcharges and/or tax penalties) or take any other action

required by law. In accordance with federal law require-ments, the Fund has implemented an anti-money laundering compliance program, which includes the designation of an anti-money laundering complianceofficer.

Other Transaction InformationThe Fund may suspend the offering of shares, or any classof shares, of the Portfolios or reject any purchase orderswhen we think it is in the best interests of the Fund.

Certain patterns of exchange and/or purchase or saletransactions involving the Portfolios may result in theFund rejecting, limiting or prohibiting, at its sole discre-tion, and without prior notice, additional purchasesand/or exchanges and may result in a shareholder’saccount being closed. Determination in this regard maybe made based on the frequency or dollar amount of theprevious exchange or purchase or sale transaction. See“Frequent Purchases and Redemptions of Shares.”

How To Redeem Class I, Class P and Class L SharesYou may redeem Class I, Class P and Class L shares of aPortfolio, as applicable, by mail or, if authorized, by tele-phone, at no charge other than as described below. Thevalue of shares redeemed may be more or less than thepurchase price, depending on the NAV at the time ofredemption. Class I, Class P and Class L shares of aPortfolio, as applicable, will be redeemed at the NAVnext determined after we receive your redemptionrequest in good order.

Requests should be addressed to Morgan StanleyInstitutional Fund, Inc., c/o Morgan Stanley ServicesCompany Inc., P.O. Box 219804, Kansas City,MO 64121-9804.

To be in good order, redemption requests must includethe following documentation:

(a) A letter of instruction, if required, or a stockassignment specifying the number of shares or dollaramount to be redeemed, signed by all registered ownersof the shares in the exact names in which the shares areregistered;

(b) The share certificates, if issued;

(c) Any required signature guarantees; and

(d) Other supporting legal documents, if required, inthe case of estates, trusts, guardianships, custodianship,corporations, pension and profit sharing plans and otherorganizations.

You automatically have telephone redemption andexchange privileges unless you indicate otherwise bychecking the applicable box on the new account applica-tion form or calling Morgan Stanley Services to opt outof such privileges. You may request a redemption ofClass I, Class P and Class L shares by calling the Fund at1-800-548-7786 and requesting that the redemptionproceeds be wired to you. You cannot redeem Class I,Class P and Class L shares by telephone if you hold






30

share certificates for those shares. For your protectionwhen calling the Fund, we will employ reasonable proce-dures to confirm that instructions communicated overthe telephone are genuine. These procedures mayinclude requiring various forms of personal identificationsuch as name, mailing address, social security number orother tax identification number. Telephone instructionsmay also be recorded. If reasonable procedures areemployed, none of Morgan Stanley, Morgan StanleyServices or the Fund will be liable for following tele-phone instructions which it reasonably believes to begenuine. Telephone redemptions and exchanges maynot be available if you cannot reach Morgan StanleyServices by telephone, whether because all telephonelines are busy or for any other reason; in such case, ashareholder would have to use the Fund’s other redemp-tion and exchange procedures described in this prospec-tus. During periods of drastic economic or marketchanges, it is possible that the telephone privileges maybe difficult to implement, although this has not beenthe case with the Fund in the past. To opt out of tele-phone privileges, please contact Morgan Stanley Servicesat 1-800-548-7786.

The Fund will ordinarily distribute redemption proceedsin cash within one business day of your redemptionrequest, but it may take up to seven days. However, ifyou purchased Class I and Class P shares by check, theFund will not distribute redemption proceeds until ithas collected your purchase payment, which may takeup to eight days.

If we determine that it is in the best interest of the Fundor Portfolio not to pay redemption proceeds in cash, wemay distribute to you securities held by the Portfoliofrom which you are redeeming. If requested, we will paya portion of your redemption(s) in cash (during any90 day period) up to the lesser of $250,000 or 1% ofthe net assets of the Portfolio at the beginning of suchperiod. Such in-kind securities may be illiquid and diffi-cult or impossible for a shareholder to sell at a time andat a price that a shareholder would like. Redemptionspaid in such securities generally will give rise to income,gain or loss for income tax purposes in the same manneras redemptions paid in cash. In addition, you may incurbrokerage costs and a further gain or loss for income taxpurposes when you ultimately sell the securities.

