MORGAN STANLEY INSTITUTIONAL FUND INC, 497, 1997-02-24

MORGAN STANLEY INSTITUTIONAL FUND INC
497, 1997-02-24

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<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

ACTIVE COUNTRY ALLOCATION PORTFOLIO

A PORTFOLIO OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover &
Co. announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Morgan Stanley Group Inc. is the
direct parent of Morgan Stanley Asset Management Inc., the Fund's investment
adviser. Subject to certain conditions being met, it is currently anticipated
that the transaction will close in mid-1997. Thereafter, Morgan Stanley Asset
Management Inc. will be a subsidiary of Morgan Stanley, Dean Witter, Discover &
Co.

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is hereby amended and supplemented as follows: Under the
heading "Management of the Fund," the third paragraph on Page 16 is deleted and
replaced with the following:

PORTFOLIO MANAGERS. BARTON M. BIGGS, MADHAV DHAR, FRANCINE J. BOVICH
AND ANN D. THIVIERGE. Barton M. Biggs has been Chairman and a director of the
Adviser since 1980 and a Managing Director of Morgan Stanley since 1975. He is
also a director of Morgan Stanley Group Inc. and a director and chairman of
various registered investment companies to which the Adviser and certain of its
affiliates provide investment advisory services. Mr. Biggs holds a B.A. from
Yale University and an M.B.A. from New York University. Madhav Dhar is a
Managing Director of Morgan Stanley. He joined the Adviser in 1984 to focus on
global asset allocation and investment strategy and now is a co-head of the
Adviser's emerging markets group. He is a portfolio manager of the Fund's
Emerging Markets Portfolio, the Emerging Markets and Global Equity Allocation
Funds of the Morgan Stanley Fund, Inc., and the Morgan Stanley Emerging Markets
Fund, Inc. (a closed-end investment company listed on the New York Stock
Exchange). He holds a B.S. (honors) from St. Stephens College, Delhi University
(India), and an M.B.A. from Carnegie-Mellon University. Francine Bovich joined
the Adviser as a Principal in 1993. She is responsible for product development,
portfolio management and communication of the Adviser's asset allocation
strategy to institutional investor clients. Previously, Ms. Bovich was a
Principal and Executive Vice President of Westwood Management Corp.
("Westwood"), a registered investment adviser. Before joining Westwood, she was
a Managing Director of Citicorp Investment Management, Inc. (now Chancellor
Capital Management), where she was responsible for the Institutional Investment
Management Group. Ms. Bovich began her investment career with Banker's Trust
Company. She holds a B.A. in Economics from Connecticut College and an M.B.A. in
Finance from New York University. Ann Thivierge is a Principal of the Adviser.
She is a member of the Adviser's asset allocation committee, primarily
representing the Total Fund Management team since its inception in 1991. Prior
to joining the Adviser in 1986, she spent two years at Edgewood Management
Company, a privately held investment
<PAGE>
management firm. Ms. Thivierge holds a B.A. in International Relations from
James Madison College, Michigan State University, and an M.B.A. in Finance from
New York University.

--------------

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25% of the Class B shares' average daily net
assets on an annualized basis. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. Shares in a
Portfolio account opened prior to January 2, 1996 (each, a "Pre-1996
Account") were designated Class A shares on January 2, 1996. For a
Portfolio account opened on or after January 2, 1996 (a "New Account"),
the minimum initial investment is $500,000 for Class A shares and
$100,000 for Class B shares. Certain exceptions to the foregoing
minimums apply to (1) shares in a Pre-1996 Account with a value of
$100,000 or more on March 1, 1996 (a "Grandfathered Class A Account");
(2) Portfolio accounts held by certain employees of the Adviser and of
its affiliates; and (3) certain advisory or asset allocation accounts,
such as Total Funds Management accounts, managed by Morgan Stanley or
its affiliates, including the Adviser ("Managed Accounts"). The Adviser
reserves the right in its sole discretion to determine which of such
advisory or asset allocation accounts shall be Managed Accounts. For
information regarding Managed Accounts, please contact your Morgan
Stanley account representative or the Fund at the telephone number
provided on the cover of this Prospectus. Shares in a Pre-1996 Account
with a value of less than $100,000 on March 1, 1996 (a "Grandfathered
Class B Account") converted to Class B shares on March 1, 1996. The
minimum investment levels may be waived at the discretion of the Adviser
for (i) certain employees and customers of Morgan Stanley or its
affiliates and certain trust departments, brokers, dealers, agents,
financial planners, financial services firms, or investment advisers
that have entered into an agreement with Morgan Stanley or its
affiliates; and (ii) retirement and deferred compensation plans and
trusts used to fund such plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of
1986, as amended, and "rabbi trusts". See "Purchase of Shares Minimum
Investment and Account Sizes; Conversion from Class A to Class B
Shares."

--------------

Under the heading "PURCHASE OF SHARES," under the subheadings "MINIMUM
INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B SHARES" and
"MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES," these two sections
are deleted and replaced with the following:

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

For a Portfolio account opened on or after January 2, 1996 (a "New
Account"), the minimum initial investment and minimum account size are
$500,000 for Class A shares and $100,000 for Class B shares. Managed
Accounts may purchase Class A shares without being subject to any
minimum initial investment or minimum account size requirements for a
Portfolio account. Employees of the Adviser and certain of its
affiliates may purchase Class A shares subject to conditions, including
a lower minimum initial investment, established by Officers of the Fund.
<PAGE>
If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

Investors may also invest in the Fund by purchasing shares through a
trust department, broker, dealer, agent, financial planner, financial
services firm or investment adviser. An investor may be charged an
additional service or transaction fee by that institution. The minimum
investment levels may be waived at the discretion of the Adviser for (i)
certain employees and customers of Morgan Stanley or its affiliates and
certain trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". The Fund reserves the right to modify or terminate the
conversion features of the shares as stated above at any time upon
60-days' notice to shareholders.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

If the value of a New Account falls below $100,000 because of
shareholder redemption(s), the Fund will notify the shareholder, and if
the account value remains below $100,000 for a continuous 60-day period,
the shares in such account are subject to redemption by the Fund and, if
redeemed, the net asset value of such shares will be promptly paid to
the shareholder. The Fund, however, will not redeem shares based solely
upon changes in the market that reduce the net asset value of shares.

