Item 1. Business

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Overview

MSCI is a leading provider of mission critical investment decision support tools and services — we power investors to make better decisions about their investment portfolios. Our tools and services help investors better understand the drivers of risk and return and build portfolios to more effectively and efficiently achieve their investment objectives. We are able to do this by leveraging our knowledge of the global investment process and our expertise in research, data, and technology in order to deliver actionable solutions1 to our clients. We are dynamic and flexible in the delivery of our content and capabilities, such as our indexes; portfolio construction tools and risk-management services; environmental, social and governance (“ESG”) research and ratings; and real estate benchmarks, return analytics services and market insights; much of which can be accessed by our clients through multiple channels and platforms.

Professionally managed investment assets generally continue to grow at a rapid pace as global economies and markets continue to evolve, and both individuals and sovereign entities are increasing their savings. In addition to this growth, the investment industry continues to transform, as evidenced by a number of notable trends, including:

	(1)	Transformation of clients’ operating models and business strategies, including an increased focus on factor and indexed investments, to address the changing competitive landscape characterized by an intense focus by investors on the drivers of risk and return, manager fee compression and industry consolidation;

	(2)	Continuing growth of index-based investing and assets linked to exchange traded funds (“ETFs”);

	(3)	Growing use of advanced technologies to enhance investment analytics and streamline operations;

	(4)	Increasing outsourcing of non-core functions and vendor/supply chain consolidation; and

	(5)	Increasing integration of ESG considerations into investment processes and products.

1	The term “solutions” as used throughout this Annual Report on Form 10-K refers to the usage of our products and/or services by our clients to help them achieve their specific investment objectives.

We are uniquely positioned to benefit from these trends and to help our clients adapt to the changing industry. Our clients rely on us to provide consistent, scalable and integrated solutions across their entire investment process, driving more informed investment decisions and increased operational efficiency. These solutions increasingly involve multiple areas of content or services and may also be supported by insights from our research team to help our clients understand how our tools can be utilized alone or in combination. The differentiated research insights and content embedded in our innovative tools are central to the MSCI franchise. Through the content developed in each of our operating segments — Index, Analytics, ESG and Real Estate — our clients gain a broad view of the global investment industry, which enables them to manage their investment objectives across multiple asset classes in an increasingly integrated manner. Our clients use the offerings from each of our operating segments to achieve a wide range of objectives:

	•	Index and Analytics help investors define investment universes, measure performance, analyze returns, set asset allocations, construct portfolios, conduct portfolio attribution and manage risk. Additionally, our indexes serve as a basis for index-linked investment products such as ETFs;

	•	ESG’s research and ratings provide unique insights that help investors identify and measure ESG risks and opportunities; and

	•	Real Estate offers data-driven analytics and research of global and individual property markets as well as benchmarks for performance measurement.

We remain keenly focused on staying at the forefront of investment trends to address the evolving needs of our clients in a changing industry. In order to most effectively serve our clients and remain differentiated from competition, we remain committed to driving a solutions-based approach, achieving service excellence, enhancing our differentiated research and content and delivering flexible, cutting-edge technology and platforms.

Clients

As a client-centric company, we offer innovative solutions to help our clients adapt to a fast-changing marketplace. As the needs of our clients change, so do our offerings. Our clients comprise a wide spectrum of the global investment industry and include the following key client segments:

	(1)	asset owners (pension funds, endowments, foundations, central banks, sovereign wealth funds, family offices and insurance companies);

	(2)	asset managers (institutional, mutual funds, hedge funds, ETFs, insurance, private wealth, private banks and real estate investment trusts);

	(3)	financial intermediaries (banks, broker-dealers, exchanges, custodians, trust companies and investment consultants); and

	(4)	wealth managers (including an increasing number of “robo-advisors”).

The clients described above have unique investment objectives and turn to us for an integrated set of tools that help them effectively and efficiently achieve these objectives. For example:

	(1)	Asset owners and, increasingly, wealth managers, are seeking to better understand the drivers of risk and return as well as the value provided by active managers (versus their passive counterparts). Additionally, they are seeking tools for model portfolio creation and to gain a complete and detailed picture of their entire portfolio. These investors include those with long time horizons who are turning to private assets, such as real estate, private equity and hedge funds, as they seek uncorrelated and above-market returns.

	(2)	Active asset managers must enhance and explain their investment processes and strategies, and find ways to differentiate themselves from their competitors in order to attract assets and justify their fees.

	(3)	Asset managers are increasingly developing index-based products, such as ETFs, to more efficiently implement their investment strategies and continue to attract assets.

	(4)	Financial intermediaries, such as exchanges and broker dealers, are creating exchange-listed and over-the-counter index-based products such as futures, options, swaps and structured products to help industry participants manage investment risk and efficiently achieve their investment objectives.

	(5)	Asset owners, asset managers and wealth managers are looking to integrate ESG considerations into their investment processes.

	(6)	Clients are seeking customized solutions and high-touch support from their tools providers to help them operate more effectively and efficiently.