Class I and Class P shares of the Small CompanyGrowth Portfolio redeemed within 30 days of purchasewill be subject to a 2% redemption fee, payable to thePortfolio. The redemption fee is designed to protect thePortfolio and its remaining shareholders from the effectsof short-term trading. The redemption fee is notimposed on redemptions made: (i) through systematicwithdrawal/exchange plans, (ii) through pre-approvedasset allocation programs, (iii) of shares received by rein-vesting income dividends or capital gain distributions,(iv) through certain collective trust funds or otherpooled vehicles and (v) on behalf of advisory accountswhere client allocations are solely at the discretion of thethe Morgan Stanley Investment Management investment

team. The redemption fee is based on, and deductedfrom, the redemption proceeds. Each time you redeemor exchange Class I, Class P and Class L shares, theshares held the longest will be redeemed or exchangedfirst.

The redemption fee may not be imposed on transactionsthat occur through certain omnibus accounts atFinancial Intermediaries. Certain FinancialIntermediaries may not have the ability to assess aredemption fee. Certain Financial Intermediaries mayapply different methodologies than those describedabove in assessing redemption fees, may impose theirown redemption fee that may differ from a Portfolio’sredemption fee or may impose certain trading restric-tions to deter market-timing and frequent trading. Ifyou invest in a Portfolio through a FinancialIntermediary, please read that Financial Intermediary’smaterials carefully to learn about any other restrictionsor fees that may apply.

Exchange PrivilegeYou may exchange Class I, Class P and Class L shares forthe same class of shares of other available portfolios ofthe Fund and available portfolios of Morgan StanleyInstitutional Fund Trust. Exchanges are effected basedon the respective NAVs of the applicable portfolios (subject to any applicable redemption fee). To obtain aprospectus for another portfolio, call the Fund at1-800-548-7786 or contact your Financial Intermediary.If you purchased Portfolio shares through a FinancialIntermediary, certain portfolios may be unavailable forexchange. Contact your Financial Intermediary to determine which portfolios are available for exchange.

You can process your exchange by contacting yourFinancial Intermediary. Otherwise, you should sendexchange requests to Morgan Stanley Services by mail toMorgan Stanley Institutional Fund, Inc., c/o MorganStanley Services Company Inc., P.O. Box 219804,Kansas City, MO 64121-9804. Exchange requests canalso be made by calling 1-800-548-7786.

When you exchange for Class I, Class P or Class Lshares of another portfolio, your transaction will betreated the same as an initial purchase. You will be sub-ject to the same minimum initial investment andaccount size as an initial purchase. Your exchange pricewill be the price calculated at the next Pricing Time afterthe Fund receives your exchange order. The Fund, in itssole discretion, may waive the minimum initial invest-ment amount in certain cases. An exchange of shares ofthe Small Company Growth Portfolio held for less than30 days from the date of purchase will be subject to the2% redemption fee described above. The Fund may terminate or revise the exchange privilege upon requirednotice or in certain cases without notice.

How To Redeem Class H SharesYou may redeem Class H shares of the Global DiscoveryPortfolio by contacting your authorized financial representative. The value of Class H shares redeemedmay be more or less than the purchase price, depending




31

on the NAV at the time of redemption. Class H sharesof the Global Discovery Portfolio will be redeemed atthe NAV next determined after we receive your redemp-tion request in good order.

The Fund will ordinarily distribute redemption proceedsin cash within one business day of your redemptionrequest, but it may take up to seven days.