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

EMERGING MARKETS PORTFOLIO
EMERGING MARKETS DEBT PORTFOLIO

PORTFOLIOS OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
--------------

The Prospectus is hereby amended and supplemented to reflect the addition of
a Portfolio Manager to the Emerging Markets Portfolio.

ADDITION OF PORTFOLIO MANAGER. Marianne L. Hay has joined Madhav Dhar as a
portfolio manager with primary responsibility for managing the assets of the
Emerging Markets Portfolio. Accordingly, the second paragraph on p. 26 of the
Prospectus is deleted and replaced with the following paragraph:

EMERGING MARKETS PORTFOLIO -- MADHAV DHAR AND MARIANNE L. HAY. Madhav Dhar
is a Managing Director of Morgan Stanley. He joined the Adviser in 1984 to
focus on global asset allocation and investment strategy and now is a
co-head of the Adviser's emerging markets group. He holds a B.S. (honors)
from St. Stephens College, Delhi University (India), and an M.B.A. from
Carnegie-Mellon University. Mr. Dhar has had primary responsibility for
managing the Portfolio's assets since its inception. Marianne L. Hay, a
Managing Director of Morgan Stanley & Co. Incorporated, is a co-head of the
Adviser's emerging markets group and shares, with Mr. Dhar, primary
responsibility for managing the Portfolio's assets. She joined the Adviser
in June 1993 to work with the Adviser's senior management covering all
emerging markets, asset allocation, product development and client services.
Ms. Hay has 17 years of investment experience. Prior to joining the Adviser,
she was a director of Martin Currie Investment Management, Ltd. where her
responsibilities included geographic asset allocation and portfolio
management for global and emerging markets funds, as well as being director
in charge of the company's North American clients. Prior to her tenure at
Martin Currie Investment Management, Ltd. she worked for the Bank of
Scotland and the investment management firm of Ivory and Sime plc. She
graduated with an honors degree in genetics from Edinburgh University and
holds a Diploma in Education and the qualification of the Association of the
Institute of Bankers in Scotland.
--------------
<PAGE>
Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day
<PAGE>
period, the Class A shares in such account will convert to Class B
shares and will be subject to the distribution fee and other features
applicable to the Class B shares. The Fund, however, will not convert
Class A shares to Class B shares based solely upon changes in the market
that reduce the net asset value of shares. Under current tax law,
conversions between share classes are not a taxable event to the
shareholder.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

U.S. REAL ESTATE PORTFOLIO

A PORTFOLIO OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is hereby amended and supplemented as follows: The first
sentence of the third paragraph under the heading "INVESTMENT OBJECTIVE AND
POLICIES" on page 10 is deleted and replaced by the following to clarify that
the Portfolio can invest in non-U.S. issuers principally engaged in the U.S.
real estate industry:

Under normal circumstances, at least 65% of the Portfolio's total
assets will be invested in income producing equity securities of U.S.
and non-U.S. companies principally engaged in the U.S. real estate
industry.

--------------

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25% of the Class B shares' average daily net
assets on an annualized basis. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. Shares in a
Portfolio account opened prior to January 2, 1996 (each, a "Pre-1996
Account") were designated Class A shares on January 2, 1996. For a
Portfolio account opened on or after January 2, 1996 (a "New Account"),
the minimum initial investment is $500,000 for Class A shares and
$100,000 for Class B shares. Certain exceptions to the foregoing
minimums apply to (1) shares in a Pre-1996 Account with a value of
$100,000 or more on March 1, 1996 (a "Grandfathered Class A Account");
(2) Portfolio accounts held
<PAGE>
by certain employees of the Adviser and of its affiliates; and (3)
certain advisory or asset allocation accounts, such as Total Funds
Management accounts, managed by Morgan Stanley or its affiliates,
including the Adviser ("Managed Accounts"). The Adviser reserves the
right in its sole discretion to determine which of such advisory or
asset allocation accounts shall be Managed Accounts. For information
regarding Managed Accounts, please contact your Morgan Stanley account
representative or the Fund at the telephone number provided on the cover
of this Prospectus. Shares in a Pre-1996 Account with a value of less
than $100,000 on March 1, 1996 (a "Grandfathered Class B Account")
converted to Class B shares on March 1, 1996. The minimum investment
levels may be waived at the discretion of the Adviser for (i) certain
employees and customers of Morgan Stanley or its affiliates and certain
trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". See "Purchase of Shares Minimum Investment and Account Sizes;
Conversion from Class A to Class B Shares."

--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

Shares in a Portfolio account opened prior to January 2, 1996 (a
"Pre-1996 Account") were designated Class A shares on January 2, 1996.
Shares in a Pre-1996 Account with a value of $100,000 or more on March
1, 1996 (a "Grandfathered Class A Account") remained Class A shares
regardless of account size thereafter. Except for shares in a Managed
Account, shares in a Pre-1996 Account with a value of less than $100,000
on March 1, 1996 (a "Grandfathered Class B Account") converted to Class
B shares on March 1, 1996. Grandfathered Class A Accounts and Managed
Accounts are not subject to conversion from Class A shares to Class B
shares.
<PAGE>
Investors may also invest in the Fund by purchasing shares through a
trust department, broker, dealer, agent, financial planner, financial
services firm or investment adviser. An investor may be charged an
additional service or transaction fee by that institution. The minimum
investment levels may be waived at the discretion of the Adviser for (i)
certain employees and customers of Morgan Stanley or its affiliates and
certain trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". The Fund reserves the right to modify or terminate the
conversion features of the shares as stated above at any time upon
60-days' notice to shareholders.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

EQUITY GROWTH PORTFOLIO
EMERGING GROWTH PORTFOLIO
MICROCAP PORTFOLIO
AGGRESSIVE EQUITY PORTFOLIO

PORTFOLIOS OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is hereby amended and supplemented as follows: The third
sentence in the second paragraph under the heading "INVESTMENT OBJECTIVES AND
POLICIES -- THE EQUITY GROWTH PORTFOLIO" on page 13 is deleted and replaced by
the following:

The Adviser's universe of potential investments generally comprises
companies with market capitalizations of $500 million or more.

