The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in "Item 1A.-Risk Factors."

Overview

We are a leading global provider of investment decision support tools, including indices and portfolio risk and performance analytics for use by institutions in managing equity, fixed income and multi-asset class portfolios. Our flagship products are our global equity indices marketed under the MSCI brand and our equity portfolio analytics marketed under the Barra brand. Our products are used in many areas of the investment process, including portfolio construction and optimization, performance benchmarking and attribution, risk management and analysis, index-linked investment product creation, asset allocation, investment manager selection and investment research.

Our clients include asset owners such as pension funds, endowments, foundations, central banks and insurance companies; institutional and retail asset managers, such as managers of pension assets, mutual funds, exchange traded funds ("ETFs"), hedge funds and private wealth; and financial intermediaries such as broker-dealers, exchanges, custodians and investment consultants. As of November 30, 2009, we had over 3,100 clients across 67 countries. We had 21 offices in 15 countries to help serve our diverse client base, with approximately 51.4% of our revenue from clients in the Americas, 31.6% in Europe, the Middle East and Africa ("EMEA"), 9.4% in Japan and 7.6% in Asia-Pacific (not including Japan), based on the fiscal year ended November 30, 2009 revenues.

Our principal sales model is to license annual, recurring subscriptions to our products for use at specified locations by a given number of users for an annual fee paid up front. The substantial majority of our revenues come from these annual, recurring subscriptions. Over time, as their needs evolve, our clients often add product modules, users and locations to their subscriptions, which results in an increase in our revenues per client. Additionally, a significant source of our revenues comes from clients who use our indices as the basis for index-linked investment products such as ETFs. We also derive revenues from certain institutional clients that use our indices as the basis for passively managed retail and institutional indexed funds and separate accounts. These clients commonly pay us a license fee for the use of our intellectual property based on the investment product's assets. We also generate a limited amount of our revenues from certain exchanges that use our indices as the basis for futures and options contracts and pay us a license fee for the use of our intellectual property based on their volume of trades.

In evaluating our financial performance, we focus on revenue growth for the Company in total and by product category as well as operating profit growth and the level of profitability as measured by our operating margin. Our business is not highly capital intensive and, as such, we expect to continue to convert a high percentage of our operating profits into excess cash in the future. We expect to use this cash to make investments in our business both internally and externally through acquisitions in order to capitalize on the many growth opportunities before us and to expand our market position. Our revenue growth strategy includes: (a) expanding and deepening our relationships with investment institutions worldwide; (b) developing new and enhancing existing equity product offerings, as well as further developing and growing our investment tools for multi-asset class investment institutions; and (c) actively seeking to acquire products, technologies and companies that will enhance, complement or expand our client base and our product offerings.

To maintain and accelerate our revenue and operating income growth, we will continue to invest in and expand our operating functions and infrastructure, including new sales and client support staff and facilities in locations around the world and additional staff and supporting technology for our research and our data

operations and technology functions and our general and administrative functions. At the same time, managing and controlling our operating expenses is very important to us and a distinct part of our culture. Over time, our goal is to keep the rate of growth of our operating expenses below the rate of growth of our revenues allowing us to expand our operating margins. However, at times, because of significant market opportunities, it may be more important for us to invest in our business in order to support increased efforts to attract new clients and to develop new product offerings, rather than emphasize short-term operating margin expansion. Furthermore, in some periods our operating expense growth may exceed our operating revenue growth due to the variability of revenues from several of our products, including our equity indices licensed as the basis of ETFs.

Business Environment

Beginning in the second half of 2008, various sectors of the global financial market were adversely affected by a market environment that included illiquidity and widening credit spreads, unprecedented market volatility, and changes in interest rates, foreign exchange rates, investor participation levels and legal and regulatory, accounting, tax and compliance requirements. The conditions in the financial markets also began to impact our business particularly with respect to our equity index asset based fees due to declines in the value of assets in ETFs linked to our products and our revenues from our equity portfolio analytics due to the closure of dedicated quant funds, both standalone and within traditional asset managers, and quantitative teams which support fundamental money managers.