If we determine that it is in the best interest of the Fundor the Global Discovery Portfolio not to pay redemptionproceeds in cash, we may distribute to you securitiesheld by the Portfolio. If requested, we will pay a portionof your redemption(s) in cash (during any 90 day peri-od) up to the lesser of $250,000 or 1% of the net assetsof the Portfolio at the beginning of such period. Suchin-kind securities may be illiquid and difficult or impos-sible for a shareholder to sell at a time and at a price thata shareholder would like. Redemptions paid in suchsecurities generally will give rise to income, gain or lossfor income tax purposes in the same manner as redemp-tions paid in cash. In addition, you may incur brokeragecosts and a further gain or loss for income tax purposeswhen you ultimately sell the securities.

Exchange PrivilegeYou may exchange Class H shares of the GlobalDiscovery Portfolio for Class H shares of other availableportfolios of the Fund. In addition, you may exchangeClass H shares for Class H shares of available portfoliosof Morgan Stanley Institutional Fund Trust. Not allportfolios of the Fund or of Morgan StanleyInstitutional Fund Trust offer Class H shares. Your abili-ty to exchange Class H shares may therefore be limited.A front-end sales charge (load) is not imposed onexchanges of Class H shares. Exchanges are effectedbased on the respective NAVs of the applicable portfo-lios (subject to any applicable redemption fee). To obtaina prospectus for another portfolio, call the Fund at1-800-548-7786 or contact your Financial Intermediary.If you purchased Portfolio shares through a FinancialIntermediary, certain portfolios may be unavailable forexchange. Contact your Financial Intermediary to deter-mine which portfolios are available for exchange.

You can process your exchange by contacting yourFinancial Intermediary.

When you exchange for Class H shares of another portfo-lio, your transaction will be treated the same as an initialpurchase. You will be subject to the same minimum initialinvestment and account size as an initial purchase, exceptthat it will not be subject to a front-end sales charge. Yourexchange price will be the price calculated at the nextPricing Time after the Fund receives your exchange order.The Fund, in its sole discretion, may waive the minimuminitial investment amount in certain cases. The Fund mayterminate or revise the exchange privilege upon requirednotice or in certain cases without notice.

Frequent Purchases and Redemptions of SharesFrequent purchases and redemptions of shares byPortfolio shareholders are referred to as “market-timing”

or “short-term trading” and may present risks for othershareholders of a Portfolio, which may include, amongother things, diluting the value of a Portfolio’s shares heldby long-term shareholders, interfering with the efficientmanagement of the Portfolio, increasing brokerage andadministrative costs, incurring unwanted taxable gainsand forcing the Portfolio to hold excess levels of cash.

In addition, a Portfolio is subject to the risk that market-timers and/or short-term traders may take advantage oftime zone differences between the foreign markets onwhich a Portfolio’s securities trade and the time thePortfolio’s NAV is calculated (“time-zone arbitrage”). Forexample, a market-timer may purchase shares of aPortfolio based on events occurring after foreign marketclosing prices are established, but before the Portfolio’sNAV calculation, that are likely to result in higher pricesin foreign markets the following day. The market-timerwould redeem the Portfolio’s shares the next day, whenthe Portfolio’s share price would reflect the increasedprices in foreign markets for a quick profit at theexpense of long-term Portfolio shareholders.

Investments in other types of securities also may be sus-ceptible to short-term trading strategies. These invest-ments include securities that are, among other things,thinly traded, traded infrequently or relatively illiquid,which have the risk that the current market price for thesecurities may not accurately reflect current market val-ues. A shareholder may seek to engage in short-termtrading to take advantage of these pricing differences(referred to as “price arbitrage”).

The Fund discourages and does not accommodate fre-quent purchases and redemptions of Portfolio shares byPortfolio shareholders and the Fund’s Board of Directorshas adopted policies and procedures with respect to suchfrequent purchases and redemptions.

The Fund’s policies with respect to purchases andredemptions of Portfolio shares are described in the“Shareholder Information—How To Purchase Class I,Class P and Class L Shares,” “ShareholderInformation—How to Purchase Class H Shares,”“Shareholder Information—Other TransactionInformation,” “Shareholder Information—How ToRedeem Class I, Class P and Class L Shares” and“Shareholder Information—How to Redeem Class HShares” sections of this Prospectus. Except as describedin each of these sections, and with respect to trades thatoccur through omnibus accounts at FinancialIntermediaries, as described below, the Fund’s policiesregarding frequent trading of Portfolio shares are applieduniformly to all shareholders. With respect to trades thatoccur through omnibus accounts at FinancialIntermediaries, such as investment advisers, broker-dealers,transfer agents and third party administrators, the Fund(i) has requested assurance that such FinancialIntermediaries currently selling Portfolio shares have inplace internal policies and procedures reasonablydesigned to address market-timing concerns and hasinstructed such Financial Intermediaries to notify theFund immediately if they are unable to comply with






The Fund currently consists of the following portfolios:

U.S. EquityAdvantage PortfolioFocus Growth PortfolioGrowth PortfolioOpportunity PortfolioSmall Company Growth Portfolio*U.S. Real Estate Portfolio

Global and International EquityActive International Allocation PortfolioAsian Equity PortfolioEmerging Markets PortfolioGlobal Advantage PortfolioGlobal Discovery Portfolio

Global Franchise PortfolioGlobal Opportunity PortfolioGlobal Real Estate PortfolioInternational Advantage PortfolioInternational Equity PortfolioInternational Opportunity PortfolioInternational Real Estate PortfolioInternational Small Cap PortfolioSelect Global Infrastructure Portfolio

Fixed IncomeEmerging Markets Debt Portfolio

* Portfolio is currently closed to new investors

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such policies and procedures and (ii) requires all prospec-tive Financial Intermediaries to agree to cooperate inenforcing the Fund’s policies with respect to frequentpurchases, redemptions and exchanges of Portfolio shares.

With respect to trades that occur through omnibusaccounts at Financial Intermediaries, to some extent, theFund relies on the Financial Intermediary to monitorfrequent short-term trading within a Portfolio by theFinancial Intermediary’s customers and to collect thePortfolio’s redemption fee from its customers. However,the Fund has entered into agreements with FinancialIntermediaries whereby Financial Intermediaries arerequired to provide certain customer identification andtransaction information upon the Fund’s request. TheFund may use this information to help identify and pre-vent market-timing activity in the Fund. There can beno assurance that the Fund will be able to identify or prevent all market-timing activities.

Dividends and DistributionsEach Portfolio’s policy is to distribute to shareholderssubstantially all of its net investment income, if any, inthe form of an annual dividend and to distribute netrealized capital gains, if any, at least annually.

The Fund automatically reinvests all dividends and dis-tributions in additional shares. However, you may electto receive distributions in cash by giving written noticeto the Fund or your Financial Intermediary or bychecking the appropriate box in the DistributionOption section on the Account Registration Form.

TaxesThe dividends and distributions you receive from aPortfolio may be subject to federal, state and local taxa-tion, depending on your tax situation. The tax treatment

of dividends and distributions is the same whether ornot you reinvest them. For taxable years beginningbefore January 1, 2013, dividends paid by a Portfoliothat are attributable to “qualified dividends” received bythe Portfolio may be taxed at reduced rates to individualshareholders (15% at the maximum), if certain require-ments are met by the Portfolio and the shareholders.

Dividends paid by a Portfolio not attributable to “quali-fied dividends” received by a Portfolio, including distribu-tions of short-term capital gains, will generally be taxed atnormal tax rates applicable to ordinary income. Long-term capital gains distributions to individuals are taxedat a reduced rate (15% at the maximum) beforeJanuary 1, 2013, regardless of how long you have heldyour shares. Unless further Congressional legislativeaction is taken, reduced rates for dividends and long-term capital gain will cease to be in effect afterDecember 31, 2012. The Fund will tell you annuallyhow to treat dividends and distributions.

If you redeem shares of a Portfolio, you may be subjectto tax on any gains you earn based on your holding peri-od for the shares and your marginal tax rate. Anexchange of shares of a Portfolio for shares of anotherportfolio is treated for tax purposes as a sale of the origi-nal shares in the Portfolio, followed by the purchase ofshares in the other portfolio. Conversions of sharesbetween classes will not result in taxation.

