MSCI (MSCI) 10-K risk factor changes: FY2017 vs FY2016

[removed: We are dependent on the use of third-party] [added: A refusal by a key vendor to distribute our] data [removed: and software, and] [added: or] any loss of key outside suppliers of data or software products or reduction in the accuracy or quality of such data or products or any failure by us to comply with our vendors’ licensing requirements could impair our ability to provide our clients [added: with the data, products or services they desire, which could have a material adverse effect on our business, financial condition or results of operations.]

[removed: with the products or services they desire, which] [added: Such cyber-attacks] could have a [removed: material] [added: materially] adverse effect on our business, financial condition or results of operations.

As of December 31, [removed: 2016,] [added: 2017,] we relied on the data of over 200 suppliers, including large volumes of data from certain stock exchanges around the world.

Termination of provision of data by one or more of our significant data suppliers or exclusion from, or restricted use of, or litigation in connection [removed: with,] [added: with] a data provider’s information could decrease the information available for us to use (and offer our clients) and may have a material adverse effect on our business, financial condition or results of operations.

We also monitor our use of third-party data and software products to comply with applicable [removed: license] [added: licensing] requirements.

Our business could be materially adversely affected if we are unable to timely or effectively replace the functionality provided by data or [removed: software that becomes unavailable or fails to operate effectively for any reason.]

Our clients that pay us a fee based on the assets of an [added: index-linked] investment product may seek to negotiate a lower asset-based fee percentage or lower the total expense ratio of [removed: their funds linked to MSCI indexes] [added: such products] or may cease using our indexes, which could limit the growth of or decrease our revenues from asset-based fees.

As the assets of index-linked investment [removed: products] [added: products, including ETFs and mutual funds,] managed by our clients change, they may request to pay us lower asset-based fee percentages, which are sometimes calculated as a percentage of the relevant [removed: fund’s] [added: product’s] total expense ratio (“TER”).

Additionally, competition is intense and increasing rapidly among our clients that provide [removed: exchange traded funds (“ETFs”), among other products.][added: index-linked investment products, including ETFs.]

The fees [removed: ETF] providers [added: of index-linked investment products] charge their clients are one of the competitive differentiators for [added: these managers with some providers seeking to win or retain business by charging their clients lower fees.]

As noted above, in many cases our fees can be affected by an increase or decrease in [removed: a product provider’s] [added: an investment product’s] TER.

Moreover, clients that have licensed our indexes to serve as the basis of index-linked investment products are generally not required to continue to use our indexes and could elect to cease offering the product or switch to a lower fee [removed: index, and at least one large client has ceased using MSCI indexes as the basis for a significant number of its index funds in the past.][added: index.]

We [removed: offer] [added: have] a [removed: diversified pricing structure] [added: differentiated licensing strategy] for our indexes and from time-to-time experience faster growth in lower fee product areas, resulting in a lower average asset-based fee percentage for licensing our indexes.

Finally, to the extent that an asset manager finds it beneficial to offer clients [removed: ETFs and institutional funds] [added: multiple kinds of index-linked investment products] based on the same indexes, a shift away from use of an index as the basis of one type of product may lead to a corresponding shift away from the use of the same index as the basis of [removed: the] [added: an] other type of product.

If we are required to offer clients materially lower asset-based fee percentages with respect to [added: index-linked] investment products that generate fees based on the assets of such products or our largest clients cease to use our indexes, our revenues could be negatively impacted, which could have a material adverse effect on our business, financial condition or results of operations.

They accounted for [removed: 18.3%] [added: 21.7%] and [removed: 18.4%] [added: 18.3%] of revenues for the fiscal years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

These asset-based fees accounted for [removed: 47.4%] [added: 55.5%] and [removed: 48.3%] [added: 47.4%] of the total revenues from our ten largest clients for the fiscal years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

[removed: Volatile capital markets, as well as changing] investment styles, among other factors, may influence an investor’s decision to invest in and maintain an investment in an index-linked investment product.

Accordingly, the value of assets [removed: linked to ETFs] [added: in index-linked investment products] can fluctuate significantly over short periods of time and such volatility may be further impacted by fluctuations in foreign currency exchange rates.

If we are unable to offset the impact of decreased values of assets linked to [removed: ETFs,] [added: index-linked investment products,] including by managing our operating costs, our profitability could be materially adversely affected.

Certain events could lead to interruptions in our operations, including interruptions affecting our information technology platform, electronic delivery systems and the internet, [removed: that] [added: which] could impair our ability to provide clients with products and customer service.

Heavy use of our electronic delivery systems and other factors such as loss of service from third parties, operational failures, sabotage, break-ins and similar disruptions from unauthorized tampering, intrusions or hacking, human error, cyber-terrorism, [added: ransomware,] terrorist attacks affecting sites where we are located, natural disasters, power loss, telecommunications failures, technical breakdowns, internet failures or computer viruses could impair our systems’ operations or interrupt their availability for extended periods of time.

While we have implemented disaster recovery and business continuity [removed: plans] [added: plans, increased our protection measures in response to global cyber-attacks] and [removed: have] been able to defend our systems against such disruptions and attacks in the past, there is no assurance that we will be able to do so successfully in the future or that our disaster recovery or business continuity plans will be effective in mitigating the risks and costs associated with the particular event that has occurred.

[added: See “ —Changes in government] regulations, including the implementation of new or pending financial [added: or operational] regulations or the repeal of existing financial [added: or operational] regulations, could materially adversely affect our business, financial condition or results of operations” below.

We have confidentiality policies in place regarding changes to the composition of our indexes and have implemented information barrier procedures to protect the confidentiality of [removed: the] [added: any] material, non-public information regarding changes to our equity indexes.

We have confidentiality policies in place and have implemented information barrier procedures to limit access to this information and to prevent the unauthorized disclosure and misuse of information regarding material non-public changes [added: relating] to [removed: the composition of] our equity indexes.

If our confidentiality policies or information barrier procedures fail or we are delayed in implementing such procedures as necessary with respect to a newly acquired business and an employee inadvertently discloses, or deliberately [removed: misuses,] [added: misuses] material non-public information [removed: about a change] [added: related] to one of our indexes, our reputation may suffer.

In addition, certain exchanges permit our clients to list [removed: ETFs or other financial] [added: index-linked investment] products based on our equity indexes only if we provide a representation to the exchange that we have information barrier procedures in place designed to address the unauthorized disclosure and misuse of [removed: material,] [added: material] non-public information [removed: about changes] [added: related] to [removed: the composition of] our equity indexes.

[removed: Our larger] competitors may have access to more resources and may be able to achieve greater economies of scale, and our specialized competitors that are focused on a narrower product line may be more effective in devoting technical, marketing and financial resources to compete with us with respect to a particular product.

Accordingly, competitive [added: and market] pressures may result in fewer clients, fewer subscriptions or investment product licenses, [added: including as a result of client closures and consolidations,] price reductions, [added: prolonged selling] and [added: renewal cycles, and] increased operating costs, such as for marketing and product development, which could, individually or in the aggregate, result in lower revenue, gross margins and operating income.

See [removed: “— Our] [added: “—Our] clients that pay us a fee based on the assets of an [added: index-linked] investment product may seek to negotiate a lower asset-based fee percentage or lower the total expense ratio of [removed: their funds linked to MSCI indexes] [added: such products] or may cease using our indexes, which could limit the growth of or decrease our revenues from asset-based fees” above and Part I, Item 1.

If, among other things, we fail to accurately [removed: predict] [added: anticipate] or respond or adapt to evolving technologies and changing industry standards, if we fail to anticipate and meet the needs of our clients through the successful development of new products and services, if our new products and services are not attractive to our clients or cannot be integrated with third-party platforms, if our new products do not perform as well as anticipated, if [added: we misprice our new products and services, if] the launch of new products and offering of new services is not timely, or if competitors in any business line introduce products, services, systems and processes that are more competitive than ours or that gain greater market acceptance, we could lose market share and clients to our competitors which could materially adversely affect our business, financial condition or results of operations.

If we are unable to effectively manage transitions to new or enhanced products and services, our business, financial condition or results of operations could be materially [removed: adversely affected.]

For the fiscal years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] revenues from our ten largest clients accounted for [removed: 25.7%] [added: 27.8%] and [removed: 26.0%] [added: 25.7%] of our total revenues, respectively.

Failure [removed: of] [added: to achieve] one or more of these objectives could have a material adverse effect on our business, financial condition and operating results.

For the fiscal year ended December 31, [removed: 2016,] [added: 2017,] our largest client organization by revenue, BlackRock, accounted for [removed: 9.4%] [added: 11.5%] of our total revenues.

For the fiscal years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015, 93.7%] [added: 2016, 95.3%] and [removed: 93.0%,] [added: 93.7%,] respectively, of the revenue from BlackRock came from fees based on the assets in BlackRock’s ETFs that are based on our indexes.

See [removed: “— Our] [added: “—Our] clients that pay us a fee based on the assets of an [added: index-linked] investment product may seek to negotiate a lower asset-based fee percentage or lower the total expense ratio of [removed: their funds linked to MSCI indexes] [added: such products] or may cease using our indexes, which could limit the growth of or decrease our revenues from asset-based [removed: fees ”] [added: fees”] above.

If we experience higher than expected operating costs, including increased personnel costs, occupancy costs, selling and marketing costs, investments in geographic expansion, communication costs, travel costs, [removed: software] [added: application] development costs, professional fees, costs related to information technology infrastructure and other costs, and we cannot adjust to these costs, our operating results may fluctuate significantly or our anticipated profitability may be reduced and our anticipated results of operations and financial position may be materially adversely affected.

Failure to do so could limit our ability to maintain or grow current revenues, which could have a material adverse effect on our business, financial condition or results of [removed: operations ”] [added: operations”] above.

We are dependent on third parties to supply data and software for our products and are dependent on certain vendors to distribute our data.

Additionally, we rely on certain third-party vendors to distribute our data to clients.

While some of our vendors generate revenue in connection with distributing our data, others do not derive a direct financial benefit from doing so.

Should any of our key vendors refuse to distribute our data for any reason, we would need to find alternative ways to distribute our data, which may have a material adverse effect on our business, financial condition or results of operations.

software that becomes unavailable or fails to operate effectively for any reason.

For example, at least one large client ceased using MSCI indexes as the basis for a significant number of its index funds.

Additionally, clients that license our indexes to serve as the basis for listed futures and options contracts might discontinue such contracts.

While we look to maximize the price/volume trade-off over the long-term, there can be no assurance that we will be able to do so.

Results for any given quarter could be materially adversely affected by stronger growth in AUM in index-linked investment products with lower than average product fees not sufficiently off-set by growth in AUM in index-linked investment products in higher than average product fees.

Volatile capital markets, which may impact whether investors choose to invest in developed or emerging markets, or in the U.S. or non-U.S. markets, as well as changing

For example, a trend that favors active investment management over passive investment management could lead to a decreased demand for index-linked investment products, and thus decreased revenue attributable to assets in index-linked investment products.

Our larger

adversely affected.

On June 23, 2016, the United Kingdom voted to leave the European Union through the Referendum of the United Kingdom’s Membership of the European Union, an event commonly referred to as “Brexit.” Brexit could lead to legal uncertainty and potentially divergent national laws and regulations that affect our business.

To the extent that we rely on our clients and vendors to provide data for our products and services and certain laws, rules or regulations impact our clients’ and vendors’ ability to provide that data to us or regulate the fees for which such data can be provided, our ability to continue to produce our products and services or the related costs could be negatively impacted.

The regulations that most materially impact us are described below:

| | • | Regulation Affecting Benchmarks. Regulation (EU) 2016/1011 on indexes used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds was |

For 2017, we continued to rely on our 2016 compliance statement as updated in light of the Regulation (EU) 2016/1011.

Additionally, on January 3, 2018, rules became effective in the EU that require sell-side firms to unbundle the costs of research, and separately charge buy-side firms for execution, investment research and other advisory services.

MSCI is not such a firm, and we rely on our clients to determine whether their use of our products and services falls within the definition of investment research, and from which budget our fees are to be paid.

The impact of these decisions on our clients’ budgets and the ongoing uncertainty around the application of the rules has led to and could continue to lead to delays in the execution of agreements and the potential loss of revenue in the EU, specifically for certain of our ESG Research products.

If additional rules or interpretations are issued that expand the definition of investment research services in such a way that causes our clients in the EU to believe other of our products and services constitute investment research, these negative impacts could increase which could materially adversely affect our business, financial condition or results of operations.

To the extent that our clients are subject to increased

we would prevail in any litigation arising from such claims if such claims are not settled.

Despite our efforts and processes to prevent breaches of our internal network system through security patches and software updates, we are still vulnerable to cyber-attacks launched by those seeking to exploit vulnerabilities in such code.

delays in or loss of market acceptance of our products, license terminations or renegotiations and/or unexpected expenses and diversion of resources to remedy or mitigate such errors.

Additionally, while we offer products and services to both active and passive investment managers, an economic trend that significantly favors either active investment management or passive investment management could lead to a decrease in our revenues that would not be fully offset by revenues generated from products and services sold to passive or active investment managers.

We cannot provide assurance that we will be successful in integrating acquired businesses or that

Swiss francs, Euros, Hungarian forints, Hong Kong dollars, Chinese yuan and Mexican pesos.

As of December 31, 2017, we had $2.1 billion of outstanding indebtedness in the form of senior unsecured notes (collectively, the “Senior Notes”).

The Revolving Credit Agreement is subject to an unused commitment fee of 0.35%.

We recognized an interest expense associated with the Senior Notes and the Revolving Credit Agreement of approximately $116.0 million for the year ended December 31, 2017.

If we are unable to generate sufficient cash flow from operations or access it, we may need to refinance all or a portion of our indebtedness on or before maturity and we may not be able to secure additional financing on terms favorable or acceptable to us or at all.