For the fiscal year ended November 30, 2009 ("fiscal year 2009"), our revenues related to equity index asset based fees increased as the value of the assets in ETFs linked to our products recovered from the relatively low balances experienced at the end of the fiscal year ended November 30, 2008 ("fiscal year 2008") and the first half of fiscal year 2009, asset inflows increased, the number of new ETFs linked to our products increased and we applied minimum fee provisions to certain of our ETF licenses. However, because the vast majority of our revenues results from granting licenses to clients in the financial services industry, including asset managers, broker-dealers, exchanges and other institutional clients many of whom have not recovered as quickly or strongly as the equity markets, the performance of our subscription products remains under pressure, most notably subscriptions to our equity portfolio analytics products.

We do not believe that our liquidity has been affected by the events in the global financial markets. See "-Liquidity and Capital Resources-Cash Flows" below.

Key Financial Metrics and Drivers

Revenues

Our principal sales model is to license annual, recurring subscriptions to our products for use at specified locations by a given number of client users for an annual fee paid upfront. The substantial majority of our revenues come from these annual, recurring subscriptions. These fees are recorded as deferred revenues on our consolidated statement of financial condition and are recognized each month on our income statement as the service is rendered. Over time, as their needs evolve, our clients often add product modules, users and locations to their subscriptions, which results in an increase in our revenues per client. Additionally, a significant source of our revenues comes from clients who use our indices as the basis for certain index-linked investment products such as ETFs, passive mutual funds and structured products. These clients commonly pay us a license fee for the use of our intellectual property based on the investment product's assets.

We group our revenues into the following four product categories:

Equity Indices

This category includes fees from MSCI equity index data subscriptions, fees based on assets in investment products linked to our equity indices, fees from non-recurring licenses of our equity index historical data and fees from custom MSCI indices. We also generate a limited amount of revenues from license fees for the use of our intellectual property based on the trading volume of futures and options contracts linked to our indices.

Clients typically subscribe to equity index data modules for use by a specified number of users at a particular location. Clients may select delivery from us or delivery via a third-party vendor. We are able to grow our revenues for data subscriptions by expanding the number of client users and their locations and the number of third-party vendors the client uses for delivery of our data modules. The increasing scope and complexity of a client's data requirements beyond standard data modules, such as requests for historical data or customized indices, also provide opportunities for further revenue growth from an existing client.

Revenues from our index-linked investment product licenses, such as ETFs, increase or decrease as a result of changes in value of the assets in the investment products. These changes in the value of the assets in the investment products can result from equity market price changes, investment inflows and outflows and changes in foreign currency exchange rates. In most cases, fees for these licenses are paid quarterly in arrears and are calculated by multiplying a negotiated basis point fee times the average daily assets in the investment product for the most recent period.

Equity Portfolio Analytics

This category includes revenues from annual, recurring subscriptions to Barra Aegis and our proprietary risk data in Barra Aegis; Equity Models Direct products; and our proprietary equity risk data incorporated in third-party software application offerings (e.g., Barra on Vendors).

Barra Aegis has many uses, including portfolio risk analysis and forecasting, optimization and factor-based portfolio performance attribution. A base subscription for use in portfolio analysis typically involves a subscription to Barra Aegis and various risk data modules. A client may add portfolio performance attribution, optimization tools, process automation tools or other features to its Barra Aegis subscription. By licensing the client to receive additional software modules and risk data, or increasing the number of permitted client users or client locations, we can increase our revenues per client further.

Our Equity Models Direct risk data is distributed directly to clients who then combine it with their own software applications or upload the risk data onto third-party applications. A base subscription to our Equity Models Direct product provides equity risk data for a set fee that authorizes one to two users. By licensing the client to receive equity risk model data for additional countries, or increasing the number of permitted client users or client locations, we can further increase our revenues per client.

The Barra on Vendors product makes our proprietary risk data from our Equity Models Direct product available to clients via third party providers, such as FactSet Research Systems, Inc.

Multi-Asset Class Portfolio Analytics

This category includes revenues from annual, recurring subscriptions to BarraOne and Barra TotalRisk together with our proprietary risk data for multiple asset classes. Currently, we are actively selling subscriptions only to BarraOne and related risk data. Most of the features and functionality of TotalRisk have been added to BarraOne, and we are decommissioning TotalRisk. As this happens, we will offer our TotalRisk clients the opportunity to transition to BarraOne. As this transition takes place, revenues from this product group will increasingly come from BarraOne. Therefore, we expect declines in revenues from TotalRisk.