--------------

On page 19, the first sentence under the heading "FOREIGN INVESTMENT" is
deleted and replaced by the following:

The Portfolios may invest in U.S. dollar-denominated securities of foreign
issuers trading in U.S. markets and the Equity Growth, Emerging Growth and
Aggressive Equity Portfolios may invest in non-U.S. dollar-denominated
securities of foreign issuers.

--------------

On page 19, the last paragraph under the heading "FOREIGN INVESTMENT" is
deleted and replaced by the following:

Investments in securities of foreign issuers are frequently denominated in
foreign currencies and, since the Equity Growth, Emerging Growth and Aggressive
Equity Portfolios may also temporarily hold uninvested reserves in bank deposits
in foreign currencies, the value of the Portfolios' assets measured in U.S.
dollars may be
<PAGE>
affected favorably or unfavorably by changes in currency exchange rates and in
exchange control regulations, and the Portfolios may incur costs in connection
with conversions between various currencies.

--------------

On page 19 the first sentence under the heading "FORWARD FOREIGN CURRENCY
EXCHANGE CONTRACTS" is deleted and replaced by the following:

The Equity Growth, Emerging Growth and Aggressive Equity Portfolios may
enter into forward foreign currency exchange contracts ("forward contracts"),
that provide for the purchase or sale of an amount of a specified foreign
currency at a future date.

--------------

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

--------------
<PAGE>
Under the heading "PURCHASE OF SHARES," under the subheadings "MINIMUM
INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B SHARES" and
"MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES," these two sections
are deleted and replaced with the following:

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

If the value of a New Account falls below $100,000 because of
shareholder redemption(s), the Fund will notify the shareholder, and if
the account value remains below $100,000 for a continuous 60-day period,
the shares in such account are subject to redemption by the Fund and, if
redeemed, the
<PAGE>
net asset value of such shares will be promptly paid to the shareholder.
The Fund, however, will not redeem shares based solely upon changes in
the market that reduce the net asset value of shares.

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

SMALL CAP VALUE EQUITY PORTFOLIO
VALUE EQUITY PORTFOLIO
BALANCED PORTFOLIO

PORTFOLIOS OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is hereby amended and supplemented to reflect a change in
Portfolio Managers for the Small Cap Value Equity Portfolio.

Gary D. Haubold has resigned from Morgan Stanley Asset Management Inc. Gary
G. Schlarbaum and William B. Gerlach now have primary responsibility for
managing the assets of the Small Cap Value Equity Portfolio. Accordingly, the
third full paragraph on Page 18 is deleted and replaced with the following
paragraph:

PORTFOLIO MANAGERS

Stephen C. Sexauer and Alford E. Zick, Jr. have primary responsibility for
managing the Balanced Portfolio and the Value Equity Portfolio and have had such
responsibility since the Portfolios' inception in February and January, 1990,
respectively. Gary G. Schlarbaum and William B. Gerlach have had primary
responsibility for managing the Small Cap Value Equity Portfolio since January,
1997, and November, 1996, respectively.

Additionally, the first full paragraph on Page 19 of the Prospectus is deleted
and replaced with the following paragraphs:

GARY G. SCHLARBAUM. Mr. Schlarbaum, a Managing Director of Morgan Stanley,
joined MAS in 1987. He assumed responsibility for the MAS Funds Equity and Small
Cap Value Portfolios in 1987, the MAS Funds Balanced Portfolio in 1992 and the
MAS Funds Multi-Asset-Class and Mid Cap Value Portfolios in 1994. Mr. Schlarbaum
also is a Director of MAS Fund Distribution, Inc. He previously was with First
Chicago Investment Advisers and was a Professor at the Krannert Graduate School
at Purdue University. Mr. Schlarbaum
<PAGE>
holds a B.A. in Economics from Coe College and a Ph.D. in Applied Economics from
University of Pennsylvania.

WILLIAM B. GERLACH. Mr. Gerlach joined the Adviser in July 1996 and has
worked with the Adviser's affiliate, Miller Anderson & Sherrerd, LLP for the
past five years. He assumed responsibility for the MAS Funds Small Cap Value and
Mid Cap Value Portfolios in 1996. Previously, he was with Alphametrics
Corporation and Wharton Econometric Forecasting Associates. Mr. Gerlach received
a B.A. in Economics from Haverford College.

--------------

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

If the value of a New Account falls below $100,000 because of
shareholder redemption(s), the Fund will notify the shareholder, and if
the account value remains below $100,000 for a continuous 60-day period,
the shares in such account are subject to redemption by the Fund and, if
redeemed, the
<PAGE>
net asset value of such shares will be promptly paid to the shareholder.
The Fund, however, will not redeem shares based solely upon changes in
the market that reduce the net asset value of shares.