If we do so, the risks related to our level of indebtedness could intensify, including by making it difficult for us to optimally capitalize and manage the cash flow for our business or placing us at a competitive disadvantage compared to our competitors that have less indebtedness.

Furthermore, the terms of our debt agreements include restrictive covenants that limit, among other things, our and our existing and future subsidiaries’ financial flexibility.

See Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a description of the restrictive covenants in our debt agreements.

Uncertainties in the interpretation and application of the 2017 Tax Cuts and Jobs Act could materially affect our tax obligations and effective tax rate.

The 2017 Tax Cuts and Jobs Act (“Tax Reform”) was enacted on December 22, 2017, and significantly affected U.S. tax law by changing how the U.S. imposes income tax on multinational corporations.

The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we will apply the law and may impact our results of operations in the period issued.

these ETF managers with some ETF providers seeking to win or retain business by charging their clients lower fees.

While we look to maximize the price/volume trade-off over the long-term there can be no assurance that we will be able to do so and results for any given quarter could be materially adversely affected by stronger growth in lower fee products areas that is not sufficiently off-set by growth in the volume of AUM in ETFs or other products that are based on our indexes.

The ability of our licensees to cease using our indexes or switch to lower fee indexes is generally true not just with respect to an index’s use as the basis of an ETF but also with respect to its use as the basis of other financial products, including mutual funds and institutional funds.

See “ —Changes in government

During 2015 and 2016, our Board of Directors adopted significant changes to the Company’s compensation approach and philosophy, including the implementation of a more performance-based approach to the payment of annual cash compensation pursuant to our Annual Incentive Plan (the “AIP”) based on the achievement of certain financial metrics and long-term equity incentive compensation based on total shareholder return for executive officers and managing directors.

We also implemented the CIP initiative in 2016 to further incentivize our client coverage personnel by aligning each eligible employee’s target annual incentive with key performance metrics in accordance with our overall goals and strategy.

If our cash and equity incentive plans, including our new cash bonus plan (i.e., the AIP and CIP) and long-term equity incentive compensation program, do not adequately engage our

See “— Our financial condition and results of operations may be negatively impacted to the extent that our current and potential future clients are affected by adverse changes in the financial markets” below.

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protect our products and services.

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| | | amount of information about the index available without a license and the other particular facts and circumstances of the cases. In some instances, the results have been unfavorable to the index owner. If courts or regulators or other governmental bodies in relevant jurisdictions determine that a license is not required to issue investment products linked to indexes, this could have a material adverse effect on our business, financial condition or results of operations. See “— Changes in government regulations, including the implementation of new or pending financial regulations or the repeal of existing financial regulations, could materially adversely affect our business, financial condition or results of operations ” above. It might also lead to changes in current industry practices such that we would no longer make our index level data publicly available, such as via our website or news media, on a timely basis. |

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Cancellation of subscriptions or investment product licenses or renegotiation of terms by a significant number of clients could have a material adverse effect on our business, financial condition or results of operations.

Our principal business model is to license annual, recurring subscriptions to our products for use at specified locations and often by a given number of users or for a certain volume of products or services.

For most of our products and services, our clients may cancel their subscriptions or investment product licenses at the end of the current term.

While we believe the primarily annual, recurring subscription model supports our marketing efforts by allowing clients to subscribe without the requirement of a long-term commitment, the cancellation of subscriptions or investment product licenses by a significant number of clients at any given time may have a material adverse effect on our business, financial condition or results of operations.

Our financial condition and results of operations may be negatively impacted to the extent that our current and potential future clients are affected by adverse changes in the financial markets.

Unfavorable changes in global or domestic financial market conditions may negatively impact the performance and financial viability of our current and potential clients, the majority of which are in the financial services industry.

As a result, adverse financial market conditions could result in reduced demand for our products and services due to, among other things, the closure or consolidation of our clients, a decrease in the number of fund launches, including hedge fund launches or a shift in our clients’ investment patterns; the inability of our customers to pay for products or services, including forgoing products or services, delaying payment or underpaying; prolonged selling and renewal cycles; and increased reserves for doubtful accounts and write-offs of accounts receivable.

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Most recently, on June 23, 2016, the

For example, the exchange rate as of December 31, 2016 was £0.81/$1 compared with a rate on June 23, 2016 of £0.68/$1 and a rate on June 1, 2016 of £0.69/$1.

As of December 31, 2016, we had $2.1 billion of outstanding indebtedness from our Senior Notes and a related interest expense of $101.7 million for the year ended December 31, 2016.

Our clients [added: comprise a wide spectrum of the global investment industry and] include asset owners (pension funds, endowments, foundations, central banks, sovereign wealth funds, family offices and insurance companies), asset [removed: management firms (mutual] [added: managers (institutional, mutual] funds, hedge funds, [removed: providers of exchange-traded funds (“ETFs”),] [added: ETFs,] private [added: wealth, private banks and real estate investment trusts), private] wealth managers, [added: private banks,] real estate investment [removed: trusts and] [added: trusts,] financial intermediaries (banks, broker-dealers, exchanges, custodians, trust companies and investment [removed: consultants).][added: consultants) and data distributors.]

As of December 31, [removed: 2016,] [added: 2017,] we had over [removed: 6,500] [added: 7,000] clients across [removed: 87] [added: 88] countries.

To calculate the number of clients, we [removed: may count certain] [added: use the shipping address of the ultimate customer utilizing the product which counts] affiliates, user locations, or business units within a single organization as separate clients.

If we aggregate all related clients under their respective parent entity, the number of clients would be approximately [removed: 3,900] [added: 4,000] as of December 31, [removed: 2016.][added: 2017.]

We had offices in [removed: 33] [added: 32] cities in 21 countries to help serve our diverse client base, with [removed: 52.3%] [added: 52.6%] of our revenues coming from clients in the Americas, [removed: 35.2%] [added: 34.9%] in Europe, the Middle East and Africa (“EMEA”) and 12.5% in Asia and Australia.

Our principal business model is to license annual, recurring subscriptions to our [removed: products and services for use at specified locations, often by a given number of users or for a certain volume of services,] [added: offerings] for a fee, which is, in a majority of cases, paid [removed: up front.][added: in advance.]

Furthermore, a portion of our revenues comes from clients who use our indexes as the basis for index-linked investment [removed: products] [added: products,] such as [removed: ETFs] [added: ETFs,] or as the basis for passively managed funds and separate accounts.

These clients commonly pay us a license fee, [removed: primarily] [added: typically] in arrears, for the use of our intellectual [removed: property,] [added: property] primarily [removed: in arrears,] based on the [added: AUM in their] investment [removed: product’s assets.][added: product.]

We also generate revenues from certain exchanges that use our indexes as the basis for futures and options contracts and pay us a license fee, [removed: primarily] [added: typically] in arrears, for the use of our intellectual property based on their volume of trades.

In addition, we generate revenues from subscription agreements for the receipt of periodic benchmark reports, digests and other publications, which are most often associated with our [removed: real estate products] [added: Real Estate offerings] that are recognized upon delivery of such reports or data updates.

Fees are primarily paid in arrears after the [removed: product] [added: offering] is delivered.

We also realize one-time fees related to customized reports, historical data sets and certain implementation and consulting services, as well as from certain [removed: products and services] [added: offerings] that are purchased on a non-renewal basis.

In evaluating our financial performance, we focus on revenue and profit growth, including [removed: GAAP and] [added: results accounted for under accounting principles generally accepted in the United States (“GAAP”) as well as] non-GAAP measures, for the Company as a whole [removed: as well as] [added: and] by operating segment.

[removed: In addition, we focus on operating metrics, including Run] Rate, subscription sales and Aggregate Retention Rate to manage the business.

Our business is not highly capital intensive and, as such, we expect to continue to convert a high percentage of our profits into [added: excess cash in the future.]

[removed: We] [added: As discussed in the previous section, we] utilize a portfolio of key financial metrics to manage the Company, including GAAP and non-GAAP measures.

In the discussion that follows, we provide variances excluding the impact of foreign currency exchange rate [removed: fluctuations.][added: fluctuations when the impact is not considered negligible.]

Revenues from subscription agreements for the receipt of periodic benchmark reports, digests, and other publications, which are most often associated with our real estate [removed: benchmark business,] [added: offerings,] are recognized upon delivery of such reports or data updates.

Asset-based fees are principally recognized based on the estimated [removed: assets under management (“AUM”)] [added: AUM] linked to our indexes from independent third-party sources or the most recently reported information provided by the client.

Cost of revenues consists of costs related to the production and servicing of our products and services and primarily includes related information technology costs, including data center, platform and infrastructure costs; costs to acquire, produce and maintain market data information; costs of research to support, maintain [removed: and rebalance] existing products; costs of product management teams; costs of client service and consultant teams to support customer needs; as well as other support costs directly attributable to the cost of revenues including certain human resources, finance and legal costs.

Selling and marketing expenses [removed: consists] [added: consist] of costs associated with acquiring new clients or selling new products or product renewals to existing clients and primarily includes the costs of our sales force and marketing teams, as well as costs incurred in other groups associated with acquiring new business, including product management, research, technology and sales operations.

R&D expenses [removed: consists] [added: consist] of the costs to develop new or enhance existing products and the costs to develop new or improved technology and service platforms for the delivery of our products and services and primarily includes the costs of [removed: application] development, [removed: quality and assurance,] research, product management, project management and the technology support associated with these efforts.

G&A expenses [removed: consists] [added: consist] of costs primarily related to finance operations, human resources, office of the CEO, legal, corporate technology, corporate development and certain other administrative costs that are not directly attributed, but are instead allocated, to a product or service.

[removed: Amortization of intangible assets expense relates to definite-lived intangible assets] [added: Intangibles] arising from past acquisitions [removed: and consists] [added: consist] of customer relationships, trademarks and trade names, technology and software, proprietary processes and data and non-competition agreements.

No impairment of [added: acquired] intangible assets has been identified during any of the periods presented.

“Adjusted EBITDA,” a measure used by management to assess operating performance, is defined as net income before [added: (1)] income (loss) from discontinued operations, net of income taxes, [removed: plus] [added: (2)] provision for income taxes, [added: (3)] other expense (income), net, [added: (4)] depreciation and amortization of property, equipment and leasehold improvements, [added: (5)] amortization of intangible assets and, at times, [added: (6)] certain other transactions or adjustments.

“Adjusted EBITDA expenses,” a measure used by management to assess operating performance, is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible [removed: assets.][added: assets and, at times, certain other transactions or adjustments.]

Run Rate is a key operating metric and is important because an increase or decrease in our Run Rate ultimately impacts our operating [removed: revenues.][added: revenues over time.]

Subscription sales is a key operating metric and is important because new subscription sales increase our Run Rate and ultimately our operating [removed: revenues.][added: revenues over time.]

Another key operating metric is Aggregate Retention Rate which is important because subscription cancellations decrease our Run Rate and ultimately our operating [removed: revenues.][added: revenues over time.]

Our consolidated financial statements are prepared in accordance with [removed: accounting principles generally accepted in the United States (“GAAP”).][added: GAAP.]

See Note 1, “Introduction And Basis Of Presentation—Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements included herein for a listing of our accounting [removed: policies.][added: policies and Note 2, “Recent Accounting Standards Updates.”]

For the year ended December 31, [removed: 2015,] [added: 2017,] the Company repurchased approximately [removed: 10.7] [added: 1.6] million shares at an average price of [removed: $62.63] [added: $87.96] per share for a total value of [removed: $670.8] [added: $136.9] million pursuant to open market repurchases.

[removed: For] [added: Subsequent to] the year ended December 31, [removed: 2016,] [added: 2017 and through February 16, 2018,] the Company repurchased [removed: approximately 10.3] [added: an additional 0.4] million shares [added: of common stock] at an average price of [removed: $73.71] [added: $137.06] per share for a total value of [removed: $759.4 million pursuant to open market repurchases.][added: $54.5 million.]

The weighted average shares outstanding used to calculate our diluted earnings per share for the year ended December 31, [removed: 2016] [added: 2017] decreased by [added: 4.8% compared to the year ended December 31, 2016, and by] 12.2% [added: for the year ended December 31, 2016] compared to the year ended December 31, 2015.

The decreases in both periods reflect the impact of the share repurchase programs, partially offset by the impact of restricted stock units and stock options that converted to [removed: shares.][added: shares as well as increased dilution from employee stock awards outstanding.]

On August 13, 2015, we completed a private offering of $800.0 million aggregate principal amount of 5.75% [removed: Senior Notes] [added: senior unsecured notes] due 2025 (the “2025 Senior Notes”) and received $789.5 million, net of $10.5 million of debt issuance costs.

On August 4, 2016, we completed a private offering of $500.0 million aggregate principal amount of 4.75% [removed: Senior Notes] [added: senior unsecured notes] due 2026 (the “2026 Senior [added: Notes” and, together with the 2024 Senior Notes and the 2025 Senior Notes, the “Senior] Notes”) and received $493.3 million, net of $6.7 million of debt issuance costs.

| From discontinued operations | | | [removed: —] [added: \-] | | | | (0.06 | ) | | | 0.06 | | | | (100.0 | %) |

| From discontinued operations | | | [removed: —] [added: \-] | | | | (0.06 | ) | | | 0.06 | | | | (100.0 | %) |

We are an innovative and leading provider of mission-critical investment decision support tools, including indexes; portfolio construction and risk management products and services; ESG research and ratings; and real estate research, reporting and benchmarking offerings.

Our research-derived intellectual property includes methodologies, models, derived data and algorithms (collectively, “content”), as well as applications and services, which help our clients manage their investment processes and address their investment, risk and regulatory challenges.