Through a combined use of the content and capabilities provided by each of our Index, Analytics, ESG and Real Estate operating segments, our clients are better able to achieve their multi-faceted investment objectives. See Part I, Item 1. “Business—Operating Segments” for additional information on the content, applications and services provided by each operating segment that fuel the solutions we provide to our clients.

As of December 31, 2018, we served over 7,000 clients across 90 countries worldwide.2 For the fiscal years ended December 31, 2018 and 2017, revenues from our ten largest clients accounted for 28.6% and 27.8% of our total revenues, respectively. For the fiscal year ended December 31, 2018, our largest client organization by revenue, BlackRock, accounted for 11.9% of our total revenues. For the fiscal years ended December 31, 2018 and 2017, 95.8% and 95.3%, respectively, of the revenue from BlackRock came from fees based on the assets in BlackRock’s ETFs that are based on our indexes.

Growth Strategy

Our products and services are deeply integrated in the global investment ecosystem and in our clients’ investment processes. Against the backdrop of the growing and transforming industry described above, we aim to help industry participants adapt to and thrive in the industry of the future by delivering actionable solutions. As a leading provider of mission critical content, applications and services that support the investment processes of a variety of participants in the global investment industry, we are well positioned to grow our relationships with existing clients as well as expand to new clients.

Our growth is being fueled by our competitive advantages, which are helping investment institutions create sustainable business models today and into the future. These areas of competitive advantage include:

	(1)	Differentiated research-enhanced content, which is grounded in our deep knowledge of the global investment process and fueled by experienced research, product development and data management teams;

	(2)	Actionable solutions and client service excellence supported by a client coverage team that helps build and maintain strong and trusted client relationships with the senior executives and investment professionals at the world’s largest investment institutions; and

	(3)	Flexible, scalable and cutting-edge technology that is supported by a large team of technology and data professionals, and powers content from MSCI, clients and third parties while helping our clients be more cost-effective in their own operations.

Our growth strategy is focused on a number of key initiatives that optimize the value of our integrated company and capitalize on our competitive advantages to address the changing needs of our clients and the investment industry. These strategic initiatives include:

	•	Expand leadership in research-enhanced content. Our research-driven content plays a key role in our ability to help our clients develop relevant, global and sustainable investment strategies in an efficient manner. We are continually developing a wide range of differentiated content and have amassed an extensive database of historical global market data, proprietary equity index data, factor models, private real estate benchmark data, risk algorithms and ESG data, all of which are critical components of our clients’ investment processes.

2	To calculate the number of clients, we 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 4,000 as of December 31, 2018.

We take an integrated team approach to developing content across our operating segments. Our product management, research and product development, data operations and technology and application development departments are at the center of this process. Our content is developed by a research and product development team (“research team”) comprised of mathematicians, economists, statisticians, financial engineers and investment industry experts. Through our relationships with the world’s largest investment institutions, we monitor investment trends and their drivers globally and support instrument valuation, risk modeling, portfolio construction, portfolio attribution, 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 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.

We are leveraging developments in technology, such as machine learning and artificial intelligence, together with a wide range of alternative data sources to enable us to develop new content more quickly and deliver content more cost-effectively. Additionally, we have integrated our research, data and technology teams, which develop content and capabilities that support our operating segments. By focusing on cross-product and cross-functional innovation, we can maximize the capabilities of each of our operating segments in order to bring greater value to our clients. We expect to grow as one integrated company through the ongoing integration of the full suite of offerings provided by each of our operating segments. For example, we have leveraged our new global equity model (from the Analytics segment) as well as our ESG ratings research into the indexes we offer. 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.

	•	Strengthen existing and new client relationships by providing solutions. Our global vantage point enables us to view financial markets in terms of what matters to global investors and financial institutions. We believe our global operating footprint is a competitive advantage that enables us to tailor our coverage initiatives to better serve our clients in the markets where they operate. We consult with clients and other market participants to develop content and provide insights. Our research and product management teams seek to understand our clients’ investment processes and needs in order to generate content and design offerings that help clients understand the dimensions of performance and risk in their portfolios and make better-informed investment decisions. Our consultative approach to content development, dedication to client support and range of offerings enable us to build strong relationships with investment professionals and institutions around the world.

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. 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. In 2018, we hired a Global Head of Client Solutions to bring integrated solutions to four of our largest client segments (asset managers, banking & trading, asset owners and alternative investment managers). Additionally, to ensure that we provide world-class service to our largest accounts, as of December 31, 2018, we have expanded the number of account managers across our largest strategic accounts.

In support of our clients and the continual development of our brand, our industry and content experts are interviewed as thought leaders and commentators in prominent financial and trade media and have written research pieces that have served as the basis of news articles around the investment world. Members of our research team and other employees regularly speak at industry conferences, as well as at our own events. These events bring our employees and clients together, expose clients to our latest research and content enhancements, enable client access to global industry experts and policymakers, and give our employees an opportunity to gain better insights into our clients’ needs.

	•	Improve access to our solutions through cutting-edge technology and platforms. Underlying all our efforts is the development and use of the latest technology to provide richer content and services and a better client experience. A flexible, cutting-edge platform greatly enhances the value of our content, as well as the content of clients and third parties. Our technology has and will continue to simplify and increase secure access to our products. We seek to provide functionality not currently available in the market that will easily be integrated within client workflows. In addition, we increasingly employ proprietary and third-party machine learning and artificial intelligence techniques to scale up our ability to gather and analyze data and automate and enhance the efficiency of many of our data processes, as well as generate unique research insights that help our clients build better investment strategies. In doing so, we are not only able to operate in a more cost-effective manner as a company, but are also able to internally develop cost-effective solutions to offer clients computing capacity they have not previously been able to access.

Led by our Chief Technology Officer, who was hired in 2018 to execute our technology optimization strategy across the Company, we aim to accomplish these goals in several ways:

	1)	provide our clients with a flexible and user-friendly way to access our content as well as their own content and third-party content;

	2)	develop an integrated data platform to reduce data silos and help deliver our unique set of multi-asset class data, thereby encouraging the adoption of our products by our clients across operating segments and facilitate faster product releases and increased efficiency in data processing;

	3)	incorporate data science and robotic technology into our data collection processes to enable us to build scale while also maintaining the highest quality standards;

	4)	enhance our technology infrastructure, maintaining an emphasis on cybersecurity, to ensure that our clients can continue to access our evolving products and services securely;

	5)	continue to invest in technology platforms and applications to provide scalable solutions for the processing of large volumes of asset and portfolio data; and

	6)	migrate to cloud services to create a flexible infrastructure that provides on-demand capacity and elasticity and will provide a foundation for the next level of growth and increased resiliency.

	•	Expand value-added service offerings. Continued pressure on management fees is causing our clients to look for ways to become more operationally efficient. Our managed services include end-to-end services that aim to assist clients with meeting operational and regulatory requirements by providing a convenient and cost-effective way to outsource data processing and reporting. Our clients’ outsourcing of these functions to our data management professionals enables them to focus more on value-added work such as risk budgeting, asset allocation, manager selection and monitoring. Our end-to-end services include consolidation of data from various sources, data reconciliation analysis, uploading of data into our risk and portfolio management applications, identification of data anomalies and customized client reporting. We continue to improve each of these services and provide new services that will be designed to make our clients’ operations and use of our offerings more efficient.

	•	Execute strategic relationships and acquisitions with complementary content and technology companies. We regularly evaluate and selectively pursue strategic relationships with, and acquisitions of, providers of unique and differentiated content, products and technologies that we believe have the potential to complement, enhance or expand our offerings and client base, as well as improve our ability to provide mission critical content, applications and services to enhance the investment decision processes of investment institutions, and the intermediaries that serve such institutions. In order to drive value, we target acquisitions and strategic relationships that can be efficiently integrated into our existing operational structure and global sales network.

Operating Segments

As the investment industry becomes more global and investors become increasingly focused on multi-asset class portfolios, we are well positioned to help our clients achieve their investment objectives by delivering a more comprehensive analysis of their investment strategies using the content, applications and services across our four

operating segments—Index, Analytics, ESG and Real Estate. Because the ESG and Real Estate operating segments do not meet segment disclosure reporting thresholds, ESG and Real Estate are combined and presented as All Other for reporting purposes.

Our principal business model is generally to license annual, recurring subscriptions for the majority of our Index, Analytics and ESG products and services for a fee due in advance of the service period. We also license annual recurring subscriptions for the majority of our Real Estate products for a fee which is primarily paid in arrears after the product is delivered, with the exception of the Market Information product for which the fees are generally paid in advance. A portion of our fees also come from clients who use our indexes as the basis for index-linked investment products. Such fees are primarily based on assets under management (“AUM”). See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview” and Note 1, “Introduction and Basis of Presentation—Significant Accounting Policies—Revenue Recognition,” of the Notes to the Consolidated Financial Statements included herein for further information on how we generate revenue and our revenue recognition policy.

Index

Clients use our indexes 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. We currently calculate more than 215,5003 end-of-day indexes daily and more than 11,500 indexes in real time for a variety of markets and industries. Clients receive data directly from us or from third-party providers of financial information worldwide. In addition, we use content generated by our Analytics and ESG segments to help construct some of our equity indexes, including some with the highest revenue growth rates. Products in our Index segment include:

	•	MSCI Global Equity Indexes. MSCI Global Equity Indexes are designed to measure returns across a wide variety of equity markets (e.g., World, EAFE, Emerging Markets, USA, Europe, Japan), size segments (e.g., Large, Mid and Small capitalization), sectors (e.g., Utilities, Financials) and industries (e.g., Banks, Media). As of December 31, 2018, we calculated indexes that covered more than 80 countries in developed, emerging, frontier and standalone markets, as well as various regional indexes built from the component country indexes. These indexes include the MSCI ACWI IMI, MSCI World, MSCI EAFE, MSCI Emerging Markets and MSCI USA Indexes. We believe that MSCI Global Equity Indexes are the most widely used benchmarks by cross-border equity investors. A large number of asset owners use the MSCI ACWI IMI Indexes or their component parts as the asset allocation benchmark for their equity portfolios.

	•	MSCI Custom Indexes. We currently calculate more than 12,000 custom indexes by applying a client’s criteria to an existing MSCI index. Examples of customization criteria include stock exclusions, currency hedging, tax rates, 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 strategies, developing investment products, minimizing portfolio tracking error or constructing index-linked products. In certain cases, we design an index methodology to reflect a client’s investment strategy, then brand the index under the client’s name. In other cases, we license an index to a client to use as a starting point to reflect its investment strategy within its own proprietary index.

3	The number of indexes takes into consideration different currency and return versions (e.g., price, net and gross returns).

	•	MSCI Factor Indexes. MSCI Factor Indexes, which are built using the Barra Equity Models created in our Analytics segment, seek to address a growing trend among institutional investors and asset managers whose investment processes include allocation to systematic risk factors. MSCI Factor Indexes reflect components of equity returns that can be attributed to factors such as Volatility, Yield, Value, Quality, Size and Momentum. We offer a broad suite of factor 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 Factor Mix A-Series Indexes) and multi-factor indexes (e.g., MSCI Diversified Multiple-Factor Indexes). Clients benefit from a consistent modeling framework across Factor Indexes and the Analytics segment’s offerings using Barra Equity Models in portfolio construction, risk management and performance attribution tools.

	•	MSCI ESG Indexes. MSCI ESG Indexes, which are constructed using research from our ESG segment, are designed to meet the growing demand for indexes that integrate ESG criteria into portfolio construction. Investors that wish to measure performance across various aspects of Environmental (e.g., climate change), Social (e.g., human capital) and Governance (e.g., corporate governance) metrics can use these benchmarks to inform a long-term sustainable investment view. They enable clients to benchmark the performance of ESG portfolios, to monitor compliance with ESG mandates and serve as the basis for index-based ESG investment products and portfolios. The MSCI ESG Indexes include:

	o	ESG Integration Indexes that are designed to help investors incorporate ESG criteria into their core asset allocation and investment process. These include the MSCI ESG Universal Indexes (e.g., MSCI ACWI ESG Universal Index) or MSCI ESG Leaders Indexes (e.g., MSCI USA ESG Leaders Index), which use MSCI ESG Ratings to identify companies that have demonstrated an ability to manage their ESG risks and opportunities;

	o	Values-based Indexes that include companies with the highest ESG Ratings but also exclude companies based on certain values, norms or ethical standards. These include the broad MSCI SRI Indexes, the KLD 400 Social Index as well as Values-based Indexes focused on specific themes (e.g., MSCI World ex-Tobacco Involvement Index);

	o	Environmental Indexes, including Low Carbon Target Indexes, Global Environment Indexes, and Fossil Fuels Exclusion Indexes that include investors aiming to reduce their carbon exposure or capture opportunities in renewable energy and clean technology;

	o	Impact Indexes, such as the Sustainable Impact Indexes, that include 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; and

	o	Custom ESG indexes based on client-defined ESG specifications.

	•	MSCI Real Assets Indexes. MSCI Real Assets Indexes provide investors with transparency and insight into this asset class. MSCI’s Real Assets Indexes include MSCI Real Estate Indexes (e.g., MSCI US REIT Index; MSCI Sector/Core/Factor/Liquid Real Estate Indexes), MSCI Infrastructure Indexes, MSCI Agriculture Producers Indexes, MSCI Timber Select Index, MSCI Commodity Producers Indexes and MSCI Natural Resources Indexes.

	•	Global Industry Classification Standard (“GICS”®). GICS and GICS Direct were developed and are 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. GICS Direct is a database comprised of active companies and securities classified by sector, industry group, industry and sub-industry in accordance with the proprietary GICS methodology. The MSCI US and Global Sector Indexes are comprised of GICS sector, industry group, and industry indexes across countries and regions in Developed, Emerging and select Frontier markets. The MSCI Global Sector Indexes provide a global structure for benchmarking sectors and can also serve as the basis for index-linked structured products and other investment vehicles, such as ETFs and exchange traded notes.

	•	Thematic Indexes. In 2018, MSCI launched thematic indexes to reflect the performance of various broad investment themes. These indexes allow investors to identify specific social, economic, industrial, environmental or demographic trends and their long-term secular, cyclical and structural influences on the world’s economies and markets. These indexes include:

	o	MSCI Ageing Society Opportunities Index that aims to represent the performance of companies that cater to the health, recreation and lifestyle needs of the older population;

	o	MSCI Robotics Index that aims to represent the performance of companies that potentially stand to benefit from increased adoption and utilization of robots and automation;

	o	MSCI Cybersecurity Index that aims to represent the performance of companies that potentially stand to benefit from increased investment in systems, products and services that provide protection against cyberattacks; and

	o	MSCI Efficient Energy Index that aims to represent the performance of companies that are in the business of offering products and services that promote power generation using renewable sources.

Analytics

Our Analytics segment offers risk management, performance attribution and portfolio management content, applications and services that provide clients with an integrated view of risk and return and an analysis of market, credit, liquidity and counterparty risk across all major asset classes, spanning short, medium and long-term time horizons. Our offerings also support clients’ various regulatory reporting needs.

The content we create in our Analytics segment includes models to support factor-based analytics (equity, fixed income and multi-asset class models), pricing models, time series-based analytics, as well as underlying content that is used as inputs to these models such as interest rate and credit curves. We continue to develop new and improved content in response to the evolving needs of our clients. For example, our new fixed income factor model (FI400) has been combined with models that cover currencies, commodities, equities, mutual funds, hedge funds and private assets – private real estate and private equity – to deliver our next generation multi-asset class factor model (the MSCI Multi-Asset Class (“MAC”) Factor Model) providing clients with greater insights into the drivers of risk in their portfolios. Our Analytics content includes:

	•	Equity Factor Models. The proprietary risk data in Barra Equity Models provides clients with a better understanding of their sources of risk and return and a factor structure that is aligned to multiple investment horizons, which enables them to select the risk data that best suits their investment style. Barra Equity Models include Barra Global Total Market Models, Barra Regional Equity Models and Barra Single Country Models. In 2018, we launched our new European Equity Model that allows clients to attribute portfolio performance to ESG exposures. Barra Equity Models are available through our applications, third-party applications and directly to clients for integration into their own applications. In addition, we use Barra Equity Models in our Index segment to construct MSCI Factor Indexes.

	•	Fixed Income Factor Models. Our Fixed Income Factor Models are used by clients for portfolio construction, risk management, and performance attribution in fixed income portfolios. FI400 incorporates Duration Times Spread (“DTS”) factors as forward-looking indicators of risk; country-specific spreads for Eurozone sovereign bonds; and broad coverage of cash bonds, derivatives, and securitized products across developed and emerging markets. Our Fixed Income Factor Models are fully integrated into our MAC Factor Models, and are available through our applications, and directly to clients for integration into their own applications.

	•	Multi-Asset Class Factor Models. Our MAC Models provide a detailed view of risk across markets and asset classes, including currencies, equities, fixed income, commodities, mutual funds, hedge funds and 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 MAC Models begins by identifying the factors that affect the returns of various asset classes. These factors are then combined into a single global model that forecasts the risk of multi-asset class global portfolios. MAC Models include the Barra Integrated Model (“BIM”) as well as the next generation MSCI MAC Factor Model which, among other enhancements,

		leverages FI400. The MSCI MAC Factor Model is available through our applications and directly to clients for integration into their own applications.

	•	Multi-Asset Class Risk Analytics. Our MAC Risk Analytics provide a full suite of single security and portfolio level analyses used by clients to measure and attribute risk in multi-asset class portfolios. MAC Risk Analytics include pricing models, sensitivities, stress testing, liquidity risk analytics, and a comprehensive set of configurable statistical risk measures such as standard deviation, tracking error, correlations and VaR.

	•	Performance Analytics. Our Performance Analytics enable clients to measure and attribute ex-post performance and risk using a framework consistent with our ex-ante risk analytics. We offer dedicated equity factor-based, fixed income, and Brinson-based multi-asset class models which provide granular and flexible return decomposition on portfolios and benchmarks. We also offer a multi-portfolio attribution model geared toward asset allocators and plan sponsors.

Our clients access our Analytics content through our own proprietary applications and application programming interfaces, or through third-party applications or directly on their own platforms. MSCI Analytics applications provide clients with integrated market data and constituent-level indexes aggregated from multiple third-party and proprietary sources. This integrated market and benchmark data significantly reduces the operational burden on clients for both the implementation and on-going operation of our Analytics products.

Our major applications include the following:

	•	RiskMetrics RiskManager. We believe that RiskMetrics RiskManager is an industry leader in VaR simulation and 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 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.

	•	BarraOne. BarraOne, powered by our MAC Models and BIM, provides clients with global, multi-asset class risk analysis using Barra’s fundamental factor 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 called “Factors.” BarraOne also includes VaR simulation, stress testing and optimization modules that enable clients to manage multi-asset class portfolios, carry out risk budgeting and asset allocation, manager monitoring and performance attribution.

	•	Barra Portfolio Manager. Barra Portfolio Manager, powered by Barra Equity Models, is an integrated risk and performance platform that is designed to help equity fund managers and their teams gain additional portfolio insight, manage their investment 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. We also offer many of the benefits of this hosted platform in a locally hosted solution called Barra Aegis.

	•	WealthBench and CreditManager. Wealthbench is a web-based platform used by private banks, financial advisers, brokerages and trust companies to help wealth managers assess portfolio risk, construct asset allocation policy and create comprehensive client proposals. CreditManager is a portfolio credit risk management system used primarily by banks to calculate economic capital, facilitate risk-based pricing and measure credit risk concentrations.

	•	MSCI Analytics Platform. In recent years, we have made significant investments in developing a new MSCI Analytics Platform that will provide clients with a more unified approach for using our content and applications to solve their investment problems. The MSCI Analytics Platform seeks to provide a more holistic client experience by providing better reporting and visualization tools and direct access to capabilities and content currently available through our other Analytics applications, as well as content

		from other operating segments. In 2018, for example, ESG content was fully integrated into and made available through our MSCI Analytics Platform in response to demand from institutional managers who are looking for ways to integrate ESG into their investment processes.

Our Analytics segment also provides various managed services to help clients operate more efficiently as well as address the needs of certain specialized areas of the investment community by providing a reporting service and performance reporting tools to institutional consultants and investors in hedge funds.

	•	Managed Services. As described in Part I, Item 1. “Business—Growth Strategy,” we have, and continue to expand our, capabilities to deliver new workflow solutions and data services to our clients to enable them to operate more efficiently. Our services include consolidation of client portfolio data from various sources, data reconciliation analysis, uploading of data into our risk and portfolio management applications, review of results and identification of data anomalies and customized reporting. Our Managed Services lower our clients’ internal cost of doing business by allowing clients to focus on value-added work, enabling faster implementations and making the use of our products more efficient.

	•	HedgePlatform. HedgePlatform, is a reporting service that allows clients who invest in hedge funds, including funds of funds, pension funds and endowments, to measure, evaluate and monitor the risk of their hedge fund investments across multiple hedge fund strategies. We collect position-level information from hedge funds on a monthly basis and provide clients with risk information for each individual hedge fund in which they invest as well as aggregate risk information for their overall portfolio of hedge funds. Clients who use RiskManager to measure the risk of their own holdings can further integrate the positions collected via our HedgePlatform service to allow computation of risk across their entire portfolio, while the confidential and proprietary nature of the underlying hedge fund holdings is maintained.

All Other – ESG

MSCI ESG Research analyzes over 7,8004 companies worldwide to help institutional investors understand how environmental, social and governance factors can impact the long-term risk of their investments. Subscribers to MSCI ESG Research include global asset managers, leading asset owners, consultants, advisers and academics.

In addition, MSCI ESG Research data and ratings are used in the construction of equity and fixed income indexes to help institutional investors more effectively benchmark ESG investment performance, issue index-based investment products, as well as manage, measure and report on ESG mandates. Additionally, the data and ratings produced by MSCI ESG Research are made available on most applications offered by our Analytics segment.

MSCI’s ESG 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 of equity issuers and fixed income securities, including corporate, sovereign and other government related 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 enables institutional investors to manage ESG standards and restrictions reliably and efficiently. 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.

4	Does not include subsidiary-level companies.

All Other – Real Estate

Our Real Estate segment includes research, reporting, market data and benchmarking offerings that provide real estate performance analytics for funds, investors and managers. Our Real Estate performance and risk analytics range from enterprise-wide to property-specific analysis. Some of the risk analysis generated in the Real Estate segment is also used in the products offered by our other operating segments. For example, the MAC models created in our Analytics segment offers a view of risk across market and asset classes, including private real estate, by incorporating content generated in the Real Estate segment. We also provide business intelligence to real estate owners, managers, developers and brokers worldwide. Real Estate offerings include:

	•	MSCI Enterprise Analytics. MSCI Enterprise Analytics is an interactive application that offers a single integrated analysis to private real estate investors and managers, providing them with the ability to evaluate and analyze the drivers of portfolio performance across an organizations’ investments, as well as review exposures and concentrations across markets, asset types and increasingly diverse portfolios.

	•	MSCI Global Intel. MSCI Global Intel is a leading database that equips asset owners, researchers, strategists and portfolio and risk managers with data analytics to enhance their understanding of local, regional and global real estate performance and risks. The tool comprises a consolidated set of global, regional, national, city and submarket indexes with segmentation by property type. It also allows users to generate tailored analyses through MSCI Global Intel PLUS with custom filters on asset specific characteristics such as property type, location and risk profile to create the appropriate comparisons that are essential to managing performance and risk.

	•	MSCI Income Risk Service (“MSCI IRIS”). For real estate investors who need to manage and report on the specific risk of their real estate portfolios and assets, MSCI IRIS measures the income risk factors that drive future return volatility. MSCI IRIS provides investors with transparency on the lease duration, market risk, counterparty credit risk and income concentration risk relative to the markets in which they compete. The tool offers actionable insights into portfolio resilience and sources of risk to inform strategic review, asset management and lease restructuring decisions.

Geographic Information

We currently have branches or subsidiaries in the following locations: Australia, Brazil, Canada, China, England, France, Germany, Hong Kong, Hungary, India, Italy, Japan, Korea, Mexico, the Philippines, Singapore, South Africa, Sweden, Switzerland, Taiwan, United Arab Emirates and the U.S. See Note 12, “Segment Information,” of the Notes to Consolidated Financial Statements included herein for additional information on our revenues and certain assets by geographic area.

Competition

Many industry participants compete with us by offering one or more indexes in similar categories. Such indexes vary widely in scope, including by geographic region, business sector and risk category and may be used by clients in a variety of ways in many different markets around the world. A number of these markets have become increasingly competitive in recent years.

Among our Index competitors are S&P Dow Jones Indices LLC (a joint venture company owned by CME Group, Inc. and CME Group Services LLC and by S&P Global Inc.) and FTSE Russell, a subsidiary of the London Stock Exchange Group PLC.

There is also growing competition from industry participants, including asset managers and investment banks, that create their own indexes, often in cooperation with index providers such as Solactive, which may, among other things, provide some form of calculation agent service. Asset managers, such as WisdomTree and Goldman Sachs Asset Management, manage funds, including ETFs, based on their own proprietary indexes, and many investment banks have launched structured products or created over-the-counter derivatives based on their own proprietary indexes. This is often referred to as self-indexing.

Our Analytics offerings compete with offerings from a range of competitors, including Axioma, Inc., BlackRock Solutions, Bloomberg Finance L.P., and FactSet Research Systems Inc. Additionally, some of the larger broker-dealers have developed proprietary analytics tools for their clients. Similarly, some of the large global investment organizations, such as custodians, have developed internal risk management and performance analytics tools that they offer to their clients.

We also have a variety of competitors for our other offerings that comprise a smaller portion of our revenues.

Intellectual Property and Other Proprietary Rights

We consider many aspects of our offerings, processes and services to be proprietary. We have registered “MSCI,” among other marks, as trademarks or service marks in the United States and in certain foreign countries. We will continue to evaluate the registration of additional trademarks, service marks and copyrights as appropriate. From time to time, we also file patent applications to protect our proprietary rights. Additionally, many of our offerings, processes and services require the use of intellectual property obtained from third parties. It may be necessary in the future to seek or renew licenses relating to various aspects of our offerings and services.

Although we believe the ownership of patents, copyrights, trademarks, service marks, the implementation of certain measures to protect our intellectual property and proprietary rights and our ability to obtain the rights to use intellectual property of third parties are important to our business and contribute in part to our overall success, we do not believe we are dependent on any one of our intellectual property rights or any one license to use third-party intellectual property. For a description of the risks associated with legal protection of our intellectual property and other rights, infringement claims and the ability to obtain or renew licenses for third-party intellectual property, see Part I, Item 1A. “Risk Factors” below.

Employees

We had 3,112 and 3,038 employees as of December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, 61.4% and 59.0% of our employees, respectively, were located in emerging market centers. As of December 31, 2018 our employees were based in 21 countries in order to maintain close contact with our clients and the international markets we follow.

Government Regulation

The Company is subject to reporting, disclosure and recordkeeping obligations pursuant to SEC requirements. Pursuant to the European Union’s benchmark regulation, the United Kingdom’s Financial Conduct Authority (“UK FCA”) authorized MSCI Limited (a subsidiary of MSCI Inc.) to be the benchmark administrator for all MSCI equity indexes on March 5, 2018. The Company is currently implementing the EU benchmark regulation for a limited set of the UK MSCI private real estate indexes. Information about index regulation is periodically updated on our website at https://www.msci.com/index-regulation. The contents of our website, including this webpage, are not, however, a part of or incorporated by reference in this Annual Report on Form 10-K.

MSCI ESG Research is a registered investment adviser and must comply with the requirements of the Investment Advisers Act of 1940 (the “Advisers Act”) and related SEC regulations. Such requirements relate to, among other things, disclosure obligations, recordkeeping and reporting requirements, marketing restrictions and general anti-fraud prohibitions. It is possible that in addition to MSCI ESG Research and certain of its subsidiaries, other entities in our corporate family may be required to register as an investment adviser under the Advisers Act or comply with similar laws or requirements in states or foreign jurisdictions. We registered in 2012 with the State Council Information Office of the Ministry of Commerce and the State Administration for Industry and Commerce

in China as a foreign institution supplying financial information services in China. This license is currently administered by the Cyberspace Administration of China. For a description of the risks associated with government regulation, see Part I, Item 1A. “Risk Factors” below.

Executive Officers of the Registrant

Name		Age		Position
Henry A. Fernandez		60		Chairman and Chief Executive Officer
C.D. Baer Pettit		54		President
Kathleen A. Winters		51		Chief Financial Officer and Treasurer
Laurent Seyer		54		Chief Operating Officer and Chief Client Officer
Scott A. Crum		62		Chief Human Resources Officer

There are no family relationships between any of our executive officers and any director or other executive officer of the Company.

Henry A. Fernandez

Mr. Fernandez has served as Chairman since October 2007 and as Chief Executive Officer and a director since 1998. He also served as President from 1998 until October 2017. Before leading MSCI’s transition to becoming a fully independent, standalone public company in 2009, he was a Managing Director at Morgan Stanley, where he worked in emerging markets product strategy, equity derivative sales and trading, mergers and acquisitions, worldwide corporate finance and mortgage finance for U.S. financial institutions. Mr. Fernandez worked for Morgan Stanley from 1983 to 1991 and from 1994 to 2009. Mr. Fernandez also serves on the boards of directors/trustees of Stanford University, King Abdullah University of Science and Technology, Memorial Sloan-Kettering Cancer Center, the Foreign Policy Association, and Catholic Charities of the Archdiocese of New York. Mr. Fernandez is the former Chair of the Advisory Council of the Stanford University Graduate School of Business. He holds a Bachelor of Arts in economics from Georgetown University, an M.B.A. from the Stanford University Graduate School of Business and pursued doctoral studies in economics at Princeton University.

C.D. Baer Pettit

Mr. Pettit has served as the Company's President since October 2017. As President, Mr. Pettit oversees the Company's business functions, including client coverage, marketing, product management, research and product development, technology and operations. He previously served as Chief Operating Officer from 2015 to 2017, Head of the Product Group from February 2015 to September 2015, Head of Index Products from 2011 to 2015, Head of Marketing from 2005 to 2012 and Head of Client Coverage from 2001 to 2012. Prior to joining the Company, Mr. Pettit worked for Bloomberg L.P. from 1992 to 1999. Mr. Pettit holds a Master of Arts degree in history from Cambridge University and a Master of Science degree from the School of Foreign Service at Georgetown University.

Kathleen A. Winters

Ms. Winters has served as the Chief Financial Officer and Treasurer since May 2016. Prior to joining MSCI, Ms. Winters served as the Vice President and Chief Financial Officer of Performance Materials and Technologies, an operating segment of Honeywell International, Inc. (“Honeywell”) from 2012 to 2016. She served in various positions of increasing responsibility at Honeywell from 2002 to 2016, including Vice President, Corporate Controller and Chief Accounting Officer, Vice President of Business Analysis and Planning, and Chief Financial Officer of the Specialty Products business group. Ms. Winters began her career at PricewaterhouseCoopers LLP (“PwC”) where she served in various positions from 1989 to 2001 within the Technology Information Communications and Entertainment practice. She earned her Bachelor of Science degree in Accounting from Boston College.

Laurent Seyer

Mr. Seyer has served as the Company's Chief Operating Officer since October 2017 and Chief Client Officer since 2016. As Chief Operating Officer and Chief Client Officer, Mr. Seyer manages the Company's sales, marketing, client relationship management and client service teams globally. He previously served as the Global Head of Client Coverage from 2014 to 2016. Prior to joining the Company, Mr. Seyer worked for AXA Investment Managers in Paris, most recently as Global Head of the Client Group. Prior to that, he spent 24 years at Societe Generale in a number of leadership positions, including as CEO of Lyxor Asset Management. Mr. Seyer graduated from Institut d'Etudes Politiques of Paris, where he studied law and economics.

Scott A. Crum

Mr. Crum has served as the Chief Human Resources Officer since April 2014. Prior to joining MSCI, Mr. Crum served as global head of human resources for four publicly traded companies. Mr. Crum worked for Avon Products, Inc. as Senior Vice President of Human Resources and Chief People Officer from 2012 to 2013. From 2010 to 2012, Mr. Crum served as Senior Vice President and Chief People Officer of Motorola Mobility Holdings, Inc., one of two publicly traded companies formally created when Motorola Inc. split in January 2011 until it was acquired by Google. Prior to that, he served as the Senior Vice President and Director of Human Resources of ITT Corporation from 2002 to 2010 and Senior Vice President of Administration and Employee Resources at General Instruments Corp. from 1997 to 2000. Mr. Crum holds a Bachelor of Business Administration with a concentration in industrial relations from Southern Methodist University.

Available Information

Our corporate headquarters is located at 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York, 10007, and our telephone number is (212) 804-3900. We maintain a website on the internet at www.msci.com. The contents of our website are not a part of or incorporated by reference in this Annual Report on Form 10-K.

We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information that we file electronically with the SEC at www.sec.gov. We also make available free of charge, on or through our website, these reports, proxy statements and other information as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC. To access these, click on the “SEC Filings” link found on our Investor Relations homepage (http://ir.msci.com).

We also use our Investor Relations homepage and corporate Twitter account (@MSCI_Inc) as channels of distribution of Company information. The information we post through these channels may be deemed material.

Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alert Subscription” section of our Investor Relations homepage at http://ir.msci.com/alerts.cfm. The contents of our website, including our Investor Relations homepage, and social media channels are not, however, a part of or incorporated by reference in this Annual Report on Form 10-K.