Other Products

This category includes revenues from three types of products: energy and commodity asset valuation analytics, fixed income analytics and investable hedge fund indices. The last remaining investable hedge fund indices license was terminated in fiscal year 2009.

Run Rate

At the end of any period, we generally have subscription and investment product license agreements in place for a large portion of our total revenues for the following 12 months. We measure the fees related to these agreements and refer to this as our "Run Rate." The Run Rate at a particular point in time represents the forward-looking fees for the next 12 months from all subscriptions and investment product licenses we currently provide to our clients under renewable contracts assuming all contracts that come up for renewal are renewed and assuming then-current exchange rates. For any license where fees are linked to an investment product's assets or trading volume, the Run Rate calculation reflects an annualization of the most recent periodic fee earned under such license. The Run Rate does not include fees associated with non-recurring transactions. In addition, we remove from the Run Rate the fees associated with any subscription or investment product license agreement with respect to which we have received a notice of termination or non-renewal during the period and we have determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though such notice is not effective until a later date.

Because the Run Rate represents potential future fees, there is typically a delayed impact on our operating revenues from changes in our Run Rate. In addition, the actual amount of revenues we will realize over the following 12 months will differ from the Run Rate because of:

• revenues associated with new subscriptions and non-recurring sales;

• modifications, cancellations and non-renewals of existing agreements, subject to specified notice requirements;

• fluctuations in asset-based fees, which may result from market movements or from investment inflows into and outflows from investment products linked to our indices;

• fluctuations in fees based on trading volumes of futures and options contracts linked to our indices;

• price changes;

• revenue recognition differences under U.S. GAAP; and

• fluctuations in foreign exchange rates.

The following table sets forth our Run Rate as of the dates indicated and the percentage growth over the prior period:

                                                                                     Comparison of
                                             November 30,                  November 30,         November 30,
                                   2009          2008          2007        2009 to 2008         2008 to 2007
                                            (in thousands)
Run Rates
Equity indices
Subscription                     $ 185,787     $ 170,992     $ 141,560              8.7 %               20.8 %
Asset based fees                    95,301        51,596        76,467             84.7 %              (32.5 %)

Equity Indices total               281,088       222,588       218,027             26.3 %                2.1 %
Equity portfolio analytics         118,487       129,168       124,668             (8.3 %)               3.6 %
Multi-asset class analytics         40,401        35,105        29,243             15.1 %               20.0 %
Other                               20,597        21,079        23,021             (2.3 %)              (8.4 %)

Total Run Rate                   $ 460,573     $ 407,940     $ 394,959             12.9 %                3.3 %

Subscription total                 365,272       354,964       313,429              2.9 %               13.3 %
Asset based fees total              95,301        52,976        81,530             79.9 %              (35.0 %)

Total Run Rate                   $ 460,573     $ 407,940     $ 394,959             12.9 %                3.3 %

Changes in Run Rate between periods reflect increases from new subscriptions, decreases from cancellations, increases or decreases, as the case may be, from the change in the value of assets of investment products linked to MSCI indices, the change in trading volumes of futures and options contracts linked to MSCI indices, price changes and fluctuations in foreign exchange rates.

The following table sets forth our net new recurring subscription sales for the fiscal years ended:

                                                          November 30,
                                                2009          2008          2007
                                                         (in thousands)
       New recurring subscription sales       $  56,704     $  76,918     $  68,482
       Subscription cancellations               (52,587 )     (31,802 )     (21,396 )

       Net new recurring subscription sales   $   4,117     $  45,116     $  47,086

Retention Rates

Because subscription cancellations decrease our Run Rate and ultimately our operating revenues, other key metrics are our "Aggregate Retention Rate" and "Core Retention Rate," which are collectively referred to as "Retention Rates." The annual Aggregate Retention Rate represents the retained subscription Run Rate (beginning subscription Run Rate less actual cancels during the year) as a percentage of the subscription Run Rate at the beginning of the fiscal year. If a client reduces the number of products to which it subscribes or switches between our products, we treat it as a cancellation for purposes of calculating our Aggregate Retention Rate. Our Core Retention Rate is calculated in the same way as our Aggregate Retention Rate, except that the Core Retention Rate does not treat switches between products as a cancellation. Our Aggregate and Core Retention Rates are computed on a product-by-product basis. In addition, we treat any reduction in fees resulting from renegotiated contracts as a cancellation in the calculation to the extent of the reduction. We do not calculate Aggregate or Core Retention Rates for that portion of our Run Rate attributable to assets in investment products linked to our indices or to trading volumes of futures and options contracts linked to our indices. Aggregate and Core Retention Rates for a non-annual period reflect the annualization of the cancels recorded in the period.

The following table sets forth our Aggregate Retention Rates by product category for the periods indicated for the fiscal years ended November 30, 2009, 2008 and 2007:

                                        Equity        Multi-Asset
                           Equity      Portfolio         Class
                           Index       Analytics       Analytics       Other(1)      Total
 2009
 Qtr Ended February 28,      94.9 %         86.2 %           92.0 %        83.3 %     90.8 %
 Qtr Ended May 31,           92.8 %         82.0 %           83.2 %        88.3 %     87.7 %
 Qtr Ended August 31,        91.4 %         67.6 %           73.9 %        84.2 %     80.6 %
 Qtr Ended November 30,      88.6 %         78.9 %           60.0 %        77.7 %     81.6 %
 Year Ended November 30,     91.9 %         78.7 %           77.3 %        83.4 %     85.2 %

 2008
 Qtr Ended February 29,      98.0 %         95.2 %           98.6 %        91.7 %     96.6 %
 Qtr Ended May 31,           94.3 %         88.9 %           76.9 %        96.1 %     90.6 %
 Qtr Ended August 31,        95.6 %         87.7 %           91.1 %        89.1 %     91.6 %
 Qtr Ended November 30,      89.3 %         69.6 %           85.1 %        80.8 %     80.6 %
 Year Ended November 30,     94.3 %         85.3 %           87.9 %        89.4 %     89.9 %

 2007
 Qtr Ended February 28,      97.3 %         95.3 %           92.7 %        78.7 %     94.8 %
 Qtr Ended May 31,           94.7 %         95.8 %           78.9 %        89.6 %     93.5 %
 Qtr Ended August 31,        95.8 %         88.5 %           95.4 %        88.8 %     92.3 %
 Qtr Ended November 30,      94.2 %         85.3 %           92.1 %        85.0 %     89.8 %
 Year Ended November 30,     95.5 %         91.2 %           89.8 %        74.1 %     91.8 %

(1) In fiscal year 2007, the annual Aggregate Retention Rate for the Other category is lower than the average of the quarterly Aggregate Retention Rates due to the decommissioning of our fixed income indices in the first quarter of 2007.

The following table sets forth our Core Retention Rates by product category for the periods indicated for the fiscal years ended November 30, 2009, 2008 and 2007:

                                        Equity        Multi-Asset
                           Equity      Portfolio         Class
                           Index       Analytics       Analytics       Other(1)      Total
 2009
 Qtr Ended February 28,      95.0 %         87.4 %           92.0 %        84.0 %     91.3 %
 Qtr Ended May 31,           93.2 %         83.5 %           93.7 %        89.6 %     89.5 %
 Qtr Ended August 31,        92.2 %         68.9 %           77.5 %        86.1 %     81.9 %
 Qtr Ended November 30,      89.2 %         79.2 %           65.6 %        81.7 %     82.8 %
 Year Ended November 30,     92.4 %         79.7 %           82.2 %        85.3 %     86.4 %

 2008
 Qtr Ended February 29,      98.1 %         96.8 %           98.6 %        91.7 %     97.2 %
 Qtr Ended May 31,           94.5 %         91.8 %           76.9 %        96.1 %     91.9 %
 Qtr Ended August 31,        96.0 %         92.0 %           93.7 %        93.1 %     94.1 %
 Qtr Ended November 30,      89.5 %         80.5 %           86.8 %        83.6 %     85.3 %
 Year Ended November 30,     94.5 %         90.3 %           89.0 %        91.1 %     92.1 %

 2007
 Qtr Ended February 28,      98.1 %         96.2 %           92.7 %        78.7 %     95.5 %
 Qtr Ended May 31,           95.5 %         96.6 %           94.2 %        91.3 %     95.5 %
 Qtr Ended August 31,        96.0 %         94.1 %           95.4 %        92.1 %     94.9 %
 Qtr Ended November 30,      94.4 %         86.7 %           93.3 %        85.0 %     90.5 %
 Year Ended November 30,     96.0 %         93.4 %           93.9 %        75.4 %     93.3 %

(1) In fiscal year 2007, the annual Core Retention Rate for the Other category is lower than the average quarterly Core Retention Rates due to the decommissioning of our fixed income indices in the first quarter of 2007.

The quarterly Retention Rates are calculated by annualizing the actual cancellations recorded during the quarter. This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the quarter.

For example, in the fourth quarter of 2009, we recorded cancellations of $16.3 million. To derive the Aggregate Retention Rate for the fourth quarter, we annualized the actual cancellations during the quarter of $16.3 million to derive $65.2 million of annualized cancellations. This $65.2 million was then divided by the subscription Run Rate at the beginning of the year of $355.0 million to derive a cancellation rate of 18.4%. The 18.4% was then subtracted from 100.0% to derive an Aggregate Retention Rate of 81.6% for the fourth quarter.

For the calculation of the Core Retention Rate the same methodology was used except the amount of cancellations in the quarter was reduced by the amount of product swaps. For example, in the fourth quarter 2009 we had product swaps of $1.0 million which was subtracted from the $16.3 million of actual cancels to derive core cancels of $15.3 million. This $15.3 million was annualized to derive $61.0 million of annualized cancellations which was then divided by the beginning year Run Rate of $355.0 million to derive a cancellation rate of 17.2%. The 17.2% was then subtracted from 100.0% to derive the Core Retention Rate of 82.8% for the fourth quarter.

Retention Rates for the fiscal year ended November 30, 2009 remained depressed compared to prior years, reflecting the closure or merger of a number of our clients and the shutdown of quantitative funds and teams during the year. In the fiscal year ended November 30, 2009, 31.0% of our cancellations occurred in the fourth fiscal quarter. With the exception of the current year, Retention Rates generally have been higher during the first three quarters and lower in the fourth fiscal quarter where, on average, 40% of our subscription cancellations have occurred.

Our Relationship with Morgan Stanley

Prior to May 22, 2009, Morgan Stanley was our controlling shareholder. On May 22, 2009, Morgan Stanley completed the sale, pursuant to a secondary offering, of its remaining economic and voting interests in us. Prior to July 1, 2008, our consolidated financial statements were derived from the financial statements and accounting records of Morgan Stanley using the results of operations and bases of assets and liabilities of our business. From July 1, 2008 to May 22, 2009, certain tax, allocation and compensation and benefits related information had been derived from the financial statements and accounting records of Morgan Stanley. For the fiscal years ended November 30, 2009, 2008 and 2007, direct cost allocations related to services provided by Morgan Stanley were $1.7 million, $18.3 million and $26.4 million, respectively. These allocations were based on what we and Morgan Stanley considered to be reasonable reflections of the utilization levels of these services required in support of our business and are based on methods that include direct time tracking, headcount, inventory metrics and corporate overhead.

Expenses

Compensation and benefits costs represent the majority of our expenses across all of our operating functions and typically have represented approximately 50% to 60% of our total operating expenses. These costs generally contribute to the majority of our expense increases from period to period, reflecting existing staff compensation and benefit increases and increased staffing levels. Continued growth of our emerging market centers around the world is an important factor in our ability to manage and control the growth of our compensation and benefit costs. As of November 30, 2009, the number of employees increased by 112 to 878 from 766 on November 30, 2008. We continued to increase our staff in emerging market centers during the fiscal year ended November 30, 2009. As of November 30, 2009, approximately 43.1% of our employees were located in emerging market centers compared to 27.9% as of November 30, 2008.

Information technology costs, market data, occupancy, third party consulting . . .