Our offerings are used by our clients across multiple asset classes to achieve a wide range of objectives, including benchmarking, index-linked product creation, portfolio construction, performance measurement and attribution, risk management, as well as investor and regulatory reporting.

In addition, our clients are increasingly integrating the content developed across our company, such as factor and ESG data and indexes, into their investment processes.

Fees may vary by offering, number of users or volume of services.

In addition, we focus on operating metrics, including Run

Our growth strategy includes: (a) creating broad and innovative research-driven content, (b) expanding our client base and deepening existing client relationships, (c) developing flexible and scalable technology, (d) expanding value-added service offerings and (e) executing strategic relationships and acquisitions.

The underlying impact of such will not be reflected in the variances excluding the impact of foreign currency exchange rate fluctuations.

Effective January 1, 2018, MSCI adopted the new revenue standard as set forth under ASC Subtopic 606-10, “Revenue from Contracts with Customers.” See “—Recent Accounting Standards Updates” below for additional information.

Amortization of intangible assets expense relates to definite-lived intangible assets arising from past acquisitions and internal capitalized software projects.

Tax Cuts and Jobs Act of 2017

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform”).

Tax Reform significantly revises the U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates, implementing a territorial tax system and imposing a one-time tax on deemed repatriation of historic earnings of foreign subsidiaries (the “Toll Charge”).

As part of Tax Reform, the Company recorded a provisional net charge to the provision for income taxes of $34.5 million for the year ended December 31, 2017.

The net charge of $34.5 million primarily included an estimated tax charge of approximately $47.5 million related to the Toll Charge and an estimated tax charge of approximately $16.0 million related to a change in assertion that those profits were permanently reinvested overseas as of December 31, 2017, partially offset by an estimated tax benefit of approximately $29.0 million related to the revaluation of deferred taxes at the now lower statutory corporate rate.

While we believe our provisional estimates are reasonable, the changes included in Tax Reform are broad and complex.

The final impacts of Tax Reform may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of Tax Reform, guidance from regulatory agencies, any legislative action to address questions that arise because of Tax Reform, any changes in accounting standards for income taxes or related interpretations in response to Tax Reform, or any updates or changes to estimates the Company has utilized to calculate the impact of Tax Reform, including the impact from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries.

The SEC staff has issued Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” that allows for the provisional measurement of amounts related to the impact from Tax Reform for a period of up to one year after the enactment date of Tax Reform to finalize the recording.

We currently anticipate finalizing and recording any resulting adjustments by the end of our fiscal year ending December 31, 2018.

See Note 2, “Recent Accounting Standards Updates,” and Note 10, “Income Taxes,” of the Notes to Consolidated Financial Statements included herein for more information.

| | | 2017 | | | | 2016 | | | | Increase/(Decrease) | | | | | | |

| Operating revenues | | $ | 1,274,172 | | | $ | 1,150,669 | | | $ | 123,503 | | | | 10.7 | % |

| Cost of revenues | | | 273,913 | | | | 252,107 | | | | 21,806 | | | | 8.6 | % |

| Selling and marketing | | | 177,297 | | | | 166,666 | | | | 10,631 | | | | 6.4 | % |

| Research and development | | | 75,884 | | | | 75,204 | | | | 680 | | | | 0.9 | % |

| General and administrative | | | 87,903 | | | | 87,235 | | | | 668 | | | | 0.8 | % |

| Total operating expenses | | | 694,984 | | | | 662,565 | | | | 32,419 | | | | 4.9 | % |

| Operating income | | | 579,188 | | | | 488,104 | | | | 91,084 | | | | 18.7 | % |

| Other expense (income), net | | | 112,289 | | | | 102,166 | | | | 10,123 | | | | 9.9 | % |

| Provision for income taxes | | | 162,927 | | | | 125,083 | | | | 37,844 | | | | 30.3 | % |

| Income from continuing operations | | | 303,972 | | | | 260,855 | | | | 43,117 | | | | 16.5 | % |

| Net income | | $ | 303,972 | | | $ | 260,855 | | | $ | 43,117 | | | | 16.5 | % |

| From continuing operations | | $ | 3.36 | | | $ | 2.72 | | | $ | 0.64 | | | | 23.5 | % |

| Earnings per basic common share | | $ | 3.36 | | | $ | 2.72 | | | $ | 0.64 | | | | 23.5 | % |

| From continuing operations | | $ | 3.31 | | | $ | 2.70 | | | $ | 0.61 | | | | 22.6 | % |

| Earnings per diluted common share | | $ | 3.31 | | | $ | 2.70 | | | $ | 0.61 | | | | 22.6 | % |

| Operating margin | | | 45.5 | % | | | 42.4 | % | | | | | | | | |

| | | 2017 | | | | | 2016 | | | Increase/(Decrease) | | | | | | |

| Recurring subscriptions | | $ | 973,023 | | | $ | 913,669 | | | $ | 59,354 | | | | 6.5 | % |

| Asset-based fees | | | 276,092 | | | | 210,229 | | | | 65,863 | | | | 31.3 | % |

We offer products and services to support the needs of institutional investors throughout their investment processes.

Clients look to us for an integrated view of the drivers of risk and return in their portfolios, broad and deep asset class coverage, quality data, an objective perspective and innovation.

Our products and services include indexes and analytical models; ratings and analysis that enable institutional investors to integrate ESG factors into their investment strategies; and analysis of real estate in both privately and publicly owned portfolios.

Clients use our products and services to help construct portfolios and allocate assets.

The analytical content we provide through our products is enabled by applications and are the basis for the services that we provide to clients.

Our analytical tools and content help clients measure and manage risk across all major asset classes.

Our products and services can also be customized to meet the specific needs of our clients.

Additionally, our recurring subscription offerings include our managed services offering, whereby we oversee the production of risk and performance reports on behalf of our clients.

excess cash in the future.

Our growth strategy includes: (a) expanding and deepening our relationships with investment institutions worldwide; (b) developing new and enhancing existing product offerings, including combining existing product features or data derived from our products to create new products; and (c) seeking to acquire products, technologies, services and companies that will enhance, complement or expand our client base and product offerings.

At the end of any period, we generally have subscription and investment product license agreements in place for a large portion of total revenues for the following 12 months.

The weighted average shares outstanding used to calculate our diluted earnings per share for the year ended December 31, 2015 decreased by 5.8% compared to the year ended December 31, 2014.

The annual interest expense related to these offerings for the year ended December 31, 2016 was $101.7 million.

The annual interest expense related to these offerings in future years is expected to be approximately $116.0 million.

$48.0 billion, or 11.1%, from $433.4 billion as of December 31, 2015.

The effective tax rate of 34.2% for the year ended December 31, 2015 reflects our operating tax rate adjusted for the impact of certain discrete items.

Included in the discrete items was a claim for an additional deduction related to U.S. production activities for prior years, which was partially offset by a provision for state tax liabilities related to prior years.

Overall, the discrete items decreased our effective tax rate by 0.6% in the year ended December 31, 2015.

Loss from discontinued operations, net of income taxes, for the year ended December 31, 2015 reflects the impact of a $6.4 million out-of-period income tax charge associated with tax obligations triggered upon the sale of ISS.

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | |

| | | 2015 | | | | 2014 | | | | Increase/(Decrease) | | | | | | |

| Operating revenues | | $ | 1,075,013 | | | $ | 996,680 | | | $ | 78,333 | | | | 7.9 | % |

| Cost of revenues | | | 267,695 | | | | 276,623 | | | | (8,928 | ) | | | (3.2 | %) |

| Selling and marketing | | | 162,294 | | | | 163,839 | | | | (1,545 | ) | | | (0.9 | %) |

| Research and development | | | 77,320 | | | | 71,095 | | | | 6,225 | | | | 8.8 | % |

| General and administrative | | | 86,007 | | | | 76,369 | | | | 9,638 | | | | 12.6 | % |

| Total operating expenses | | | 671,115 | | | | 659,514 | | | | 11,601 | | | | 1.8 | % |

| Operating income | | | 403,898 | | | | 337,166 | | | | 66,732 | | | | 19.8 | % |

| Other expense (income), net | | | 54,344 | | | | 28,828 | | | | 25,516 | | | | 88.5 | % |

| Provision for income taxes | | | 119,516 | | | | 109,396 | | | | 10,120 | | | | 9.3 | % |

| Income from continuing operations | | | 230,038 | | | | 198,942 | | | | 31,096 | | | | 15.6 | % |

| Income (loss) from discontinued operations, net of income taxes | | | (6,390 | ) | | | 85,171 | | | | (91,561 | ) | | | (107.5 | %) |

| Net income | | $ | 223,648 | | | $ | 284,113 | | | $ | (60,465 | ) | | | (21.3 | %) |

| From continuing operations | | $ | 2.11 | | | $ | 1.72 | | | $ | 0.39 | | | | 22.7 | % |

| Earnings per basic common share | | $ | 2.05 | | | $ | 2.45 | | | $ | (0.40 | ) | | | (16.3 | %) |

| From continuing operations | | $ | 2.09 | | | $ | 1.70 | | | $ | 0.39 | | | | 22.9 | % |

| Earnings per diluted common share | | $ | 2.03 | | | $ | 2.43 | | | $ | (0.40 | ) | | | (16.5 | %) |

| Operating margin | | | 37.6 | % | | | 33.8 | % | | | | | | | | |

For the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015, 16.9%] [added: 2016, 13.4%] and [removed: 17.8%,] [added: 16.9%,] respectively, of our revenues are subject to foreign currency exchange rate risk and primarily includes clients billed in foreign currency as well as U.S. dollar exposures on non-U.S. dollar foreign operating entities.

Of the [removed: 17.8%] [added: 13.4%] of [removed: non-U.S.] [added: non-U.S] dollar exposure for the year ended December 31, [removed: 2015, 37.0%] [added: 2017, 39.6%] was in [removed: British pounds sterling, 35.8%] [added: Euros, 27.3%] was in [removed: Euros] [added: Japanese yen] and [removed: 21.6%] [added: 26.8%] was in [removed: Japanese yen.][added: British pounds sterling.]

Revenues from index-linked investment products represented [removed: 18.3%] [added: 21.7%] and [removed: 18.4%] [added: 18.3%] of operating revenues for the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

Approximately [removed: 38.3%] [added: 36.9%] and [removed: 41.3%] [added: 38.3%] of our operating expenses for the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively, were denominated in foreign currencies, the significant majority of which were denominated in British pounds sterling, Indian rupees, Swiss francs, [added: Euros,] Hungarian forints, Hong Kong dollars, [removed: Euros, Mexican pesos and] Chinese [removed: yuan.][added: yuan and Mexican pesos.]

We have certain monetary assets and liabilities denominated in currencies other than local functional amounts and when these balances [removed: were] [added: are] remeasured into their local functional currency, either a gain or a loss [removed: resulted] [added: results] from the change of the value of the functional currency as compared to the originating currencies.

We recognized total foreign currency exchange losses of [removed: $0.2 million,] $2.2 [added: million, $0.2] million and [removed: $3.0] [added: $2.2] million for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

| --- | --- |

Our clients [added: comprise a wide spectrum of the global investment industry and] include asset owners (pension funds, endowments, foundations, central banks, sovereign wealth funds, family offices and insurance companies), asset [removed: management firms (mutual] [added: managers (institutional, mutual] funds, hedge funds, [removed: providers of] exchange-traded funds [removed: (“ETFs”)),] [added: (“ETFs”),] private [removed: wealth managers, real estate investment trusts and financial intermediaries (banks, broker-dealers, exchanges, custodians, trust companies and investment consultants).][added: wealth, private]

Our principal business model is to license annual, recurring subscriptions to our [removed: products and services] [added: offerings] for a fee, which is, in a majority of cases, paid in advance.

Fees may vary by [removed: product or service,] [added: offering,] number of users or volume of services.

We also charge clients to use our indexes as the basis for index-linked investment [removed: products] [added: products,] such as [removed: ETFs] [added: ETFs,] or as the basis for passively managed funds and separate accounts.

These clients commonly pay us a license fee, [removed: primarily] [added: typically] in arrears, for the use of our intellectual property primarily based on the assets under management (“AUM”) in their investment product.

Certain exchanges use our indexes as the basis for futures and options contracts and pay us a license fee, [removed: primarily] [added: typically] paid in arrears, for the use of our intellectual property primarily based on their volume of trades.

Clients also subscribe to periodic benchmark reports, digests and other publications associated with our Real Estate [removed: products.][added: offerings.]

Fees are primarily paid in arrears after the [removed: product] [added: offering] is delivered.

We also realize one-time fees related to customized reports, historical data sets and certain implementation and consulting services, as well as from certain [removed: products and services] [added: offerings] that are purchased on a non-renewal basis.

[removed: Our] Operating Segments

Because the ESG and Real Estate operating segments do not meet segment disclosure reporting thresholds, ESG and Real Estate are combined and presented as [removed: part of the] All Other [removed: segment] for reporting purposes.

See Note [removed: 13,] [added: 12,] “Segment Information,” of the Notes to Consolidated Financial Statements, included herein, for additional information on our current segment reporting [removed: structure.][added: structure and financial information for each segment.]

Index [removed: Segment]

[removed: Our] [added: Clients use our] indexes [removed: are used] in many areas of the investment process, including index-linked product creation and performance benchmarking, as well as portfolio construction and rebalancing, and asset allocation.

