SUB-ADVISORY AGREEMENT



     AGREEMENT made as of the 11th day of August, 2003, by and between MORGAN

STANLEY INVESTMENT MANAGEMENT INC., a Delaware corporation (hereinafter referred

to as "MSIM"), and MORGAN STANLEY INVESTMENT MANAGEMENT LIMITED, a company

incorporated under the laws of England (hereinafter referred to the "Local

Manager").



                              W I T N E S S E T H:



     WHEREAS, Morgan Stanley Institutional Fund, Inc. (the "Fund") is a Maryland

corporation engaged in business as an open-end management investment company

with 28 separate portfolios, certain of which are set forth on Schedule A (with

such portfolios set forth on Schedule A being the "Portfolios") and is

registered under the Investment Company Act of 1940, as amended (hereinafter

referred to as the "Investment Company Act"); and



     WHEREAS, MSIM and the Local Manager are engaged principally in rendering

investment advisory services and are registered as investment advisers under the

Investment Advisors Act of 1940, as amended; and



     WHEREAS, the Local Manager is regulated by the Financial Services Authority

in the United Kingdom; and



     WHEREAS, MSIM has entered into an investment advisory agreement (the

"Advisory Agreement") with the Fund dated May 31, 1997, pursuant to which MSIM

provides management and investment and advisory services to the Fund; and



     WHEREAS, the Local Manager is willing to provide investment management

services to MSIM in connection with the Fund's operations on the terms and

conditions hereinafter set forth and including the terms and conditions

contained in Annex 1 and Annex 2 to this Agreement;



     NOW THEREFORE, in consideration of the premises and the covenants

hereinafter contained, the Local Manager and MSIM hereby agree as follows:



                                    ARTICLE I



                           DUTIES OF THE LOCAL MANAGER



     MSIM hereby employs the Local Manager to act as discretionary investment

manager to MSIM and to furnish the investment management services described

below, subject to the broad supervision of MSIM and the Fund, for the period and

on the terms and conditions set forth in this Agreement. The Local Manager

hereby accepts such employment and agrees during such period, at its own

expense, to render, or arrange for the rendering of, such services and to assume

the obligations herein set forth for the compensation provided for herein. MSIM

and its affiliates shall for all purposes herein be deemed an Intermediate

Customer as defined under the rules and guidance promulgated by the Financial

Services Authority (hereinafter referred to as the "FSA Rules"). The Local

Manager and its affiliates shall for all purposes herein be deemed to be an

independent contractor and shall, unless otherwise expressly provided or

authorized, have no authority to act for or represent the Fund in any way or

otherwise be deemed an agent of the Fund.



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     The Local Manager shall have full discretion, power and authority on the

Fund's behalf to buy, sell, retain, exchange or otherwise deal in investments

and other assets, make deposits, subscribe to issues and offers for sale and

accept placings of any investments, enter into foreign currency transactions on

a spot or forward basis, effect transactions on any markets, take all day to day

decisions and otherwise act as the Local Manager judges appropriate in relation

to the investment and reinvestment of the portfolio of assets of each Portfolio.

This includes performing all acts and executing all documents which the Local

Manager reasonably considers incidental thereto, including (without limitation)

power to execute and deliver all applications, requests, or claims for refund,

reduction, repayment or credit of, or exemption or relief from, any withholding

tax or similar taxes in any jurisdiction in which such applications, requests or

claims may be made. Subject to guidelines adopted by each Portfolio, the Local

Manager shall also make recommendations or take action as to the manner in which

voting rights, rights to consent to corporate action and any other rights

pertaining to the portfolio of assets of each Portfolio shall be exercised. All

of the foregoing is subject always to the restrictions of the Articles of

Incorporation and By-Laws of the Fund, as they may be amended and/or restated

from time to time and as provided to the Local Manager by MSIM, the provisions

of the Investment Company Act and the statements relating to each Portfolio's

investment objective(s), investment policies and investment restrictions as the

same are set forth in the currently effective prospectus and statement of

additional information relating to the shares of the Fund under the Securities

Act of 1933, as amended (the "Prospectus" and "Statement of Additional

Information", respectively), as well as to the supervision of MSIM and the Board

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