Because each investor’s tax circumstances are unique andthe tax laws may change, you should consult your taxadvisor about your investment.




The financial highlights tables that follow are intendedto help you understand the financial performance ofthe Class I, Class P, Class H and Class L shares of eachPortfolio, as applicable, for the past five years or sinceinception if less than five years. Certain information re-flects financial results for a single Portfolio share. Thetotal returns in the tables represent the rate that an in-vestor would have earned (or lost) on an investment ineach Portfolio (assuming reinvestment of all dividendsand distributions).

The ratio of expenses to average net assets listed in thetables below for each class of shares of the Portfolios arebased on the average net assets of such Portfolio for eachof the periods listed in the tables. To the extent that a

Portfolio’s average net assets decrease over the Portfolio’snext fiscal year, such expense ratios can be expected to increase, potentially significantly, because certain fixedcosts will be spread over a smaller amount of assets.

The information has been audited by Ernst & YoungLLP, an independent registered public accounting firm.Ernst & Young LLP’s report, along with the Portfolios’ financial statements, are incorporated by reference intothe Portfolios’ SAI and are included in the Fund’s An-nual Report to Shareholders. The Annual Report to Shareholders and the Portfolios’ financial statements,as well as the SAI, are available at no cost from theFund at the toll-free number noted on the back coverto this Prospectus.

Financial Highlights

33




Class I

Year Ended December 31,

Selected Per Share Data and Ratios 2010 2009 2008 2007 2006Net Asset Value, Beginning of Period $ 15.27 $ 8.95 $ 18.81 $ 15.19 $ 14.78

Income (Loss) from Investment Operations:Net Investment Income (Loss)† (0.05) (0.01) 0.00‡ 0.03 (0.03)Net Realized and Unrealized Gain (Loss) on Investments 4.36 6.33 (9.82) 3.62 0.44

Total from Investment Operations 4.31 6.32 (9.82) 3.65 0.41

Distributions from and/or in Excess of:Net Investment Income — — (0.04) (0.03) —

Redemption Fees — — 0.00‡ 0.00‡ 0.00‡

Net Asset Value, End of Period $ 19.58 $15.27 $ 8.95 $ 18.81 $ 15.19

Total Return++ 28.23% 70.61%** (52.19)% 24.02% 2.77%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $17,618 $7,878 $ 4,879 $13,852 $12,416Ratio of Expenses to Average Net Assets (1) 1.00%+†† 0.99%+ 1.00%+ 1.00%+ 0.79%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 1.00%+†† 0.99%+ 1.00%+ 1.00%+ 0.79%Ratio of Net Investment Income (Loss) to Average Net Assets (1) (0.28)%+†† (0.12)%+ 0.02%+ 0.16%+ (0.23)%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.01% 0.00%§ 0.00%§ N/APortfolio Turnover Rate 79% 11% 36% 57% 76%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.51%+†† 1.88%+ 1.29%+ 1.13%+ N/ANet Investment Income (Loss) to Average Net Assets (0.79)%+†† (1.01)%+ (0.27)%+ 0.03%+ N/A

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 2.12% due to receipt of proceeds from settlements of class action suits involving primarily one of the

Portfolio’s past holdings. This one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future.Had these settlements not occurred, the total return for Class I would have been approximately 68.49%.

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

†† Reflects overall Portfolio ratios for investment income (loss) and non-class specific expenses.§ Amount is less than 0.005%.

Merrill Corp - M-S Institutional Fund Global Growth Port MSIEQUPRO Prospectus [Funds] 04-29-2011 ED [AUX] | ajacksod | 27-Apr-11 01:21 | 10-22173-5.ea | Sequence: 1CHKSUM Content: 49936 Layout: 41028 Graphics: No Graphics CLEAN


34

Focus Growth PortfolioClass P


Selected Per Share Data and Ratios 2010 2009 2008 2007 2006Net Asset Value, Beginning of Period $14.86 $ 8.73 $ 18.32 $14.81 $14.45

Income (Loss) from Investment Operations:Net Investment Loss† (0.08) (0.04) (0.04) (0.01) (0.06)Net Realized and Unrealized Gain (Loss) on Investments 4.22 6.17 (9.55) 3.52 0.42


Distributions from and/or in Excess of:Net Investment Income — — (0.00)‡ — —

Redemption Fees — — 0.00‡ 0.00‡ 0.00‡

Net Asset Value, End of Period $19.00 $14.86 $ 8.73 $18.32 $14.81

Total Return++ 27.86% 70.02%** (52.27)% 23.70% 2.49%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $1,704 $1,460 $ 1,069 $2,913 $2,317Ratio of Expenses to Average Net Assets (1) 1.25%+†† 1.24%+ 1.25%+ 1.25%+ 1.04%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 1.25%+†† 1.24%+ 1.25%+ 1.25%+ 1.04%Ratio of Net Investment Loss to Average Net Assets (1) (0.53)%+†† (0.38)%+ (0.24)%+ (0.07)%+ (0.45)%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.01% 0.00%§ 0.00%§ N/APortfolio Turnover Rate 79% 11% 36% 57% 76%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.76%+†† 2.16%+ 1.54%+ 1.38%+ N/ANet Investment Loss to Average Net Assets (1.04)%+†† (1.30)%+ (0.53)%+ (0.20)%+ N/A

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 2.17% due to receipt of proceeds from settlements of class action suits involving primarily one of the

Portfolio’s past holdings. This one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future.Had these settlements not occurred, the total return for Class P would have been approximately 67.85%.


†† Reflects overall Portfolio ratios for investment loss and non-class specific expenses.§ Amount is less than 0.005%.



35



Global Discovery PortfolioClass I

Period from December 28,

2010^ to December 31,

Selected Per Share Data and Ratios 2010Net Asset Value, Beginning of Period $ 10.00

Loss from Investment Operations:Net Investment Loss† (0.00)‡Net Realized and Unrealized Loss on Investments (0.03)

Total from Investment Operations (0.03)

Net Asset Value, End of Period $ 9.97

Total Return++ (0.30)%#

Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $ 697Ratio of Expenses to Average Net Assets (1) 1.35%*Ratio of Net Investment Loss to Average Net Assets (1) (1.14)%*Portfolio Turnover Rate 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††

Ratios Before Expense Limitation:Expenses to Average Net Assets 238.14%*Net Investment Loss to Average Net Assets (237.93)%*

^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.# Not Annualized.†† Reflects overall Portfolio ratios for investment loss and non-class specific expenses.* Annualized.



36

Global Discovery PortfolioClass P













37



Global Discovery PortfolioClass H








Ratios and Supplemental Data:††Net Assets, End of Period (Thousands) $ 349Ratio of Expenses to Average Net Assets 1.60%*Ratio of Net Investment Loss to Average Net Assets (1) (1.39)%*Portfolio Turnover Rate 0.00%#(1) Supplemental Information on the Ratios to Average Net Assets:††


^ Commencement of Operations.† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.# Not Annualized.†† Reflects overall Portfolio ratios for investment loss and non-class specific expenses.* Annualized.



38

Global Discovery PortfolioClass L













39



Growth PortfolioClass I



Income (Loss) from Investment Operations:Net Investment Income† 0.06 0.05 0.05 0.10 0.01Net Realized and Unrealized Gain (Loss) on Investments 4.49 7.58 (12.50) 4.41 0.78


Distributions from and/or in Excess of:Net Investment Income (0.00)‡ (0.06) (0.10) (0.10) (0.00)‡Net Realized Gain — — (0.02) — —

Total Distributions (0.00)‡ (0.06) (0.12) (0.10) (0.00)‡

Redemption Fees — 0.00‡ 0.00‡ 0.00‡ 0.00‡

Net Asset Value, End of Period $ 24.24 $ 19.69 $ 12.12 $ 24.69 $ 20.28

Total Return++ 23.11% 62.97%** (50.47)% 22.29% 4.07%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $704,410 $674,070 $543,841 $1,406,866 $1,012,417Ratio of Expenses to Average Net Assets 0.73%+†† 0.65%+ 0.62%+ 0.62%+ 0.63%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 0.73%+†† 0.65%+ 0.62%+ 0.62%+ 0.63%Ratio of Net Investment Income to Average Net Assets 0.27%+†† 0.35%+ 0.24%+ 0.46%+ 0.03%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%§ 0.00%§ N/APortfolio Turnover Rate 35% 19% 42% 50% 59%

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the

Portfolio’s past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in thefuture. Had these settlements not occurred, the total return for Class I shares would have been approximately 62.72%.


†† Reflects overall Portfolio ratios for investment income and non-class specific expenses.§ Amount is less than 0.005%.



40

Growth PortfolioClass P



Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.00‡ 0.02 0.00‡ 0.05 (0.04)Net Realized and Unrealized Gain (Loss) on Investments 4.42 7.46 (12.27) 4.33 0.78


Distributions from and/or in Excess of:Net Investment Income (0.00)‡ (0.02) (0.04) (0.06) —Net Realized Gain — — (0.02) — —

Total Distributions (0.00)‡ (0.02) (0.06) (0.06) —

Redemption Fees — 0.00‡ 0.00‡ 0.00‡ 0.00‡


Total Return++ 22.79% 62.66%** (50.57)% 21.93% 3.85%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $136,585 $99,475 $59,883 $166,717 $57,689Ratio of Expenses to Average Net Assets 0.98%+†† 0.90%+ 0.87%+ 0.87%+ 0.88%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 0.98%+†† 0.90%+ 0.87%+ 0.87%+ 0.88%Ratio of Net Investment Income (Loss) to Average Net Assets 0.02%+†† 0.10%+ (0.01)%+ 0.24%+ (0.23)%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%§ 0.00%§ N/APortfolio Turnover Rate 35% 19% 42% 50% 59%

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.** Performance was positively impacted by approximately 0.25% due to the receipt of proceeds from the settlements of class action suits involving primarily two of the

Portfolio’s past holdings. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in thefuture. Had these settlements not occurred, the total return for Class P shares would have been approximately 62.41%.


†† Reflects overall Portfolio ratios for investment income (loss) and non-class specific expenses.§ Amount is less than 0.005%.



41



Small Company Growth PortfolioClass I



Income (Loss) from Investment Operations:Net Investment Income (Loss)† 0.01 (0.03) (0.01) (0.05) (0.08)Net Realized and Unrealized Gain (Loss) on Investments 3.02 3.68 (5.47) 0.45 1.59


Distributions from and/or in Excess of:Net Investment Income — (0.01) — — —Net Realized Gain — (0.14) — (0.59) (1.09)

Total Distributions — (0.15) — (0.59) (1.09)

Redemption Fees 0.00‡ 0.00‡ 0.00‡ 0.00‡ 0.00‡


Total Return++ 27.20% 47.92% (41.84)% 3.04% 11.90%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $1,227,782 $977,515 $638,559 $1,137,839 $1,028,030Ratio of Expenses to Average Net Assets (1) 1.05%+†† 1.05%+ 1.02%+ 1.01%+ 1.01%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 1.05%+†† 1.05%+ 1.02%+ 1.01%+ 1.01%Ratio of Net Investment Income (Loss) to Average Net Assets (1) 0.10%+†† (0.28)%+ (0.08)%+ (0.35)%+ (0.56)%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%§ 0.00%§ N/APortfolio Turnover Rate 26% 27% 34% 50% 76%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.12%+†† 1.07%+ 1.05%+ N/A N/ANet Investment Income (Loss) to Average Net Assets 0.03%+†† (0.30)%+ (0.11)%+ N/A N/A

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”†† Reflects overall Portfolio ratios for investment income (loss) and non-class specific expenses.§ Amount is less than 0.005%.



42

Small Company Growth PortfolioClass P



Income (Loss) from Investment Operations:Net Investment Loss† (0.02) (0.05) (0.03) (0.08) (0.10)Net Realized and Unrealized Gain (Loss) on Investments 2.83 3.46 (5.17) 0.43 1.51


Distributions from and/or in Excess of:Net Realized Gain — (0.14) — (0.59) (1.09)

Redemption Fees 0.00‡ 0.00‡ 0.00‡ 0.00‡ 0.00


Total Return++ 26.86% 47.41% (41.97)% 2.81% 11.55%

Ratios and Supplemental Data:Net Assets, End of Period (Thousands) $530,123 $536,329 $345,302 $698,183 $857,275Ratio of Expenses to Average Net Assets (1) 1.30%+†† 1.30%+ 1.27%+ 1.26%+ 1.26%Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses 1.30%+†† 1.30%+ 1.27%+ 1.26%+ 1.26%Ratio of Net Investment Loss to Average Net Assets (1) (0.15)%+†† (0.53)%+ (0.34)%+ (0.61)%+ (0.81)%Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets 0.00%††§ 0.00%§ 0.00%§ 0.00%§ N/APortfolio Turnover Rate 26% 27% 34% 50% 76%(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:Expenses to Average Net Assets 1.37%+†† 1.32%+ 1.30%+ N/A N/ANet Investment Loss to Average Net Assets (0.22)%+†† (0.55)%+ (0.37)%+ N/A N/A

† Per share amount is based on average shares outstanding.‡ Amount is less than $0.005 per share.++ Calculated based on the net asset value as of the last business day of the period.+ The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates

during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets.”†† Reflects overall Portfolio ratios for investment loss and non-class specific expenses.§ Amount is less than 0.005%.



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JOB: 10-22173-5 CYCLE#;BL#: 25; 0 TRIM: 8.375" x 10.875" COMPOSITECOLORS: Black, ~note-color 2 GRAPHICS: none V1.5


Additional Information

In addition to this Prospectus, the Fund has aStatement of Additional Information, dated April 29,2011, which contains additional, more detailedinformation about the Fund and the Portfolios. TheStatement of Additional Information is incorporatedby reference into this Prospectus and, therefore, legallyforms a part of this Prospectus.

The Fund publishes Annual and Semiannual Reports toShareholders (“Shareholder Reports”) that containadditional information about each Portfolio’sinvestments. In the Fund’s Annual Report toShareholders, you will find a discussion of the marketconditions and the investment strategies thatsignificantly affected each Portfolio’s performanceduring the last fiscal year. For additional Fundinformation, including information regarding theinvestments comprising each of the Portfolios, pleasecall the toll-free number below.

You may obtain the Statement of AdditionalInformation and Shareholder Reports without chargeby contacting the Fund at the toll-free number below oron our internet site at: www.morganstanley.com/im. Ifyou purchased shares through a Financial Intermediary,you may also obtain these documents, without charge,by contacting your Financial Intermediary.

Information about the Fund, including the Statementof Additional Information and Shareholder Reports

may be obtained from the Commission in any of thefollowing ways: (1) In person: you may review andcopy documents in the Commission’s PublicReference Room in Washington D.C. (for informationon the operation of the Public Reference Room,call 1-202-551-8090); (2) On line: you may retrieveinformation from the Commission’s web site athttp://www.sec.gov; (3) By mail: you may requestdocuments, upon payment of a duplicating fee, bywriting to the Securities and Exchange Commission,Public Reference Section, Washington, D.C.20549-1520; or (4) By e-mail: you may requestdocuments, upon payment of a duplicating fee, bye-mailing the Commission at the following address:[email protected].

Morgan Stanley Institutional Fund, Inc.c/o Morgan Stanley Services Company Inc.P.O. Box 219804Kansas City, MO 64121-9804

For Shareholder Inquiries,call 1-800-548-7786.

Prices and Investments Results are available atwww.morganstanley.com/im.

The Fund’s Investment Company Act registration numberis 811-05624.

Where to FindAdditional Information

MSIEQUPRO-0411

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