[removed: As of December 31, 2016, 97] [added: | | • | 99] of the top 100 global asset managers (as ranked by Pensions & Investments (“P&I”) in its report dated [removed: May 2016) licensed equity indexes from us.][added: April 2017); |]

Clients receive data directly from us or from one or more third-party providers of financial information [added: worldwide] that distribute our equity [removed: indexes worldwide.][added: indexes.]

| | • | MSCI Global Equity Indexes. MSCI Global Equity Indexes [removed: include our flagship indexes and] are designed to measure returns across a wide variety of equity markets (e.g., Europe, Japan, USA, [removed: emerging markets), sizes] [added: Emerging Markets), size segments] (e.g., mid and large capitalization), and industries (e.g., banks, media). As of December 31, [removed: 2016,] [added: 2017,] we calculated indexes that covered more than 80 countries in developed, emerging and frontier markets, as well as various regional indexes built from the component country indexes. These indexes include the MSCI [removed: ACWI,] [added: ACWI IMI,] MSCI World, MSCI EAFE, MSCI [removed: ACWI IMI, MSCI] Emerging [removed: Market] [added: Markets] and MSCI USA Indexes. We believe that MSCI Global Equity Indexes are the most widely used benchmarks by cross-border equity funds. A [added: large] number of asset owners use the MSCI ACWI IMI Indexes as the policy benchmark for their equity portfolios. [added: More than 85% of international equity assets are benchmarked to MSCI Global Equity Indexes.] |

| | • | MSCI Custom Indexes. We currently calculate approximately [removed: 7,300] [added: 9,700] custom [removed: indexes, which apply] [added: indexes by applying] a client’s criteria to an existing MSCI index. Examples of customization criteria include liquidity screening, currency [removed: hedging, tax rates, stock exclusions or special weighting. Custom indexes can reflect specific investment criteria, such as socially responsible investment requirements or regulatory] |

| | | [added: hedging, tax rates, stock exclusions or special weighting. Custom indexes can reflect specific investment criteria, such as socially responsible investment requirements or regulatory] constraints. They can be used for back-testing [removed: strategies or] [added: strategies,] developing specialized investment products, minimizing portfolio tracking error [removed: and] [added: or] constructing index-linked products. |

| | • | MSCI Factor Indexes. MSCI Factor [removed: Indexes] [added: Indexes, which are constructed using the Barra Equity Models generated in our Analytics segment,] seek to address a growing trend among institutional investors and asset managers whose asset allocation processes include risk groupings such as volatility, income, value and momentum. MSCI Factor Indexes reflect components of equity return that can be attributed to sources of systematic [added: risk and] return such as value, size, momentum, volatility, yield and quality. We offer a [removed: comprehensive] [added: broad] suite of factor [removed: index families,] [added: indexes that have been developed using the expertise of our Analytics segment,] including high-exposure factor indexes (e.g., the MSCI Minimum Volatility Index), high capacity factor indexes (e.g., MSCI Value Weighted Indexes), combinations of single factor indexes (e.g., MSCI [removed: Quality] [added: Factor] Mix [removed: Index)] [added: A-Series Indexes)] and multi-factor indexes (e.g., MSCI Diversified Multiple-Factor Indexes). |

| | • | MSCI ESG Indexes. MSCI ESG [removed: Indexes] [added: Indexes, which] are [added: constructed using research from our ESG segment, are] designed to meet the growing demand for indexes that integrate ESG criteria into benchmarks to measure performance for use by institutional investors who wish to adopt a long-term sustainable investment view. They enable clients to issue index-based ESG investment products, to benchmark the performance of ESG portfolios and to measure and report on compliance with ESG mandates. The MSCI ESG Indexes include: |

| | [removed: •] [added: o] | [removed: MSCI ACWI] [added: Impact Indexes, such as the] Sustainable Impact Index that aims to identify companies that derive revenues from products and services that address environmental and social challenges aligned with the Sustainable Development Goals adopted by the United Nations; [added: and] |

| | [removed: •] [added: o] | Environmental Indexes, including Low Carbon Indexes, [added: Global Environment Indexes, and] Fossil Fuels Exclusion Indexes [removed: and benchmarks] that [removed: represent the markets for] [added: help investors reduce their carbon exposure or capture opportunities in] renewable energy and clean technology; [removed: and] |

| | [removed: •] [added: o] | [removed: custom] [added: Custom ESG] indexes based on client-defined ESG specifications. |

| | • | Global Industry Classification Standard (“GICS”®). GICS was developed and is maintained jointly by MSCI and Standard & Poor’s Financial Services, LLC, a subsidiary of S&P Global Inc. (“Standard & Poor’s”). This classification system was designed to respond to clients’ needs for a comprehensive, consistent and accurate framework for classifying companies into industries. GICS is widely accepted as an industry analysis framework for investment research, portfolio management and asset allocation. [removed: Our equity indexes classify constituent securities according to GICS.] We offer GICS Direct, a joint [removed: product] [added: offering] of MSCI and Standard & Poor’s. GICS Direct is a database comprised of over [removed: 44,000] [added: 45,000] active companies and [removed: more than 54,000] [added: 58,000] securities classified by sector, industry group, industry and sub-industry in accordance with the proprietary GICS methodology. [added: 90 of the top 100 global asset managers] |

Analytics [removed: Segment]

Our [removed: research-enhanced products] [added: Analytics segment offers risk management, performance attribution] and [added: portfolio management content, applications and] services [removed: help institutional investors understand] [added: that provide clients with an integrated view of risk] and [removed: control for] [added: return and an analysis of] market, credit, liquidity and counterparty risk across all major asset classes, spanning short, medium and long-term time horizons.

| | • | RiskMetrics RiskManager. We believe that RiskMetrics RiskManager is an industry leader in VaR [removed: simulation, stress testing] [added: simulation] and [removed: single security analytics.] [added: in stress testing.] Clients use RiskManager for daily analysis, measuring and monitoring of market and liquidity risk at fund and firm levels, sensitivity and stress [added: testing, interactive what-if analysis, counterparty credit exposure and regulatory risk reporting. RiskManager is a scalable platform accessed by clients via a license to a secure, interactive web-based application service. RiskManager is also offered as an outsourced risk reporting service or as a web service in which a client’s systems access RiskManager’s core risk elements by connecting directly to our systems.] |

| | • | BarraOne. BarraOne, powered by [removed: the Barra Integrated Model (“BIM”),] [added: our Multi-Asset Class Models, BIM and MIM,] provides clients with global, multi-asset class risk analysis using Barra’s fundamental factor [removed: methodology.] [added: methodology originally developed in 1975 that allows clients to understand the themes driving the risk and performance of their investments. These themes (e.g., Value, Momentum, etc.) are what Barra calls Factors.] BarraOne also includes VaR simulation, stress [removed: testing, optimization] [added: testing] and [removed: performance attribution] [added: optimization] modules that enable clients to manage multi-asset class portfolios, carry out risk [removed: budgeting,] [added: budgeting and asset allocation,] manager [removed: monitoring, performance attribution] [added: monitoring] and [removed: regulatory risk reporting.] [added: performance attribution.] |

| | • | Barra Portfolio Manager. Barra Portfolio Manager is an integrated risk and performance platform that is designed to help [added: equity] fund managers and their teams gain additional portfolio insight, manage their investment [removed: process] [added: processes] more systematically and make faster, more informed investment decisions. The hosted interactive user interface allows users to analyze risk and return, conduct pre-trade what-if analysis across a number of scenarios and construct portfolios using the Barra Optimizer. It also allows users to decompose the risk and attribute the return of their portfolios according to Barra [added: Equity] models. The platform supports optional data management services that allow users to outsource the loading and reconciliation of their portfolio and other proprietary data. [added: We also offer many of the benefits of this hosted platform in a locally hosted solution called Barra Aegis.] |

| | • | [removed: Barra] Equity [removed: Models Direct. Barra Equity Models Direct delivers our] [added: Factor Models. The] proprietary risk data [removed: to clients for integration into their own software applications, providing] [added: in Barra Equity Models provides] clients with a better understanding of their sources of risk and [removed: return,] [added: return] and a factor structure that is aligned to multiple investment [removed: horizons] [added: horizons,] which enables them to select the risk data that best suits their investment [removed: processes.] [added: analysis.] Barra Equity Models [removed: Direct includes] [added: are available through our applications, third-party applications and directly to clients for integration into their own applications. In addition, we use] Barra [added: Equity Models in our Index segment to construct MSCI Factor Indexes. Barra Equity Models include Barra] Global Total Market Models, Barra Regional Equity Models and Barra Single Country [removed: Equity] Models. [removed: The proprietary risk data in Barra Equity Models Direct is also available via third-party providers.] |

| | • | [removed: Barra Integrated Model. BIM provides] [added: Multi-Asset Class Factor Models. Our Multi-Asset Class Models provide] a detailed view of risk across markets and asset classes, including currencies, equities, fixed income, commodities, mutual [added: funds, hedge] funds and [removed: hedge funds. It] [added: private assets, including private real estate (for which we use content from our Real Estate segment) and private equity investments. The process of creating our Multi-Asset Class Models] begins by identifying the factors that affect the returns of various asset [removed: classes, including equity and fixed income securities and currencies.] [added: classes.] These factors are then combined into a single global model that forecasts the risk of multi-asset class global portfolios. [added: Multi-Asset-Class Models include the Barra Integrated Model (“BIM”) as well as the next generation MSCI Integrated Model (“MIM”) which, among other enhancements, leverages our new fixed income models.] |

| | • | InvestorForce. InvestorForce [removed: products offer] [added: offerings provide] performance reporting [removed: solutions] [added: tools] to the institutional investment community in the United States by providing investment consultants with an integrated [removed: solution] [added: service] for daily [removed: monitoring of,] [added: monitoring,] analysis [removed: of] and reporting on institutional assets. InvestorForce [removed: products] [added: offerings] also [removed: offer] [added: provide investment consultant] clients access via a web portal to a database that includes portfolio analytics and transaction and holdings information, which is updated in real time as data is collected from custodial banks and fund managers. |

All Other [removed: Segment—ESG][added: – ESG]

MSCI ESG Research analyzes [removed: thousands of] [added: over 6,500] companies worldwide to help institutional investors understand how environmental, social and governance [removed: (ESG)] factors can impact the long-term risk of their investments.

As of December 31, [removed: 2016,] [added: 2017,] subscribers to MSCI ESG Research included 82 of the top 100 global asset managers (as ranked by P&I in its report dated [removed: May 2016),] [added: April 2017),] as well as leading asset owners, consultants, advisers and academics.

MSCI’s ESG [removed: products] [added: offerings] include:

| | • | MSCI ESG Ratings. MSCI ESG Ratings are designed to identify ESG risks or opportunities that may not be captured through conventional analyses. This includes ratings, as of December 31, [removed: 2016,] [added: 2017,] for more than 6,500 companies worldwide, including over 6,000 equity issuers and [removed: 400 issuers of] [added: over 400,000] fixed income securities including [removed: corporate bonds, sovereigns] [added: corporate, sovereign] and other government related [removed: issuers.] [added: bonds.] Ratings are designed to identify and analyze ESG issues, including exposures (e.g., business segment and geographic risk), management and industry-specific measures that may include the intersection of a company’s major social and environmental impacts with its core business operations, thereby identifying potential risks and opportunities for the company and its investors. |

| | • | MSCI ESG Business Involvement Screening Research. MSCI ESG Business Involvement Screening Research is a screening service that is designed to enable institutional investors to manage ESG standards and restrictions reliably and efficiently. [removed: Managers,] [added: Asset managers, investment] advisers and asset owners can access screening research through the online MSCI ESG Manager platform or a data feed to satisfy their clients’ investment guidelines, implement client mandates and manage potential ESG portfolio risks. |

| | • | MSCI ESG Governance Metrics. MSCI ESG Governance Metrics provides institutional investors with corporate governance research and data on more than [removed: 7,000] [added: 8,000] public companies worldwide. The assessment [removed: model is based on 96 unique metrics organized into four individual scoring pillars, designed to provide consistency, transparency and structural integrity.] |

We are an innovative and leading provider of mission-critical investment decision support tools, including indexes; portfolio construction and risk management products and services; Environmental, Social and Governance (“ESG”) research and ratings; and real estate research, reporting and benchmarking offerings.

Our research-derived intellectual property includes methodologies, models, derived data and algorithms (collectively, “content”), as well as applications and services, which help our clients manage their investment processes and address their investment, risk and regulatory challenges.

We leverage our knowledge of the global investment process and our expertise in research and data collection to deliver content to our clients that helps them make more efficient and informed investment decisions.

Our content is delivered through multiple channels, including through our proprietary applications, application programming interfaces (“API”) and third-party applications and is directly embedded into client platforms.

We also offer services that help clients use our content and applications more effectively and operate more efficiently.

We operate as “One MSCI” and as a client-centric company.

We achieve this by managing our client coverage, research, data and technology groups in an integrated manner to best leverage our unique intellectual property and differentiated know-how across product lines to deliver innovative and high quality content to our clients.

As the needs of our clients change, we respond with offerings that address their evolving strategic and investment objectives (our “go-to-market strategy”).

Our clients use our offerings across multiple asset classes to achieve a wide range of objectives, including benchmarking, index-linked product creation, portfolio construction, performance measurement and attribution, risk management, as well as investor and regulatory reporting.

In addition, our clients are increasingly integrating the new content developed across our company, such as factor and ESG data and indexes, into their investment processes.

banks and real estate investment trusts), financial intermediaries (banks, broker-dealers, exchanges, custodians, trust companies and investment consultants) and data distributors.

As of December 31, 2017, our clients included:

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview” and Note 1, “Introduction and Basis of Presentation—Significant Accounting Policies, Concentrations” of the Notes to Consolidated Financial Statements, included herein, for additional information on clients and the concentration of clients.

Our products and services are deeply integrated in the global investment ecosystem and in our clients’ investment processes.

We aim to expand our position as a leading source for mission critical content, applications and services that support the investment processes of the largest and most sophisticated participants in the global investment industry.

The investment industry is experiencing a number of notable trends that are transforming the landscape of investment institutions and the manner in which they operate.

These trends, which are creating attractive opportunities for us, include: (1) increased globalization, which is driving demand for global indexes and factor models, (2) increased investing complexity, which is driving demand for sophisticated portfolio and risk management products, (3) an increased focus by investment institutions on designing and implementing lower cost and outcome-oriented strategies, which often take the form of index-based products and necessitate an understanding of the factors driving risk and return, (4) an increased integration of factor and ESG criteria into the investment process, which is driving demand for our factor and ESG content and applications, and (5) the outsourcing by investment institutions of non-core functions and the consolidation of external systems, content and vendors in order to leverage technology and services to scale efficiently, which benefits our managed service offerings and leverages our footprint across a client organization.

Against the backdrop of these industry trends, we are well positioned to leverage our competitive advantages to help investment institutions create sustainable business models today and into the future.

We have a number of competitive advantages, including deep knowledge of the global investment process, experienced research, product development and data management teams that create and promote relevant and high quality content and offerings and a client coverage team that helps build and maintain strong and trusted client relationships with the world’s largest investment institutions.

Additionally, we have a knowledgeable information technology team that develops scalable technology and data infrastructure that allow us to scale our operations, as well as help our clients be more cost-effective in their own operations through the use of our applications and services.

We have the opportunity to provide innovative content, strengthen our go-to-market strategy, and deliver enhanced capabilities through our flexible applications and outstanding client offerings and services as One MSCI.

Our growth strategy is focused on a number of key initiatives that optimize the value of One MSCI and capitalize on our competitive advantages to address the changing needs of our clients and the investment industry.

These strategic initiatives include:

| | • | Create broad and innovative research-driven content. Our research-driven content plays a key role in our ability to deliver offerings required to help our clients develop relevant, global and sustainable investment strategies in an efficient manner and with the highest standards for data quality. We have proprietary applications and databases that house data from more than 200 third-party sources in addition to our proprietary data. We have also amassed an extensive database of historical global market data, proprietary equity index data, private real estate benchmark data, risk algorithms and models and ESG data, all of which are critical components of our clients’ investment processes. |

We take an integrated team approach to developing offerings across our segments.

Our content is developed by a cross-functional research team of mathematicians, economists, statisticians, financial engineers and investment industry experts.

We monitor investment trends and their drivers globally and support instrument valuation, risk modeling, portfolio construction, asset allocation and Value at Risk (“VaR”) simulation.

An important way we monitor global investment trends and their implications for our business is through direct public consultations and client advisory panels and through the forum provided by our Editorial Advisory Board (“EAB”).

Our EAB, which was established in 1999, meets twice a year to discuss industry and emerging trends and is comprised of senior investment professionals from around the world and senior members of our research team.

We also hold consultations and regional client advisory panels that bring together a diverse group of investment leaders and practitioners.

Over the past three years, we have directed the majority of our investments toward research, data production systems and technology infrastructure and applications to enable us to develop new content more quickly and deliver new and previously existing content more cost-effectively.

In 2017, we appointed a new Global Head of Research and Product Development who leads a team of more than 180 employees, many of whom have obtained PhDs in fields that are relevant to our business.

By focusing on cross-product and cross-functional innovation, we can maximize the capabilities of each of our four operating segments—Index, Analytics, ESG and Real Estate—in order to bring greater value to our clients.

We expect to grow as One MSCI through the ongoing integration of the full suite of offerings provided by each of our four segments.

For example, we have incorporated our new global equity model (from the Analytics segment) as well as our ESG ratings research into our Index offerings.

In addition, we have combined risk measures from the Real Estate segment with asset and portfolio level risk models from the Analytics segment to enhance our multi-asset class and Real Estate risk management offerings.

In recent years, we have realigned our global client coverage function to sharpen our focus on current clients and improve our ability to identify new prospects.

In 2017, we repositioned the role of the Chief Operating Officer to be more aligned with our client and go-to-market strategies.

The Chief Operating Officer currently manages our sales, marketing, client relationship management and client service teams globally with the goal of integrating our outreach to clients and prospects, sales and marketing strategy and client service.

To ensure that we provide world-class service to our largest accounts, as of December 31, 2017, we have assigned senior account managers to more than 50 of our largest accounts by revenue, and appointed key account managers to cover more than 90 of our other large accounts.

We offer products and services to support the needs of institutional investors throughout their investment processes.

Clients look to us for an integrated view of the drivers of risk and return in their portfolios, broad and deep asset class coverage, quality data, an objective perspective and innovation.

We provide products and services that support global investing and for decades have helped institutional investors address challenging investment and risk problems.

Equity factor investing was pioneered in the 1970s based on research, data and analytics developed by Barra – part of our company since 2004.

We continue to innovate in the development of indexes and analytical models; provision of ratings and analysis that enables institutional investors to integrate environmental, social and governance (“ESG”) factors into their investment strategies; and analysis of real estate in both privately and publicly owned portfolios.

Clients use our products and services to help construct portfolios and allocate assets.

The analytical content we provide through our products is enabled by applications and are the basis for the services that we provide to clients.

Our analytical tools and content help clients measure and manage risk across all major asset classes.

Our powerful computational and reporting platform can process large multi-asset class portfolios on an intra-day basis.

We offer clients the flexibility to tailor our products and services and integrate them into their own workflows.

Primary Uses of Our Products and Services

Institutional investors use our offerings to achieve a wide range of objectives.

Benchmarking —Institutional investors worldwide use our indexes to evaluate the performance of their funds.

Our indexes are among the most widely used benchmarks for multi-country passive and active equity strategies worldwide.

Index-linked product creation —Our indexes are used as the basis for products such as ETFs.

We are a leading provider of equity indexes to the ETF industry, with approximately 900 ETFs based on our equity indexes listed around the world.

Portfolio construction —Asset managers use our research, data and multi-asset class and multi-currency models to help build portfolios and allocate assets.

Our global equity content sets provide tools for portfolio optimization and back-testing.

Asset managers also construct portfolios by replicating or tracking our indexes.

Risk management —Our products and services for statistical analysis provide clients with a broad range of risk calculations on a daily basis.

One of our best-known statistical models calculates Value at Risk (“VaR”), which estimates the largest possible loss that could be incurred in a portfolio at a specific confidence level over a given period of time.

Our Real Estate offerings include risk analytics for a variety of sectors, including residential and retail properties.

We offer an extensive library of stress testing scenarios and a suite of stress testing tools that enable clients to design and run stress tests that reflect their own investment views.

ESG integration —MSCI ESG Research provides in-depth ratings and analysis of ESG-related business practices of thousands of companies worldwide.

Our ratings and analysis can help institutional investors pursue their sustainable long-term investing goals and uncover risks and opportunities that traditional investment research may not detect.

Performance attribution —We offer a suite of performance attribution models with which to analyze the sources of portfolio performance on an absolute or relative basis, including a platform that helps analyze the strengths and weaknesses of a real estate portfolio’s performance relative to its benchmark.

Our products are multi-asset class and multi-currency, and we collect market and portfolio data daily.

A streamlined workflow makes attribution reporting intuitive and efficient.

Regulatory reporting —Our products help institutional investors comply with regulatory reporting requirements around the world.

Our processing capability enables us to create and implement a broad range of customized reports.

Recurring subscription offerings include our managed services offering, whereby we oversee the production of risk and performance reports on behalf of clients.

Revenues for the year ended December 31, 2016 totaled $1,150.7 million, up 7.0% from the prior year period.

Sources of revenue consisted of $913.7 million in recurring subscriptions, $210.2 million in revenue from asset-based fees, and $26.8 million in non-recurring revenue.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

We operate in four segments: Index, Analytics, ESG and Real Estate.

The following table presents operating revenues and Adjusted EBITDA by reportable segment for the year ended December 31, 2016:

| | | Year Ended December 31, 2016 | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Operating | | | | Percentage of | | | | | Adjusted | | | | Percentage of | | |

| (in thousands) | | Revenues | | | | Total | | | | | EBITDA (1) | | | | Total | | |

10-K 1 [removed: msci-10k_20161231.htm] [added: msci-10k_20171231.htm] 10-K

For the fiscal year ended December 31, [removed: 2016][added: 2017]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange Act.

The aggregate market value of Common Stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter (based on the closing price of these securities as reported by The New York Stock Exchange on June 30, [removed: 2016)] [added: 2017)] was [removed: $7,080,925,883.][added: $9,086,723,896.]

As of February [removed: 17, 2017,] [added: 16, 2018,] there were [removed: 90,545,374] [added: 89,944,256] shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

Documents incorporated by reference: Portions of the registrant’s proxy statement for its annual meeting of stockholders, to be held on May [removed: 11, 2017,] [added: 10, 2018,] are incorporated herein by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2016][added: 2017]

| Item 1A. | | [Risk Factors](#ITEM_1A_RISK_FACTORS) | | [removed: 18] [added: 16] |

| Item 1B. | | [Unresolved Staff Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS) | | [removed: 42] [added: 34] |

| Item 2. | | [Properties](#ITEM_2_PROPERTIES) | | [removed: 42] [added: 34] |

| Item 3. | | [Legal Proceedings](#ITEM_3_LEGAL_PROCEEDINGS) | | [removed: 42] [added: 34] |

| Item 4. | | [Mine Safety Disclosures](#ITEM_4_MINE_SAFETY_DISCLOSURES) | | [removed: 42] [added: 34] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU) | | [removed: 43] [added: 35] |

| Item 6. | | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | | [removed: 47] [added: 39] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | | [removed: 50] [added: 42] |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market Risk](#ITEM_7A_QUALITATIVE_QUANTITATIVE_DISCLOS) | | [removed: 82] [added: 74] |

| Item 8. | | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | | [removed: 82] [added: 75] |

| Item 9. | | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | | [removed: 83] [added: 75] |

| Item 9A. | | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | | [removed: 83] [added: 75] |

| Item 9B. | | [Other Information](#ITEM_9B_OR_INFORMATION) | | [removed: 84] [added: 76] |

| Item 10. | | [Directors, Executive Officers and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | | [removed: 85] [added: 78] |

| Item 11. | | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | | [removed: 85] [added: 78] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF) | | [removed: 85] [added: 78] |

| Item 13. | | [Certain Relationships and Related Transactions, and Director Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR) | | [removed: 85] [added: 78] |

| Item 14. | | [Principal Accounting Fees and Services](#ITEM_14_PRINCIPAL_ACCOUNTING_FEES_SERVIC) | | [removed: 85] [added: 78] |

| Item 15. | | [Exhibits, Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | | [removed: 86] [added: 79] |

| Item 16. | | [Form 10-K Summary](#ITEM_16_FORM_10K_SUMMARY) | | [removed: 86] [added: 95] |

| Emerging growth company | | ☐ | | | | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

As of December 31, [removed: 2016,] [added: 2017,] our principal offices consisted of the following leased properties:

| Budapest, Hungary | | | [removed: 44,225] [added: 49,318] | | | | 1 | | | February 29, 2024 |

| London, England | | | 30,519 | | | | 1 | | | December [removed: 26,] [added: 25,] 2026 |

As of December 31, [removed: 2016,] [added: 2017,] we also leased and occupied offices in the following [removed: locations: Hong Kong, China;] [added: locations (in descending order of square footage):] Chicago, Illinois; San Francisco, California; Beijing, China; Frankfurt, Germany; [added: Shanghai, China; Hong Kong, China;] Paris, France; Sydney, Australia; Tokyo, Japan; Ann Arbor, Michigan; Portland, Maine; Toronto, Canada; [removed: Shanghai, China;] Singapore; [removed: Amsterdam,] [added: Almere,] Netherlands; Seoul, Korea; [added: Milan, Italy;] Gaithersburg, Maryland; Cape Town, South Africa; Stockholm, Sweden; Sao Paolo, Brazil; and Dubai, United Arab Emirates.

| Manila, Philippines | | | 25,747 | | | | 1 | | | July 31, 2022 |

| Manila, Philippines | | | 20,904 | | | | 1 | | | February 28, 2019 |

Our common stock has traded on the New York Stock Exchange since November 15, 2007 and trades under the symbol “MSCI.” As of February [removed: 17, 2017,] [added: 16, 2018,] there were [removed: 136] [added: 128] shareholders of record of our common stock.

The following table presents the high and low closing prices per share and cash dividends declared and distributed per share of our common stock from January 1, [removed: 2015] [added: 2016] through December 31, [removed: 2016.][added: 2017.]

On February [removed: 17, 2017,] [added: 16, 2018,] the per share closing price of our common stock on the New York Stock Exchange was [removed: $94.27.][added: $145.00.]

On [removed: February 1, 2017,] [added: January 30, 2018,] our Board of Directors declared [removed: our first quarter] [added: a quarterly] cash dividend, in an amount of [removed: $0.28] [added: $0.38] per share of common stock, to be paid on March 15, [removed: 2017] [added: 2018] to shareholders of record as of the close of trading on February [removed: 17, 2017.][added: 16, 2018.]

On February 18, 2016, the Board of Directors, upon the recommendation of the Compensation [removed: Committee,] [added: and Talent Management Committee of the Board of Directors (the “Compensation Committee”),] approved the MSCI Inc. 2016 Non-Employee Directors Compensation Plan (the “Directors Plan”), a [removed: new] cash and equity incentive compensation plan that was approved by shareholders at the Company’s 2016 annual meeting of shareholders.

Non-employee directors are entitled to receive an annual grant of $140,000 each in stock units and the lead director is entitled to an additional $25,000 in stock [removed: units,] [added: units (a total of $165,000),] which are typically subject to a one-year vesting schedule.

The Omnibus Plan replaced the Company’s [added: then] existing equity compensation plan—the MSCI Inc. Amended and Restated 2007 Equity Incentive Compensation Plan (as amended, the “2007 Plan”).

[removed: The] [added: Despite the changes implemented by Tax Reform, the] Company will continue to maintain the Performance Plan and may make [removed: tax-qualified] awards pursuant to this plan.

The following table presents certain information with respect to our equity compensation plans at December 31, [removed: 2016:][added: 2017:]

| Equity Compensation Plans Not Approved by Security Holders | | | — | | | [added: $] | — | | | | — | |

| MSCI Amended and Restated 2007 Equity Incentive [added: Compensation Plan] | | | [added: 903,539] | | | [added: $] | [added: 58.61] | | | | [added: —] | |

| RiskMetrics Group, Inc. 2007 Omnibus Incentive Compensation Plan | | | [removed: 165,902] [added: 95,311] | | | $ | [removed: 22.22] [added: 21.13] | | | | — | |

| MSCI Inc. 2016 Non-Employee Directors Compensation Plan | | | [removed: 18,657] [added: 16,181] | | | $ | [removed: 76.36] [added: 100.95] | | | | [removed: 330,948] [added: 311,870] | |

On October 28, 2015, the Board of Directors approved a [removed: new] stock repurchase program authorizing the purchase of up to $1.0 billion worth of shares of MSCI’s common stock (the “2015 Repurchase Program”).

For the year ended December 31, [removed: 2016,] [added: 2017,] the Company repurchased approximately [removed: 10.3] [added: 1.6] million shares at an average price of [removed: $73.71] [added: $87.96] per share for a total value of [removed: $759.4] [added: $136.9] million pursuant to open market repurchases under the [removed: 2015 Repurchase Program and the] 2016 Repurchase Program.

The following table provides information with respect to purchases made by or on behalf of the Company of its common stock during the quarter ended December 31, [removed: 2016.][added: 2017.]

| (1) | Includes (i) shares purchased by the Company in the open market; (ii) shares withheld to satisfy tax withholding obligations on behalf of employees in connection with the vesting and delivery of outstanding shares underlying restricted stock units; (iii) shares withheld to satisfy tax withholding obligations on behalf of employees in connection with the vesting and delivery of outstanding shares underlying performance stock units; (iv) shares withheld to satisfy tax withholding obligations and exercise [removed: price] [added: prices] on behalf of employees in connection with the exercise and delivery of outstanding shares underlying stock options; and (v) shares held in treasury under the MSCI Inc. Non-Employee Directors Deferral Plan. The value of the shares withheld were determined using the fair market value of the Company’s common stock on the date of withholding, using a valuation methodology established by the Company. The amount also includes shares repurchased under the 2016 Repurchase Program. |

The Company completed its offering of the 2026 Senior Notes on August 4, 2016, the 2025 Senior Notes on August 13, 2015 and [removed: its offering of] the 2024 Senior Notes on November 20, 2014.

There were no unregistered sales of equity securities in the year ended December 31, [removed: 2016.][added: 2017.]

The following graph compares the cumulative total shareholders’ return on our common stock, the Standard & Poor’s 500 Stock Index and the NYSE Composite Index since December 31, [removed: 2011] [added: 2012] assuming an investment of $100 at the closing price on December 31, [removed: 2011.][added: 2012.]

[removed: ][added: ]

| | | [added: 2017 | | | |] 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | [removed: | 2011 | | |]

| December 31, 2017 | | | | | | | | | | | | |

| First Quarter | | $ | 99.31 | | | $ | 78.71 | | | $ | 0.28 | |

| Second Quarter | | $ | 106.17 | | | $ | 96.26 | | | $ | 0.28 | |

| Third Quarter | | $ | 117.74 | | | $ | 102.28 | | | $ | 0.38 | |

| Fourth Quarter | | $ | 129.35 | | | $ | 116.98 | | | $ | 0.38 | |

Effective May 1, 2018, non-employee directors will be entitled to receive an annual grant of $160,000 and the lead director will be entitled to an additional $50,000 in stock units (a total of $210,000), which will also be subject to a one-year vesting schedule.

| MSCI Inc. 2016 Omnibus Plan | | | 548,826 | | | $ | 80.94 | | | | 7,002,387 | |

| Total | | | 1,563,857 | | | $ | 64.60 | | | | 7,314,257 | |

| Month #1 (October 1, 2017-October 31, 2017) | | | 494 | | | $ | 121.13 | | | | \- | | | $ | 733,122,000 | |

| Month #2 (November 1, 2017-November 30, 2017) | | | 400 | | | $ | 124.00 | | | | 400 | | | $ | 733,073,000 | |

| Month #3 (December 1, 2017-December 31, 2017) | | | \- | | | $ | \- | | | | \- | | | $ | 733,073,000 | |

| Total | | | 894 | | | $ | 122.41 | | | | 400 | | | $ | 733,073,000 | |

| MSCI Inc. | | $ | 424 | | | $ | 261 | | | $ | 236 | | | $ | 154 | | | $ | 141 | | | $ | 100 | |

| S&P 500 | | $ | 208 | | | $ | 171 | | | $ | 153 | | | $ | 151 | | | $ | 132 | | | $ | 100 | |

| NYSE Composite Index | | $ | 172 | | | $ | 145 | | | $ | 129 | | | $ | 135 | | | $ | 126 | | | $ | 100 | |

Source: Bloomberg

| December 31, 2015 | | | | | | | | | | | | |

| First Quarter | | $ | 61.31 | | | $ | 47.24 | | | $ | 0.18 | |

| Second Quarter | | $ | 63.75 | | | $ | 60.32 | | | $ | 0.18 | |

| Third Quarter | | $ | 68.16 | | | $ | 57.78 | | | $ | 0.22 | |

| Fourth Quarter | | $ | 72.85 | | | $ | 57.95 | | | $ | 0.22 | |

| Compensation Plan | | | 1,288,660 | | | $ | 55.76 | | | | — | |

| MSCI Inc. 2016 Omnibus Plan | | | 303,790 | | | $ | 74.79 | | | | 7,261,273 | |

| Total | | | 1,777,009 | | | $ | 56.10 | | | | 7,592,221 | |

| Month #1 (October 1, 2016-October 31, 2016) | | | 794,092 | | | $ | 82.27 | | | | 793,777 | | | $ | 1,080,255,000 | |

| Month #2 (November 1, 2016-November 30, 2016) | | | 1,472,756 | | | $ | 79.81 | | | | 1,472,168 | | | $ | 962,771,000 | |

| Month #3 (December 1, 2016-December 31, 2016) | | | 1,167,609 | | | $ | 79.50 | | | | 1,167,609 | | | $ | 869,959,000 | |

| Total | | | 3,434,457 | | | $ | 80.27 | | | | 3,433,554 | | | $ | 869,959,000 | |

| MSCI Inc. | | $ | 246 | | | $ | 222 | | | $ | 145 | | | $ | 133 | | | $ | 94 | | | $ | 100 | |

| S&P 500 | | $ | 198 | | | $ | 177 | | | $ | 175 | | | $ | 154 | | | $ | 116 | | | $ | 100 | |

| NYSE Composite Index | | $ | 168 | | | $ | 150 | | | $ | 156 | | | $ | 146 | | | $ | 116 | | | $ | 100 | |

The selected Consolidated Statement of Income data for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] and the selected Consolidated Statement of Financial Condition data as of December 31, [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] are derived from our audited consolidated financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Our consolidated financial statements for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] have been audited and [removed: reported upon by an independent registered public accounting firm in each period.]

[added: The selected Consolidated] Statement of Income data for the years ended December 31, [removed: 2013] [added: 2014] and [removed: 2012] [added: 2013] and the selected Consolidated Statement of Financial Condition data as of December 31, [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] are derived from our audited consolidated financial statements not included in this Annual Report on Form 10-K.

| | | | [added: 2017 | | | |] 2016 | | | 2015 (1) | | | | 2014 (2) | | | | 2013 (4) | | | [removed: | 2012 (5) | | |]

| Operating revenues | | $ | [removed: 1,150,669] [added: 1,274,172] | | | $ | [removed: 1,075,013] [added: 1,150,669] | | | $ | [removed: 996,680] [added: 1,075,013] | | | $ | [removed: 913,364] [added: 996,680] | | | $ | [removed: 826,990] [added: 913,364] | |

| Total operating expenses | | | [removed: 662,565] [added: 694,984] | | | | [removed: 671,115] [added: 662,565] | | | | [removed: 659,514] [added: 671,115] | | | | [removed: 573,033] [added: 659,514] | | | | [removed: 508,755] [added: 573,033] | |

| Operating income | | | [removed: 488,104] [added: 579,188] | | | | [removed: 403,898] [added: 488,104] | | | | [removed: 337,166] [added: 403,898] | | | | [removed: 340,331] [added: 337,166] | | | | [removed: 318,235] [added: 340,331] | |

| Other expense (income), net | | | [removed: 102,166] [added: 112,289] | | | | [removed: 54,344] [added: 102,166] | | | | [removed: 28,828] [added: 54,344] | | | | [removed: 27,503] [added: 28,828] | | | | [removed: 57,434] [added: 27,503] | |

| Provision for income taxes | | | [removed: 125,083] [added: 162,927] | | | | [removed: 119,516] [added: 125,083] | | | | [removed: 109,396] [added: 119,516] | | | | [removed: 112,918] [added: 109,396] | | | | [removed: 96,010] [added: 112,918] | |

| Income from continuing operations, net of income taxes | | | [removed: 260,855] [added: 303,972] | | | | [removed: 230,038] [added: 260,855] | | | | [removed: 198,942] [added: 230,038] | | | | [removed: 199,910] [added: 198,942] | | | | [removed: 164,791] [added: 199,910] | |

| Income (loss) from discontinued operations, net of income taxes | | | — | | | | [removed: (6,390] [added: —] | [removed: )] | | | [removed: 85,171] [added: (6,390] | [added: )] | [removed: (3)] | | [removed: 22,647] [added: 85,171] | [added: (3)] | | | [removed: 19,447] [added: 22,647] | |

| Net income | | $ | [removed: 260,855] [added: 303,972] | | | $ | [removed: 223,648] [added: 260,855] | | | $ | [removed: 284,113] [added: 223,648] | | | $ | [removed: 222,557] [added: 284,113] | | | $ | [removed: 184,238] [added: 222,557] | |

| Operating margin | | | [removed: 42.4] [added: 45.5] | % | | | [removed: 37.6] [added: 42.4] | % | | | [removed: 33.8 |] [added: 37.6] | % | | [removed: 37.3] | [added: 33.8 |] % | | | [removed: 38.5] [added: 37.3] | % |

| Earnings per basic common share from continuing operations | | $ | [removed: 2.72] [added: 3.36] | | | $ | [removed: 2.11] [added: 2.72] | | | $ | [removed: 1.72] [added: 2.11] | | | $ | [removed: 1.66] [added: 1.72] | | | $ | [removed: 1.34] [added: 1.66] | |

| Earnings per basic common share from discontinued operations | | | — | | | | [removed: (0.06] [added: —] | [removed: )] | | | [removed: 0.73] [added: (0.06] | [added: )] | | | [removed: 0.19] [added: 0.73] | | | | [removed: 0.16] [added: 0.19] | |

| Earnings per basic common share | | $ | [removed: 2.72] [added: 3.36] | | | $ | [removed: 2.05] [added: 2.72] | | | $ | [removed: 2.45] [added: 2.05] | | | $ | [removed: 1.85] [added: 2.45] | | | $ | [removed: 1.50] [added: 1.85] | |

| Earnings per diluted common share from continuing operations | | $ | [removed: 2.70] [added: 3.31] | | | $ | [removed: 2.09] [added: 2.70] | | | $ | [removed: 1.70] [added: 2.09] | | | $ | [removed: 1.64] [added: 1.70] | | | $ | [removed: 1.32] [added: 1.64] | |

| Earnings per diluted common share from discontinued operations | | | — | | | | [removed: (0.06] [added: —] | [removed: )] | | | [removed: 0.73] [added: (0.06] | [added: )] | | | [removed: 0.19] [added: 0.73] | | | | [removed: 0.16] [added: 0.19] | |

| Earnings per diluted common share | | $ | [removed: 2.70] [added: 3.31] | | | $ | [removed: 2.03] [added: 2.70] | | | $ | [removed: 2.43] [added: 2.03] | | | $ | [removed: 1.83] [added: 2.43] | | | $ | [removed: 1.48] [added: 1.83] | |

| Basic | | | [removed: 95,986] [added: 90,336] | | | | [removed: 109,124] [added: 95,986] | | | | [removed: 115,737] [added: 109,124] | | | | [removed: 120,100] [added: 115,737] | | | | [removed: 122,023] [added: 120,100] | |

| Diluted | | | [removed: 96,540] [added: 91,914] | | | | [removed: 109,926] [added: 96,540] | | | | [removed: 116,706] [added: 109,926] | | | | [removed: 121,074] [added: 116,706] | | | | [removed: 123,204] [added: 121,074] | |

| Dividends declared per common share | | $ | [removed: 1.00] [added: 1.32] | | | $ | [removed: 0.80] [added: 1.00] | | | $ | [removed: 0.18] [added: 0.80] | | | $ | [removed: —] [added: 0.18] | | | $ | — | |

| | | [removed: 2016] [added: 2017] | | | | [added: | 2016 | | |] 2015 (1) | | | | 2014 (2) | | | | 2013 (4) | | | [removed: | 2012 (5) | | |]

| Cash and cash equivalents | | $ | [removed: 791,834] [added: 889,502] | | | $ | [removed: 777,706] [added: 791,834] | | | $ | [removed: 508,799] [added: 777,706] | | | $ | [removed: 358,434] [added: 508,799] | | | $ | [removed: 183,309] [added: 358,434] | |

| Accounts receivable (net of allowances) | | $ | [removed: 221,504] [added: 327,597] | | | $ | [removed: 208,239] [added: 221,504] | | | $ | [removed: 178,717] [added: 208,239] | | | $ | [removed: 169,490] [added: 178,717] | | | $ | [removed: 153,557] [added: 169,490] | |

| Goodwill and intangibles, net of accumulated amortization | | $ | [removed: 1,903,490] [added: 1,882,457] | | | $ | [removed: 1,957,111] [added: 1,903,490] | | | $ | [removed: 1,998,532] [added: 1,957,111] | | | $ | [removed: 2,408,871] [added: 1,998,532] | | | $ | [removed: 2,438,827] [added: 2,408,871] | |

| Total assets | | $ | [removed: 3,082,578] [added: 3,275,668] | | | $ | [removed: 3,146,987] [added: 3,082,578] | | | $ | [removed: 2,882,533] [added: 3,146,987] | | | $ | [removed: 3,129,286] [added: 2,882,533] | | | $ | [removed: 3,013,118] [added: 3,129,286] | |

| Deferred revenue | | $ | [removed: 334,358] [added: 374,365] | | | $ | [removed: 317,552] [added: 334,358] | | | $ | [removed: 310,775] [added: 317,552] | | | $ | [removed: 319,735] [added: 310,775] | | | $ | [removed: 308,022] [added: 319,735] | |

| Current maturities of long-term debt | | $ | — | | | $ | — | | | $ | — | | | $ | [removed: 18,301] [added: —] | | | $ | [removed: 40,654] [added: 18,301] | |

| Long-term debt, net of current maturities | | $ | [removed: 2,075,201] [added: 2,078,093] | | | $ | [removed: 1,579,404] [added: 2,075,201] | | | $ | [removed: 788,358] [added: 1,579,404] | | | $ | [removed: 782,652] [added: 788,358] | | | $ | [removed: 805,227] [added: 782,652] | |

| Total shareholders' equity | | $ | [removed: 317,605] [added: 401,012] | | | $ | [removed: 901,487] [added: 317,605] | | | $ | [removed: 1,432,833] [added: 901,487] | | | $ | [removed: 1,564,347] [added: 1,432,833] | | | $ | [removed: 1,413,950] [added: 1,564,347] | |

| (1) | Includes the impact of [added: the] Insignis [added: business (“Insignis”)] from the October 16, 2015 acquisition date, which was not material. Deferred taxes have been presented in accordance with new accounting guidance prospectively beginning on December 31, 2015. Prior periods have not been retrospectively restated to match this presentation. |

| (4) | Includes the results of [removed: InvestorForce] [added: Investor Force Holdings, Inc. (“InvestorForce”)] from the January 29, 2013 acquisition date, the impact of which was not material. |

reported upon by an independent registered public accounting firm in each period.

| --- | --- |

The selected Consolidated

| Short-term investments | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 70,898 | |

| (5) | Includes the results of IPD from the November 30, 2012 acquisition date, the impact of which was not material. |

Based on their evaluation, as of December 31, [removed: 2016,] [added: 2017,] the end of the period covered by this Annual Report on Form 10-K, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] based on the criteria described in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management, including the Company’s CEO and CFO, concluded that, as of December 31, [removed: 2016,] [added: 2017,] our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

[removed: PricewaterhouseCoopers,] [added: PricewaterhouseCoopers] LLP, our independent registered public accounting firm, has audited and issued a report on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] which appears on page F-2 of this Annual Report on Form 10-K.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, [removed: 2016] [added: 2017] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Annual Incentive Plan

The Compensation and Talent Management Committee (the “Committee”) of the Board of Directors of MSCI Inc. (the “Company”) adopted the MSCI Inc. Annual Incentive Plan (the “AIP”), effective February 23, 2018, which will govern the terms of annual cash incentive awards granted to eligible employees of the Company (including each of the Company’s current named executive officers), as determined by the Committee from time to time.

The terms and conditions set forth in the AIP are consistent with the Company’s historical practices with respect to granting annual cash incentive awards to eligible employees.

Employees who participate in the Company’s Coverage Incentive Plan (or any other cash incentive plan) maintained by the Company will not be eligible to participate in the AIP.

The Committee (or its delegate) will administer the AIP and will have the authority to determine all of the terms of the awards granted under the AIP.

Annual cash incentive awards granted under the AIP will be payable based on the achievement of specified performance measures, including financial criteria and/or key performance indicators (as may be adjusted pursuant to the AIP).

The performance measures for the Company’s named executive officers will be described in the Company’s annual proxy statement.

Following the end of each performance period, the Committee (or its delegate) will determine the degree of achievement of the performance measures and may adjust the final award payable to a participant upward or downward, subject to and in accordance with the requirements of any applicable plan, program, policy or arrangement maintained or entered into by the Company that may be in effect and to the extent applicable to any such participant.

Awards granted under the AIP will be paid in cash as soon as practicable following the Committee’s (or its delegate’s) determination of the final award payable to a participant (but in no event later than March 15th of the year following the end of the applicable performance period).

Unless otherwise provided, the payment of a final award is subject to the participant’s continuous service with the Company or its subsidiaries through the applicable payment date.

In the event of a participant’s termination of service prior to the payment date, unless otherwise provided by the Committee, any unpaid portion of any award will be forfeited in its entirety; however, in the event of a participant’s termination of service due to death or disability, the participant will be eligible to receive his or her award based on (i) actual achievement of the applicable underlying financial and operational metrics and (ii) 100% achievement of the target Key Performance Indicators (“KPIs”) for such performance period.

Awards paid to a participant following a termination of service due to death or disability will be payable at the same time as awards payable to other participants.

In the event of a change in control (as defined in the AIP), unless otherwise determined by the Committee, (i) the performance period applicable to any outstanding award will cease as of the date immediately prior to the change in control, (ii) (A) with respect to the portion of any award based on performance measures (other than KPIs), such award will be payable based on the higher of (x) the Company’s actual achievement of the performance measures (other than KPIs) for the period commencing on the first day of the performance period and ending on the date immediately prior to such change in control and (y) 100% and (B) with respect to the portion of any award based on KPIs, such award will be payable at 100% of the target KPIs and (iii) any such award shall be payable by

the Company (or the successor or survivor entity (or its parent)) within 60 days of the date of the change in control, prorated for the portion of the applicable performance period that elapsed prior to the change in control.

If the Company’s successor will not be implementing a comparable annual incentive plan for the remaining portion of the year in which the change in control occurs, the Committee may, in its discretion, elect to pay 100% of the award or such other amount the Committee determines appropriate based upon the achievement of the performance measures and the KPIs as described in the previous sentence.

If any AIP participant is eligible to receive a prorated annual bonus pursuant to any change in control severance plan that is maintained by the Company and in effect at the time of a change in control (any such plan, a “CIC Plan”), any prorated annual bonus payable to a participant pursuant to a CIC Plan in respect of the year in which the change in control occurs will be reduced (but in no event reduced to less than zero) by any awards paid to the participant under the AIP in respect of such year.

None.

Except for the information relating to our Executive Officers set forth in Part I of this Annual Report on Form 10-K, we incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

Information regarding our Code of Ethics and Business Conduct and Corporate Governance Policies is incorporated herein by reference from our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

Any amendments to, or waivers from, a provision of our Codes of Ethics that apply to our principal executive officer, principal financial officer, [added: principal accounting officer or] controller, or persons performing similar functions and that relates to any element of the Code of Ethics enumerated in paragraph (b) of Item 406 of Regulation S-K shall be disclosed by posting such information on our website at www.msci.com.

We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, [removed: 2016.][added: 2017.]

The information required by this Item is set forth [removed: on the exhibit index that begins on page EX-1 of this Annual Report on Form 10-K.][added: below.]

EXHIBIT INDEX

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Exhibit Number | Description | Form | File No. | Exhibit No. | Filing Date |

| 3.1 | [Third Amended and Restated Certificate of Incorporation](http://www.sec.gov/Archives/edgar/data/1408198/000119312512212354/d324997dex31.htm) | 10-Q | 001-33812 | 3.1 | 5/4/2012 |

| 3.2 | [Amended and Restated By-laws](http://www.sec.gov/Archives/edgar/data/1408198/000119312512212354/d324997dex32.htm) | 10-Q | 001-33812 | 3.2 | 5/4/2012 |

| 4.1 | [Form of Senior Indenture](http://www.sec.gov/Archives/edgar/data/1408198/000095010315006360/dp58253_ex0401.htm) | S-3 | 333-206232 | 4.1 | 8/7/2015 |

| 4.2 | [Form of Subordinated Indenture](http://www.sec.gov/Archives/edgar/data/1408198/000095010315006360/dp58253_ex0402.htm) | S-3 | 333-206232 | 4.2 | 8/7/2015 |

| 4.3 | [Form of Common Stock Certificate](http://www.sec.gov/Archives/edgar/data/1408198/000119312512212354/d324997dex41.htm) | 10-Q | 001-33812 | 4.1 | 5/4/2012 |

| 4.4 | [Indenture, dated as of November 20, 2014, among MSCI Inc., each of the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee](http://www.sec.gov/Archives/edgar/data/1408198/000119312514420084/d823985dex41.htm) | 8-K | 001-33812 | 4.1 | 11/20/2014 |

| 4.5 | [Form of Note for MSCI Inc. 5.250% Senior Notes due November 15, 2024 (included in Exhibit 4.4)](http://www.sec.gov/Archives/edgar/data/1408198/000119312514420084/d823985dex41.htm) | 8-K | 001-33812 | 4.2 | 11/20/2014 |

| 4.6 | [Indenture, dated as of August 13, 2015, among MSCI Inc., each of the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee](http://www.sec.gov/Archives/edgar/data/1408198/000119312515290101/d63256dex41.htm) | 8-K | 001-33812 | 4.1 | 8/13/2015 |

| 4.7 | [Form of Note for MSCI Inc. 5.750% Senior Notes due August 13, 2025 (included in Exhibit 4.6)](http://www.sec.gov/Archives/edgar/data/1408198/000119312515290101/d63256dex41.htm) | 8-K | 001-33812 | 4.2 | 8/13/2015 |

| 4.8 | [Indenture, dated as of August 4, 2016, among MSCI Inc., each of the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee](http://www.sec.gov/Archives/edgar/data/1408198/000119312516672119/d236625dex41.htm) | 8-K | 001-33812 | 4.1 | 8/05/2016 |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Exhibit Number | Description | Form | File No. | Exhibit No. | Filing Date |

| 4.9 | [Form of Note for MSCI Inc. 4.750% Senior Notes due August 1, 2026 (included in Exhibit 4.8)](http://www.sec.gov/Archives/edgar/data/1408198/000119312516672119/d236625dex41.htm) | 8-K | 001-33812 | 4.2 | 8/05/2016 |

| 10.1† | [Index License Agreement for Funds, dated as of March 18, 2000, between Morgan Stanley Capital International and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312515069699/d832959dex101.htm) | 10-K | 001-33812 | 10.1 | 2/27/2015 |

| 10.2† | [Amendment to Index License Agreement for Funds between Morgan Stanley Capital International and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312512086989/d264713dex102.htm) | 10-K | 001-33812 | 10.2 | 2/29/2012 |

| 10.3† | [Letter Agreement to Amend MSCI-BGI Fund Index License Agreement, dated as of June 21, 2001, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312511017728/dex103.htm) | 10-K | 001-33812 | 10.3 | 1/31/2011 |

| 10.4† | [Addendum to the Index License Agreement for Funds, dated as of September 18, 2002, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312507207372/dex104.htm) | S-1/A | 333-144975 | 10.4 | 9/26/2007 |

| 10.5† | [Amendment to the Index License Agreement for Funds, dated as of December 3, 2004, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312507226305/dex105.htm) | S-1/A | 333-144975 | 10.5 | 10/26/2007 |

| 10.6† | [Amendment to the Index License Agreement for Funds, dated as of May 1, 2005, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312507207372/dex106.htm) | S-1/A | 333-144975 | 10.6 | 9/26/2007 |

| 10.7† | [Amendment to the Index License Agreement for Funds, dated as of July 1, 2006, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312507207372/dex107.htm) | S-1/A | 333-144975 | 10.7 | 10/26/2007 |

| 10.8 | [Amendment to Index License Agreement for Funds, dated as of June 5, 2007, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312511017728/dex108.htm) | 10-K | 001-33812 | 10.8 | 1/31/2011 |

| 10.9 | [Amendment to Index License Agreement for Funds, dated as of November 7, 2008, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312512086989/d264713dex109.htm) | 10-K | 001-33812 | 10.9 | 2/29/2012 |

| 10.10† | [Amendment to Index License Agreement for Funds, dated as of December 9, 2008, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000095010310001952/dp18350_ex1002.htm) | 10-Q | 001-33812 | 10.2 | 7/2/2010 |

| 10.11 | [Amendment to Index License Agreement for Funds, dated as of April 1, 2009, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312510017074/dex1011.htm) | 10-K | 001-33812 | 10.11 | 1/29/2010 |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Exhibit Number | Description | Form | File No. | Exhibit No. | Filing Date |

| 10.12† | [Amendment to Index License Agreement for Funds, dated as of May 21, 2009, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000095010310001952/dp18350_ex1003.htm) | 10-Q | 001-33812 | 10.3 | 7/2/2010 |

| 10.13 | [Amendment to Index License Agreement for Funds, dated as of September 30, 2009, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000095010310001952/dp18350_ex1004.htm) | 10-Q | 001-33812 | 10.4 | 7/2/2010 |

| 10.14 | [Amendment to Index License Agreement for Funds, dated as of October 6, 2009, between MSCI Inc. and Barclays Global Investors, N.A.](http://www.sec.gov/Archives/edgar/data/1408198/000119312510017074/dex1014.htm) | 10-K | 001-33812 | 10.14 | 1/29/2010 |

| 10.15† | [Amendment to the Index License Agreement for Funds, dated as of October 4, 2011, by and between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.). Replaces in its entirety the Amendment to Index License Agreement for Funds, dated as of October 27, 2009, between MSCI Inc. and Barclays Global Investors, N.A. filed as Exhibit 10.15 to Form 10-K (001-33812) filed with the SEC on February 29, 2012](http://www.sec.gov/Archives/edgar/data/1408198/000119312513087988/d448124dex1015.htm) | 10-K | 001-33812 | 10.15 | 3/1/2013 |

| 10.23 | [Tax Sharing Agreement, dated as of November 20, 2007, between Morgan Stanley and MSCI Inc.](http://www.sec.gov/Archives/edgar/data/1408198/000119312508040715/dex1012.htm) | 10-K | 001-33812 | 10.12 | 2/28/2008 |

| 10.29* | [MSCI Inc. Amended and Restated 2007 Equity Incentive Compensation Plan](http://www.sec.gov/Archives/edgar/data/1408198/000119312513087988/d448124dex1030.htm) | 10-K | 001-33812 | 10.30 | 3/1/2013 |

| 10.30* | [MSCI Independent Directors’ Equity Compensation Plan as amended and restated on January 12, 2011](http://www.sec.gov/Archives/edgar/data/1408198/000119312511017728/dex1039.htm) | 10-K | 001-33812 | 10.39 | 1/31/2011 |

| 10.31* | [MSCI Inc. Performance Formula and Incentive Plan](http://www.sec.gov/Archives/edgar/data/1408198/000119312508040718/ddef14a.htm) | Proxy | 001-33812 | Annex C | 2/28/2008 |

| | | Title: | | [removed: Chairman,] [added: Chairman and] Chief Executive Officer [removed: and President] |

Date: February [removed: 24, 2017][added: 26, 2018]

| /S/ HENRY A. FERNANDEZ | | [removed: Chairman,] [added: Chairman and] Chief Executive [removed: Officer, and] [added: Officer] | | February [removed: 24, 2017] [added: 26, 2018] |

| Henry A. Fernandez | | [removed: President] (principal executive officer) | | |

| /S/ KATHLEEN A. WINTERS | | Chief Financial Officer [added: and Treasurer] | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ RICHARD J. NAPOLITANO | | Global Controller | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ ROBERT G. ASHE | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ BENJAMIN F. DUPONT | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ WAYNE EDMUNDS | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ ALICE W. HANDY | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ CATHERINE R. KINNEY | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ WENDY E. LANE | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| [added: Jacques P. Perold] /S/ LINDA H. RIEFLER | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ GEORGE W. SIGULER | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ PATRICK TIERNEY | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| /S/ RODOLPHE M. VALLEE | | Director | | February [removed: 24, 2017] [added: 26, 2018] |

| [Consolidated Statements of Financial Condition as of December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015](#CONSOLIDATED_STATEMENTS_FINANCIAL_CONDIT)] [added: 201](#CONSOLIDATED_STATEMENTS_FINANCIAL_CONDIT)6] | | [removed: F-3] [added: F-4] |

| [Consolidated Statements of Income for the Years Ended December 31, [removed: 2016,] [added: 2017,] December 31, [removed: 2015,] [added: 2016,] and December 31, [removed: 2014](#CONSOLIDATED_STATEMENTS_INCOME)] [added: 201](#CONSOLIDATED_STATEMENTS_INCOME)5] | | [removed: F-4] [added: F-5] |

| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2016,] [added: 2017,] December 31, [removed: 2015,] [added: 2016,] and December 31, [removed: 2014](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] [added: 201](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)5] | | [removed: F-5] [added: F-6] |

| [Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, [removed: 2016,] [added: 2017,] December 31, [removed: 2015,] [added: 2016,] and December 31, [removed: 2014](#CONSOLIDATED_STATEMENTS_SHAREHOLDERS_EQU)] [added: 201](#CONSOLIDATED_STATEMENTS_SHAREHOLDERS_EQU)5] | | [removed: F-6] [added: F-7] |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2016,] [added: 2017,] December 31, [removed: 2015,] [added: 2016,] and December 31, [removed: 2014](#CONSOLIDATED_STATEMENTS_CASH_FLOWS)] [added: 201](#CONSOLIDATED_STATEMENTS_CASH_FLOWS)5] | | [removed: F-7] [added: F-8] |

| [Notes to Consolidated Financial Statements](#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN) | | [removed: F-8] [added: F-9] |

In our opinion, the [removed: accompanying] consolidated [removed: statements of] financial [removed: condition and the related consolidated] statements [removed: of income, of comprehensive income, of shareholders’ equity and of cash flows] [added: referred to above] present fairly, in all material respects, the financial position of [removed: MSCI Inc. and its subsidiaries at] [added: the Company as of] December 31, [removed: 2016] [added: 2017] and [removed: December 31, 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company's management is responsible for these [added: consolidated] financial statements, for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report On Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on [removed: these] [added: the Company’s consolidated] financial statements and on the Company's internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made [removed: only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

| | | [removed: 2016] [added: 2017] | | | | [added: | 2016 | | |] 2015 | | |

| Cash and cash [removed: equivalents] [added: equivalents, beginning of period] | | [removed: $] | 791,834 | | | [removed: $] | 777,706 | | [added: | | 508,799 | |]

| Accounts receivable (net of allowances of [removed: $1,035] [added: $1,700] and [removed: $1,117] [added: $1,035] at December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015,] [added: 2016,] respectively) | | | [removed: 221,504] [added: 327,597] | | | | [removed: 208,239] [added: 221,504] | |

| Prepaid income taxes | | | [removed: 12,389] [added: 15,103] | | | | [removed: 46,115] [added: 12,389] | |

| Prepaid and other assets | | | [removed: 29,943] [added: 34,927] | | | | [removed: 31,211] [added: 29,943] | |

| Total current assets | | | [removed: 1,055,670] [added: 1,267,129] | | | | [removed: 1,063,271] [added: 1,055,670] | |

| Property, equipment and leasehold improvements (net of accumulated depreciation and amortization of [removed: $136,841] [added: $171,280] and [removed: $114,680] [added: $136,841] at December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015,] [added: 2016,] respectively) | | | [removed: 95,585] [added: 94,437] | | | | [removed: 98,926] [added: 95,585] | |

| Goodwill | | | [removed: 1,555,850] [added: 1,560,621] | | | | [removed: 1,565,621] [added: 1,555,850] | |

| Intangible assets (net of accumulated amortization of [removed: $462,860] [added: $507,612] and [removed: $418,512] [added: $462,860] at December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015,] [added: 2016,] respectively) | | | [removed: 347,640] [added: 321,836] | | | | [removed: 391,490] [added: 347,640] | |

| Deferred tax assets | | | [removed: 9,531] [added: 12,013] | | | | [removed: 9,180] [added: 9,531] | |

| /S/ JACQUES P. PEROLD | | Director | | February 26, 2018 |

| /S/ MARCUS L. SMITH | | Director | | February 26, 2018 |

| Marcus L. Smith | | | | |

| | | | | |

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of MSCI Inc. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Basis for Opinions

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Definition and Limitations of Internal Control over Financial Reporting

only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

February 26, 2018

We have served as the Company’s auditor since 2014.

| | | 2017 | | | | 2016 | | |

| Cash and cash equivalents | | $ | 889,502 | | | $ | 791,834 | |

| Net income | | | | | | | | | | | | | | | 303,972 | | | | | | | | 303,972 | |

| Dividends | | | | | | | | | | | 20 | | | | (120,992 | ) | | | | | | | (120,972 | ) |

| Balance at December 31, 2017 | | $ | 1,295 | | | $ | (2,321,989 | ) | | $ | 1,264,849 | | | $ | 1,505,204 | | | $ | (48,347 | ) | | $ | 401,012 | |

| Net cash provided by operating activities | | | 404,158 | | | | 442,363 | | | | 321,247 | |

| Net cash (used in) provided by financing activities | | | (267,543 | ) | | | (372,899 | ) | | | 4,696 | |

| (1) Includes $43.6 million accrual for amounts payable after December 31, 2018 related to the estimated one-time tax charge on the deemed repatriation of historic earnings and profits of foreign subsidiaries. See Note 10, "Income Taxes," for additional information. | | | | | | | | | | | | |

MSCI Inc., together with its wholly-owned subsidiaries (the “Company” or “MSCI”), provides mission-critical investment decision support tools, including indexes; portfolio construction and risk management products and services; Environmental, Social and Governance (“ESG”) research and ratings; and real estate research, reporting and benchmarking offerings.

MSCI’s research-derived intellectual property includes methodologies, models, derived data and algorithms, as well as applications and services, which help its clients manage their investment processes and address their investment, risk and regulatory challenges.

year in which they were earned rather than expensing the awards on the date of grant.

If necessary an impairment charge will be recorded up to, but not more than, the total amount of goodwill allocated to the reporting unit.

The Company completed its annual goodwill impairment test as of July 1, 2017 on its four reporting units, which are the same as its four operating segments.

The Company performed a step zero, qualitative impairment test on each of its Index, Analytics and ESG operating segments and determined that it was more likely than not that the fair value for each of the Index, Analytics and ESG operating segments was not less than the carrying value for each.

As revenues have been below management’s expectations for the Real Estate segment, the Company performed a step 1, quantitative impairment test for this segment and determined that the fair value substantially exceeded its carrying value.

| Balance as of December 31, 2017 | | $ | 1,700 | |

The Company will be adopting the new revenue guidance as of January 1, 2018 using the modified retrospective transition method.

Under this adoption method, the Company will record an immaterial adjustment to retained earnings at January 1, 2018.

The adoption of the ASUs will generally result in more revenue being recognized up-front or earlier in the life of new contracts for certain MSCI products and services, including fees related to the licensing of desktop applications, implementation and set-up services and multi-year deals.

Overall, the impact on consolidated revenues and the trend of earnings is not expected to be material.

The adoption of the ASUs will also result in higher accounts receivable and deferred revenue balances than under the current guidance.

Under the current guidance, MSCI only records the value of an invoice to accounts receivable and deferred revenue once the service period begins.

Under the new guidance, however, when MSCI issues an invoice for a non-cancellable, non-refundable contract, MSCI has an unconditional right to consideration and recognizes a valid receivable.

In addition, the new standard will require enhanced disclosures in relation to (i) disaggregated revenue, (ii) reconciliations of contract balances, (iii) performance obligations, (iv) significant judgments and (v) costs to obtain or fulfill contracts.

Amendments related to accounting for the income tax consequences have been adopted prospectively, resulting in the recognition of $5.7 million of excess tax benefits within “Provision for income taxes” in the Consolidated Statement of Income rather than “Additional paid in capital” in the Consolidated Statement of Financial Condition for the year ended December 31, 2017.

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February 24, 2017

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| | | December 31, | | | | December 31, | | |

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| Balance at December 31, 2013 | | $ | 1,256 | | | $ | (268,391 | ) | | $ | 1,073,157 | | | $ | 758,975 | | | $ | (650 | ) | | $ | 1,564,347 | |

| Net income | | | | | | | | | | | | | | | 284,113 | | | | | | | | 284,113 | |

| Dividends | | | | | | | (4 | ) | | | | | | | (20,393 | ) | | | | | | | (20,397 | ) |

| Excess tax benefits from employee stock incentive plans | | | | | | | | | | | 2,835 | | | | | | | | | | | | 2,835 | |

| Amortization of discount on long-term debt | | | — | | | | — | | | | 2,218 | |

| Excess tax benefits from share-based compensation | | | (7,625 | ) | | | (15,253 | ) | | | (2,835 | ) |

| Net cash provided by operating activities | | | 434,738 | | | | 305,994 | | | | 305,673 | |

| Excess tax benefits from share-based compensation | | | 7,625 | | | | 15,253 | | | | 2,835 | |

| Repayment of long-term debt | | | — | | | | — | | | | (810,000 | ) |

| Net cash (used in) provided by financing activities | | | (365,274 | ) | | | 19,949 | | | | (442,328 | ) |

| Cash and cash equivalents, beginning of period | | | 777,706 | | | | 508,799 | | | | 358,434 | |

MSCI Inc., together with its wholly-owned subsidiaries (the “Company” or “MSCI”), offers products and services to support the needs of institutional investors throughout their investment processes.

The Company’s products and services include the development and production of indexes and analytical models; the provision of ratings and analysis that identify environmental, social and governance risks and opportunities and the analysis of real estate in both privately and publicly owned portfolios.

The Company completed the sale of ISS on April 30, 2014.

As a result, $5.2 million was the net amount capitalized in the Consolidated Statement of Financial Condition for the year ended December 31, 2015.

period.

Additionally, if the book value of a reporting unit is zero or a negative value and it is determined that it is more likely than not that the goodwill is impaired, further analysis is required.

| | | Amount | | |

| Balance as of December 31, 2013 | | $ | 1,280 | |

For the years ended December 31, 2016, 2015 and 2014, BlackRock, Inc. accounted for 17.3%, 19.2% and 20.1%, respectively, of the Index segment’s operating revenues.

The Company is currently evaluating the overall impact and the method of adoption of ASU 2014-09, including the latest developments from the Transition Resources Group.

Areas most likely impacted may include, but not be limited to, the following: the timing of revenue recognition and costs for implementation services; the timing of revenue recognition of licenses for desktop applications; and the accounting for contract modifications.

In addition, the new standard may require certain amounts in accounts receivable and deferred revenues to be netted on the balance sheet and enhanced disclosures around performance obligations.

The Company’s final determination of the adoption methodology will depend on a number of factors, such as the significance of the impact of the new standard on the financial results, system readiness and the ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements and new disclosure requirements.

The Company does not currently know or cannot reasonably estimate quantitative information related to the impact of the new standard on its consolidated financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Presentation of Financial Statements: Going Concern (Subtopic 205-40),” or ASU 2014-15.

The amendments in ASU 2014-15 provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures.