The global market for investment decision support tools is driven by several factors. A key factor is the large and increasing number and variety of asset owners and managers around the world and the growth of invested assets. For example, the assets managed worldwide by institutional asset managers have increased from approximately $10 trillion in 1998 to approximately $25 trillion in 2006, according to Pension & Investments.

According to Investment Company Institute (“ICI”) data, the total number of mutual funds in the U.S. has increased from 2,312 in 1987 to 8,033 as of August 2007. Hedge Fund Research, Inc. has estimated that within the U.S. alone, as of December 31, 2006, 9,575 hedge funds managed approximately $1.6 trillion of assets, up from 6,297 funds managing approximately $820 billion of assets as of December 31, 2003. To aid themselves in dealing with the complexity and variety of investment opportunities worldwide, asset managers are increasing the number of employees who review investment opportunities, make investment decisions and manage market and portfolio risk.

Assets are becoming increasingly concentrated among the largest asset owners and managers even as their number and variety continue to grow. Consolidation among investment institutions seeking to broaden their product offerings and gain economies of scale has resulted in increasingly large firms with large and diverse portfolios. Because of the size of investment institutions and the complexity of investment opportunities available today, many institutions are focusing on standardizing their investment process, and putting in place appropriate processes and monitoring tools. The increased needs of both asset owners and managers require improved and standardized methods and tools for asset-liability management, asset allocation, asset class performance benchmarking, enterprise-wide risk management, portfolio construction and optimization, and risk and return measurement, attribution and reporting.

The MSCI International Equity Indices are the Company’s flagship index products. They are designed to measure returns available to international investors across a variety of public equity markets. The indices include 56 country indices across developed and emerging markets, as well as various regional composite indices built from the component country indices.

The MSCI Domestic Equity Indices are designed to measure the returns available to domestic investors in the U.S., Japan and China public equity markets. In addition to offering a total market index, each of these domestic country index series includes value and growth style indices, and in the case of the U.S. and Japan, large-, mid-, small- and micro-capitalization size segment indices.

Barra Aegis is the Company’s flagship equity risk management and analytics system. It is a sophisticated software application for equity risk management and portfolio analysis that is powered by the Company’s proprietary equity risk data. It is deployed by the client as a desktop application.

The Company’s multi-asset class portfolio analytics products offer a consistent framework for monitoring investments in a variety of asset classes across an organization. The Company has two major products in this area, which differ mainly in how they are delivered to clients and in certain functionality: Clients access BarraOne via the Internet which product includes modules for risk allocation and risk budgeting, and historical “as-of” analysis of portfolios. Clients install TotalRisk includes simulation modules that enable clients to perform historical and Monte Carlo value-at-risk calculations.

The Company’s other products consist of fixed income portfolio analytics products to facilitate the investment processes of fixed income investors; hedge fund indices and risk models for use by investors in hedge funds; and energy and commodity valuation asset analytics for investors, traders and hedgers in these asset classes.

Total operating expenses of $179.1 million for the nine months ended August 31, 2007 were $25.4 million, or 16%, higher compared to the same period in 2006.

Cost of services increased $14.9 million, or 19%, to $92.0 million for the nine months ended August 31, 2007 compared to the same period in 2006.

Interest and other income, net decreased $0.2 million, or 2%, to $10.1 million for the nine-month period ended August 31, 2007 compared to the nine-month period ended August 31, 2006.