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

GOLD PORTFOLIO

A PORTFOLIO OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is further amended and supplemented by changing the
following:

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25% of the Class B shares' average daily net
assets on an annualized basis. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. Shares in a
Portfolio account opened prior to January 2, 1996 (each, a "Pre-1996
Account") were designated Class A shares on January 2, 1996. For a
Portfolio account opened on or after January 2, 1996 (a "New Account"),
the minimum initial investment is $500,000 for Class A shares and
$100,000 for Class B shares. Certain exceptions to the foregoing
minimums apply to (1) shares in a Pre-1996 Account with a value of
$100,000 or more on March 1, 1996 (a "Grandfathered Class A Account");
(2) Portfolio accounts held by certain employees of the Adviser and of
its affiliates; and (3) certain advisory or asset allocation accounts,
such as Total Funds Management accounts, managed by Morgan Stanley or
its affiliates, including the Adviser ("Managed Accounts"). The Adviser
reserves the right in its sole discretion to determine which of such
advisory or asset allocation accounts shall be Managed Accounts. For
information regarding Managed Accounts, please contact your Morgan
Stanley account representative or the Fund at the telephone number
provided on the cover of this Prospectus. Shares in a Pre-1996 Account
with a value of less than $100,000 on March 1, 1996 (a "Grandfathered
Class B Account")
<PAGE>
converted to Class B shares on March 1, 1996. The minimum investment
levels may be waived at the discretion of the Adviser for (i) certain
employees and customers of Morgan Stanley or its affiliates and certain
trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". See "Purchase of Shares Minimum Investment and Account Sizes;
Conversion from Class A to Class B Shares."

--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

Investors may also invest in the Fund by purchasing shares through a
trust department, broker, dealer, agent, financial planner, financial
services firm or investment adviser. An investor may be charged an
additional service or transaction fee by that institution. The minimum
investment levels may be waived at the discretion of the Adviser for (i)
certain employees and customers of Morgan Stanley or its affiliates and
certain trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal
<PAGE>
Revenue Code of 1986, as amended, and "rabbi trusts". The Fund reserves
the right to modify or terminate the conversion features of the shares
as stated above at any time upon 60-days' notice to shareholders.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

GLOBAL EQUITY PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL SMALL CAP PORTFOLIO
ASIAN EQUITY PORTFOLIO
EUROPEAN EQUITY PORTFOLIO
JAPANESE EQUITY PORTFOLIO
LATIN AMERICAN PORTFOLIO

PORTFOLIOS OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
--------------

The Prospectus is further amended and supplemented by changing the
following:

Under the heading "PROSPECTUS SUMMARY," under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25% of the Class B shares' average daily net
assets on an annualized basis. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. Shares in a
Portfolio account opened prior to January 2, 1996 (each, a "Pre-1996
Account") were designated Class A shares on January 2, 1996. For a
Portfolio account opened on or after January 2, 1996 (a "New Account"),
the minimum initial investment is $500,000 for Class A shares and
$100,000 for Class B shares. Certain exceptions to the foregoing
minimums apply to (1) shares in a Pre-1996 Account with a value of
$100,000 or more on March 1, 1996 (a "Grandfathered Class A Account");
(2) Portfolio accounts held
<PAGE>
by certain employees of the Adviser and of its affiliates; and (3)
certain advisory or asset allocation accounts, such as Total Funds
Management accounts, managed by Morgan Stanley or its affiliates,
including the Adviser ("Managed Accounts"). The Adviser reserves the
right in its sole discretion to determine which of such advisory or
asset allocation accounts shall be Managed Accounts. For information
regarding Managed Accounts, please contact your Morgan Stanley account
representative or the Fund at the telephone number provided on the cover
of this Prospectus. Shares in a Pre-1996 Account with a value of less
than $100,000 on March 1, 1996 (a "Grandfathered Class B Account")
converted to Class B shares on March 1, 1996. The minimum investment
levels may be waived at the discretion of the Adviser for (i) certain
employees and customers of Morgan Stanley or its affiliates and certain
trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". See "Purchase of Shares Minimum Investment and Account Sizes;
Conversion from Class A to Class B Shares."

--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

If the value of a New Account containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

INTERNATIONAL MAGNUM PORTFOLIO

A PORTFOLIO OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The prospectus dated May 1, 1996 (the "Prospectus") of the International
Magnum Portfolio of the Morgan Stanley Institutional Fund, Inc. (the "Fund") is
hereby amended and supplemented as follows:

The following section is added before the section under the heading
"PROSPECTUS SUMMARY:"

FINANCIAL HIGHLIGHTS

The following table provides financial highlights for the International
Magnum Portfolio for the period ended July 31, 1996 and is part of the Fund's
unaudited financial statements which are included in the Fund's Statement of
Additional Information (the "SAI"). The SAI is available at no cost from the
Fund at the address and telephone number noted on the cover page of this
Prospectus. The following information should be read in conjunction with the
financial statements and notes thereto.
<PAGE>

<TABLE>
<CAPTION>
CLASS A CLASS B
--------- ---------
PERIOD FROM
MARCH 15, 1996* TO
JULY 31, 1996
(UNAUDITED)
--------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................................................... $ 10.00 $ 10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (1).............................................................. 0.03 0.03
Net Realized and Unrealized Loss on Investments........................................ (0.06) (0.08)
--------- ---------
Total from Investment Operations..................................................... (0.03) (0.05)
--------- ---------
NET ASSET VALUE, END OF PERIOD............................................................. $ 9.97 $ 9.95
--------- ---------
--------- ---------
TOTAL RETURN............................................................................... (0.30)% (0.50)%
--------- ---------
--------- ---------
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (Thousands)...................................................... $ 65,939 $ 2,395
Ratio of Expenses to Average Net Assets (1)................................................ 1.00%** 1.25%**
Ratio of Net Investment Income to Average Net Assets (1)................................... 1.71%** 1.66%**
Portfolio Turnover Rate.................................................................... 3% 3%
Average Commission Rate.................................................................... $ 0.0391 $ 0.0391
- --------------------------
(1) Effect of voluntary expense limitation during the period:
Per share benefit to net investment income........................................... $ 0.02 $ 0.02
Ratios before expense limitation:
Expenses to Average Net Assets....................................................... 2.15%** 2.68%**
Net Investment Income to Average Net Assets.......................................... 0.56%** 0.23%**
* Commencement of Operations
** Annualized
</TABLE>

--------------

Under the heading "PROSPECTUS SUMMARY" under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25%, on an annualized basis, of the Class B
shares' average daily net assets. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. The minimum
initial investment for shares in a Portfolio account is $500,000 for
Class A shares and $100,000 for Class B shares. Certain exceptions to
the foregoing minimums apply to (1) Portfolio accounts held by certain
employees of the Adviser and of its affiliates and (2) certain advisory
or asset allocation accounts, such as Total Funds Management accounts,
managed by Morgan Stanley or its affiliates, including the Adviser
("Managed Accounts"). The Adviser reserves the right in its sole
discretion to determine which of such advisory or asset allocation
accounts shall be Managed Accounts. For information regarding Managed
Accounts, please contact your Morgan Stanley account representative or
the Fund at the telephone number provided on the cover of this
Prospectus. The minimum investment levels may be waived at the
discretion of the Adviser for (i) certain employees and customers of
Morgan Stanley or its affiliates and
<PAGE>
certain trust departments, brokers, dealers, agents, financial planners,
financial services firms, or investment advisers that have entered into
an agreement with Morgan Stanley or its affiliates; and (ii) retirement
and deferred compensation plans and trusts used to fund such plans,
including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Internal Revenue Code of 1986, as amended, and "rabbi
trusts". See "Purchase of Shares -- Minimum Investment and Account
Sizes; Conversion from Class A to Class B Shares."
--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

For a Portfolio account, the minimum initial investment and minimum
account size are $500,000 for Class A shares and $100,000 for Class B
shares. Managed Accounts may purchase Class A shares without being
subject to such minimum initial investment or minimum account size
requirements for a Portfolio account. Employees of the Adviser and of
its affiliates may purchase Class A shares subject to conditions,
including a lower minimum initial investment established by Officers of
the Fund.

If the value of a Portfolio account containing Class A shares falls
below $500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder. Managed Accounts are not subject to conversion
from Class A shares to Class B shares.

Investors may also invest in the Portfolio by purchasing shares
through a trust department, broker, dealer, agent, financial planner,
financial services firm or investment adviser. An investor may be
charged an additional service or transaction fee by that institution.
The minimum investment levels may be waived at the discretion of the
Adviser for (i) certain employees and customers of Morgan Stanley or its
affiliates and certain trust departments, brokers, dealers, agents,
financial planners, financial services firms, or investment advisers
that have entered into an agreement with Morgan Stanley or its
affiliates; and (ii) retirement and deferred compensation plans and
trusts used to fund such plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of
1986, as amended, and "rabbi trusts". The Fund reserves the right to
modify or terminate the conversion features of the shares as stated
above at any time upon 60-days' notice to shareholders.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

If the value of a Portfolio account falls below $100,000 because of
shareholder redemption(s), the Fund will notify the shareholder, and if
the account value remains below $100,000 for a continuous 60-day period,
the shares in such account are subject to redemption by the Fund and, if
redeemed, the
<PAGE>
net asset value of such shares will be promptly paid to the shareholder.
The Fund, however, will not redeem shares based solely upon changes in
the market that reduce the net asset value of shares.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.
--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.
--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED MAY 1, 1996

FIXED INCOME PORTFOLIO
GLOBAL FIXED INCOME PORTFOLIO
MUNICIPAL BOND PORTFOLIO
MORTGAGE-BACKED SECURITIES PORTFOLIO
HIGH YIELD PORTFOLIO
MONEY MARKET PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO

PORTFOLIOS OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is further amended and supplemented by replacing:

Under the heading "FUND EXPENSES" on Page 2, the total operating
expenses (net of fee waivers) for the Class B shares of the Fixed Income
Portfolio have been lowered to 0.60%.

--------------

Under the heading "ADDITIONAL INVESTMENT INFORMATION" on Page 27
under the subheading "FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS," the first two paragraphs are deleted and replaced with the
following:

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. In order to
remain fully invested and to reduce transaction costs, each Portfolio,
except the Money Market and Municipal Money Market Portfolios, may
utilize appropriate futures contracts and options on futures contracts
to a limited extent. Because transaction costs associated with futures
and options may be lower than the costs of investing in stocks directly,
it is expected that the use of futures and options on futures contracts
to facilitate cash flows may reduce a Portfolio's overall transaction
costs.

Each Portfolio, except the Money Market and Municipal Money Market
Portfolios, may enter into futures contracts and options on futures
provided that not more than 5% of its total assets are
<PAGE>
required as deposit to secure obligations under such contracts, and
provided further that not more than 20% of its total assets are
invested, in the aggregate, in futures contracts and options on futures.

--------------

Add the following investment policies with respect to the FIXED INCOME AND
GLOBAL FIXED INCOME PORTFOLIOS under the heading "ADDITIONAL INVESTMENT
INFORMATION" on page 28 before the sub-heading "ADDITIONAL INVESTMENT
INFORMATION -- REPURCHASE AGREEMENTS."

OPTIONS TRANSACTIONS. The Fixed Income and Global Fixed Income
Portfolios may write (i.e., sell) covered call options and covered put
options on portfolio securities. By selling a covered call option, a
Portfolio would become obligated during the term of the option to
deliver the securities underlying the option should the option holder
choose to exercise the option before the option's termination date. In
return for the call it has written, the Portfolio will receive from the
purchaser (or option holder) a premium which is the price of the option,
less a commission charged by a broker. The Portfolio will keep the
premium regardless of whether the option is exercised. By selling a
covered put option, the Portfolio incurs an obligation to buy the
security underlying the option from the purchaser of the put at the
option's exercise price at any time during the option period, at the
purchaser's election (certain options written by the Portfolio will be
exercisable by the purchaser only on a specific date). A call option is
"covered" if the Portfolio owns the security underlying the option it
has written or has an absolute or immediate right to acquire the
security by holding a call option on such security, or maintains a
sufficient amount of cash, cash equivalents or liquid assets to purchase
the underlying security. Generally, a put option is "covered" if the
Portfolio maintains cash, U.S. Government securities or other liquid
assets equal to the exercise price of the option, or if the Portfolio
holds a put option on the same underlying security with a similar or
higher exercise price.

When a Portfolio writes covered call options, it augments its income
by the premiums received and is thereby hedged to the extent of that
amount against a decline in the price of the underlying securities. The
premiums received will offset a portion of the potential loss incurred
by the Portfolio if the securities underlying the options are ultimately
sold by the Portfolio at a loss. However, during the option period, the
Portfolio has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but has retained the
risk of loss should the price of the underlying security decline.

A Portfolio will write covered put options to receive the premiums
paid by purchasers (when the Adviser wishes to purchase the security
underlying the options at a price lower than its current market price,
in which case the Portfolio will write the covered put at an exercise
price reflecting the lower purchase price sought) and to close out a
long put option position. The writer of a covered put option accepts the
risk of a decline in the price of the underlying security.

A Portfolio may also purchase put or call options. When the
Portfolio purchases a call option it acquires the right to buy a
designated security at a designated price (the "exercise price"), and
when the Portfolio purchases a put option it acquires the right to sell
a designated security at the exercise price, in each case on or before a
specified date (the "termination date"), which is usually not more than
nine months from the date the option is issued. The Portfolio may
purchase call options to close out a covered call position or to protect
against an increase in the price of a security it anticipates
purchasing. The Portfolio may purchase put options on securities to
protect itself against a decline in the value of the security. If the
value of the underlying security were to fall below the exercise price
of the put purchased in an amount greater than the premium paid for the
option, the Portfolio would incur no additional loss. The Portfolio may
also purchase put options to close out written put positions
<PAGE>
in a manner similar to call option closing purchase transactions. There
are no other limits on the Portfolio's ability to purchase call and put
options.

Other risks associated with the use of options are (i) imperfect
correlation between the change in market value of the securities held by
the Portfolio and the price of options relating to the securities
purchased or sold by the Portfolio; and (ii) possible lack of a liquid
secondary market for an option. Options that are not traded on and
exchange (OTC options) are often considered illiquid and may be
difficult to value. In the opinion of the Adviser, the risk that the
Portfolio will be unable to close out an options contract will be
minimized by only entering into options transactions for which there
appears to be a liquid secondary market. For more detailed information
about options transactions, see "Investment Objectives and Policies" in
the Statement of Additional Information.

--------------

Under the heading "PROSPECTUS SUMMARY" under the subheading "HOW TO INVEST,"
the first paragraph is deleted and replaced with the following:

HOW TO INVEST

--------------

If the value of a New Account, containing Class A shares falls below
$500,000 (but remains at or above $100,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $500,000 (but remains at or above $100,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

Grandfathered Class A Accounts, Grandfathered Class B Accounts and
Managed Accounts are not subject to involuntary redemption.
<PAGE>
The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

ADDITION OF PORTFOLIO MANAGERS. J. David Germany, Michael B. Kushma
and Paul F. O'Brien have joined Robert M. Smith as portfolio managers
with primary responsibility for managing the assets of the Global Fixed
Income Portfolio. Michael J. Smith no longer has responsibility for
managing the assets of the Global Fixed Income Portfolio. Accordingly,
the third paragraph on p. 31 of the Prospectus is deleted and replaced
with the following paragraph:

GLOBAL FIXED INCOME PORTFOLIO -- J. DAVID GERMANY, MICHAEL B.
KUSHMA, PAUL F. O'BRIEN AND ROBERT M. SMITH. J. David Germany shares
primary responsibility for managing the Portfolio's assets. He joined
the Adviser in 1996 and has been a portfolio manager with the Adviser's
affiliate, Miller Anderson & Sherrerd, LLP ("MAS") since 1991. He was
Vice President & Senior Economist for Morgan Stanley & Co. Incorporated
("Morgan Stanley") from 1989 to 1991. He assumed responsibility for the
Global Fixed Income and International Fixed Income Portfolios of the
MAS-advised MAS Funds in 1993 and the MAS Funds' Multi-Asset-Class
Portfolio in 1994. Mr. Germany was Senior Staff Economist (International
Finance and Macroeconomics) to the Council of Economic Advisors --
Executive Office of the President from 1986 through 1987 and an
Economist with the Board of Governors of the Federal Reserve System --
Division of International Finance from 1983 through 1987. He holds an
A.B. degree (Valedictorian) from Princeton University and a Ph.D. in
Economics from the Massachusetts Institute of Technology. Michael B.
Kushma, a Principal at Morgan Stanley, joined the firm in 1987. He
shares primary responsibility for managing the Portfolio's assets. He
was a member of Morgan Stanley's global fixed income strategy group in
the fixed income division from 1987-1995 where he became the division's
senior government bond strategist. He joined the Adviser in 1995 where
he took responsibility for the global fixed income portfolios. Mr.
Kushma received an A.B. in economics from Princeton University in 1979,
an M. Sc. in economics from the London School of Economics in 1981 and
an M.Phil. in economics from Columbia University in 1983. Paul F.
O'Brien shares primary responsibility for managing the Portfolio's
assets. He joined the Adviser and MAS in 1996. He was head of European
Economics from 1993 through 1995 for JP Morgan and as Principal
Administrator from 1991 through 1992 for the Organization for Economic
Cooperation and Development. He assumed responsibility for the
MAS-advised MAS Funds' Global Fixed Income and International Fixed
Income Portfolios in 1996. Mr. O'Brien holds a B.S. degree from the
Massachusetts Institute of Technology and a Ph.D. in Economics from the
University of Minnesota. Robert Smith, a Principal of Morgan Stanley,
joined the Adviser in June 1994 and has shared primary responsibility
for managing the Portfolio's assets since July 1994. Prior to joining
the Adviser he spent eight years as Senior Portfolio Manager -- Fixed
Income at the State of Florida Pension Fund. Mr. Smith's
responsibilities included active total-rate-of-return management of long
term portfolios and supervision of other fixed income managers. A
graduate of Florida State University with a B.S. in Business, Mr. Smith
also received an M.B.A. -- Finance from Florida State and holds a
Chartered Financial Analyst (CFA) designation.

--------------

ADDITION OF PORTFOLIO MANAGERS. Thomas L. Bennett and Stephen F.
Esser have joined Robert Angevine as portfolio managers with primary
responsibility for managing the assets of
<PAGE>
the High Yield Portfolio. Accordingly, the last paragraph on p. 31 of
the Prospectus is deleted and replaced with the following paragraph:

HIGH YIELD PORTFOLIO -- ROBERT ANGEVINE, THOMAS L. BENNETT AND
STEPHEN F. ESSER. Robert Angevine is a Principal of the Adviser and the
Portfolio Manager for high yield investments. He shares primary
responsibility for managing the Portfolio's assets. Prior to joining the
Adviser in October 1988, he spent over eight years at Prudential
Insurance where he was responsible for the largest open-end high yield
mutual fund in the country. Mr. Angevine also manages high yield assets
for one of the largest corporate pension funds in the country. His other
experience includes international treasury operations at a major
pharmaceutical company and commercial banking. Mr. Angevine received an
M.B.A. from Fairleigh Dickinson University and a B.A. in Economics from
Lafayette College. He served two years as a Lieutenant in the U.S. Army.
Thomas L. Bennett shares responsibility for managing the Portfolio's
assets. He joined the Adviser in 1996 and has been a portfolio manager
with MAS since 1984. Mr. Bennett assumed responsibility for the
MAS-advised MAS Funds' Fixed Income Portfolio in 1984, the Domestic
Fixed Income Portfolio in 1987, the High Yield Portfolio in 1985, the
Fixed Income Portfolio II in 1990, the Special Purpose Fixed Income and
Balanced Portfolios in 1992 and the Multi-Asset-Class Portfolio in 1994.
Mr. Bennett also is the Chairman of the MAS Funds and has a B.S. degree
(Chemistry) and an M.B.A. from the University of Cincinnati. Stephen F.
Esser shares primary responsibility for managing the Portfolio's assets.
He joined the Adviser in 1996 and has been a portfolio manager with MAS
since 1988. He assumed responsibility for the MAS-advised MAS Funds'
High Yield Portfolio in 1989. Mr. Esser is a member of the New York
Society of Security Analysts and has a B.S. degree (Summa Cum Laude; Phi
Beta Kappa) from the University of Delaware.

--------------

ADDITION OF PORTFOLIO MANAGERS. Ellen D. Harvey, Christian G. Roth
and Scott F. Richard have joined Abigail Jones Feder and Kenneth R.
Holley as portfolio managers with primary responsibility for managing
the assets of the Money Market Portfolio. Accordingly, the first
paragraph on p. 32 of the Prospectus is deleted and replaced with the
following paragraph:

MONEY MARKET PORTFOLIO -- ABIGAIL JONES FEDER, KENNETH R. HOLLEY,
ELLEN D. HARVEY, CHRISTIAN G. ROTH AND SCOTT F. RICHARD. Abigail Feder
is a Principal of Morgan Stanley and shares responsibility for managing
short-term taxable and tax-exempt portfolios. Ms. Feder joined Morgan
Stanley's Corporate Finance Department in 1985. In 1987 she joined the
Adviser as a Marketing Analyst and was promoted to a Marketing Director
in 1988. She joined the Fixed Income Group as a Portfolio Manager in
1989 and she became a Vice President in 1992. Ms. Feder holds a B.A.
from Vassar College. Kenneth R. Holley joined the Adviser as a
short-term fixed income portfolio manager in July, 1993. Prior thereto,
he worked for 2 1/2 years as a Finance Officer for the African
Development Bank implementing trading strategies for the bank's $1
billion short to intermediate U.S. dollar portfolio. Prior to joining
the ADB, Mr. Holley spent 1 1/2 years with Ward and Associates Asset
Management as a Vice President responsible for fixed income strategy.
Before Ward and Associates he worked in the fixed income department of
Salomon Brothers, Inc. Mr. Holley holds a B.S. degree in Engineering
from University of Pennsylvania and an M.B.A. from the Wharton School.
Mr. Barth and Ms. Feder have had primary responsibility for managing the
Portfolio's assets since inception. Mr. Holley has shared primary
responsibility for managing the Portfolio's assets since August, 1993.
Ellen D. Harvey shares primary responsibility for managing the
Portfolio's assets. She joined the Adviser in 1996 and has been a
portfolio manager with MAS since 1984. She assumed responsibility for
the MAS-advised Cash Reserves Portfolio in 1990, the Limited Duration
Portfolio in 1992 and the Intermediate Duration Portfolio in 1994. Ms.
Harvey holds an A.B. in economics from Princeton University and an M.A.
in
<PAGE>
economics from George Washington University. Christian G. Roth shares
primary responsibility for managing the Portfolio's assets. He joined
the Adviser in 1996 and has been a portfolio manager with MAS since
1991. He served as Senior Associate, Dean Witter Capital Corporation
from 1987 to 1991. He assumed responsibility for the MAS-advised Limited
Duration and Intermediate Duration Portfolios in 1994. Mr. Roth holds a
B.S. from The Wharton School of the University of Pennsylvania. Scott F.
Richard shares primary responsibility for managing the Portfolio's
assets. He joined the Adviser in 1996 and has been a portfolio manager
with MAS since 1992. He served as Vice President, Head of Fixed Income
Research & Model Development for Goldman, Sachs & Co. from 1987 to 1991
and as Head of Mortgage Research in 1992. He assumed responsibility for
the MAS-advised Mortgage-Backed Securities Portfolio in 1992 and the
Limited Duration, Intermediate Duration, Municipal and PA Municipal
Portfolios in 1994. Mr. Richard holds a B.S. from Massachusetts
Institute of Technology and a D.B.A. from Harvard Graduate School of
Business Administration.

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PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE>
SUPPLEMENT DATED FEBRUARY 24, 1997
TO THE PROSPECTUS DATED AUGUST 22, 1996

TECHNOLOGY PORTFOLIO

A PORTFOLIO OF THE

MORGAN STANLEY INSTITUTIONAL FUND, INC. (THE "FUND")
P.O. BOX 2798
BOSTON, MASSACHUSETTS
02208-2798
-------------

Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.

--------------

The Prospectus is hereby amended and supplemented to reflect the deletion of
Dennis B. Sherva as Portfolio Manager of the Technology Portfolio.

DELETION OF PORTFOLIO MANAGER. Dennis B. Sherva no longer shares primary
responsibility for managing the assets of the Portfolio. Accordingly, the third
paragraph on p. 19 of the Prospectus is deleted and the second paragraph on p.
19 of the Prospectus is deleted and replaced with the following:

PORTFOLIO MANAGER. CHRISTOPHER R. BLAIR. Christopher Blair joined the
Adviser in 1993 as the Technology and Telecommunications Analyst for the
emerging growth stock group. Previously, he had been a Financial Analyst
for two years in Morgan Stanley's Corporate Finance Department, where he
focused on the telecommunications and technology sectors. Mr. Blair
graduated with distinction from McGill University, where he received a
B.A. in Political Science and Economics. Mr. Blair has had primary
management responsibility for the Portfolio since its inception.

--------------

Under the heading "PROSPECTUS SUMMARY" under the subheading "HOW TO
INVEST," the first paragraph is deleted and replaced with the following:

HOW TO INVEST

Class A shares of the Portfolio are offered directly to investors at
net asset value with no sales commission or 12b-1 charges. Class B
shares of the Portfolio are offered at net asset value with no sales
commission, but with a 12b-1 fee, which is accrued daily and paid
quarterly, equal to 0.25%, on an annualized basis, of the Class B
shares' average daily net assets. Share purchases may be made by sending
investments directly to the Fund or through the Distributor. The minimum
initial investment for shares in a Portfolio account is $250,000 for
Class A shares and $50,000 for Class B shares. Certain
<PAGE>
exceptions to the foregoing minimums apply to (1) Portfolio accounts
held by certain employees of the Adviser and of its affiliates and (2)
certain advisory or asset allocation accounts, such as Total Funds
Management accounts, managed by Morgan Stanley or its affiliates,
including the Adviser ("Managed Accounts"). The Adviser reserves the
right in its sole discretion to determine which of such advisory or
asset allocation accounts shall be Managed Accounts. For information
regarding Managed Accounts, please contact your Morgan Stanley account
representative or the Fund at the telephone number provided on the cover
of this Prospectus. The minimum investment levels may be waived at the
discretion of the Adviser for (i) certain employees and customers of
Morgan Stanley or its affiliates and certain trust departments, brokers,
dealers, agents, financial planners, financial services firms, or
investment advisers that have entered into an agreement with Morgan
Stanley or its affiliates; and (ii) retirement and deferred compensation
plans and trusts used to fund such plans, including, but not limited to,
those defined in Section 401(a), 403(b) or 457 of the Internal Revenue
Code of 1986, as amended, and "rabbi trusts". See "Purchase of Shares --
Minimum Investment and Account Sizes; Conversion from Class A to Class B
Shares."

--------------

MINIMUM INVESTMENT AND ACCOUNT SIZES; CONVERSION FROM CLASS A TO CLASS B
SHARES

For a Portfolio account, the minimum initial investment and minimum
account size are $250,000 for Class A shares and $50,000 for Class B
shares. Managed Accounts may purchase Class A shares without being
subject to such minimum initial investment or minimum account size
requirements for a Portfolio account. Employees of the Adviser and of
its affiliates may purchase Class A shares subject to conditions,
including a lower minimum initial investment established by Officers of
the Fund.

If the value of a Portfolio account containing Class A shares falls
below $250,000 (but remains at or above $50,000) because of shareholder
redemption(s), the Fund will notify the shareholder, and if the account
value remains below $250,000 (but remains at or above $50,000) for a
continuous 60-day period, the Class A shares in such account will
convert to Class B shares and will be subject to the distribution fee
and other features applicable to the Class B shares. The Fund, however,
will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under
current tax law, conversions between share classes are not a taxable
event to the shareholder. Managed Accounts are not subject to conversion
from Class A shares to Class B shares.

Investors may also invest in the Portfolio by purchasing shares
through a trust department, broker, dealer, agent, financial planner,
financial services firm or investment adviser. An investor may be
charged an additional service or transaction fee by that institution.
The minimum investment levels may be waived at the discretion of the
Adviser for (i) certain employees and customers of Morgan Stanley or its
affiliates and certain trust departments, brokers, dealers, agents,
financial planners, financial services firms, or investment advisers
that have entered into an agreement with Morgan Stanley or its
affiliates; and (ii) retirement and deferred compensation plans and
trusts used to fund such plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of
1986, as amended, and "rabbi trusts". The Fund reserves the right to
modify or
<PAGE>
terminate the conversion features of the shares as stated above at any
time upon 60-days' notice to shareholders.

MINIMUM ACCOUNT SIZES AND INVOLUNTARY REDEMPTION OF SHARES

If the value of a Portfolio account falls below $50,000 because of
shareholder redemption(s), the Fund will notify the shareholder, and if
the account value remains below $50,000 for a continuous 60-day period,
the shares in such account are subject to redemption by the Fund and, if
redeemed, the net asset value of such shares will be promptly paid to
the shareholder. The Fund, however, will not redeem shares based solely
upon changes in the market that reduce the net asset value of shares.

The Fund reserves the right to modify or terminate the involuntary
redemption features of the shares as stated above at any time upon
60-days' notice to shareholders.

--------------

The Account Registration Form is deleted and replaced with the form enclosed
with this supplement.

--------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE