MSCI and S&P Jointly Establish New Global Industry Classification Standard

NEW YORK, 2 August, 1999. The world's two premier providers of index services, Morgan Stanley Capital International ("MSCI") and Standard & Poor's ("S&P"), together are launching a new global industry classification standard aimed at easing the investment research and management process for financial professionals worldwide.

The collaboration between MSCI and S&P to develop the classification standard underscores the global financial community's increasing need for standard industry definitions to support asset allocation and portfolio analysis. The classification standard allows both MSCI and S&P to develop their own competing indices and index products from a common global standard.

"We know, based on a synthesis of comments and suggestions from financial market customers worldwide, including asset owners, asset managers, and investment research specialists, that they want to be able to make seamless comparisons between indices—by industry, by region, and globally," said Henry A. Fernandez, President and CEO of MSCI. "Our collaboration with S&P establishes a much-desired global capability for effective, efficient portfolio analysis and new product development, and both firms anticipate that the new classification standard will be widely adopted by the investment community worldwide."

"The equity markets are increasingly dynamic, with industries and companies changing virtually overnight," said Hendrik Kranenberg, Executive Vice President, Standard & Poor's. "Given the globalization of performance measurement and index-based asset management, this new standard will help assure increasingly risk-conscious investors that their holdings are placed in the proper categories and that their risk management techniques are based on standards provided by capable and independent index providers."

In creating the classification standard, both firms also agreed broadly on processes and procedures for revamping the classification structure as market conditions evolve globally, an effort that will aid index users in developing a global perspective on various industries.

"It is not just that we have established a global standard that we believe will make everyone's life easier," Mr. Fernandez said. "By instituting a common approach for industry classification, MSCI and S&P have taken a huge step in aiding uniformity and transparency in the global marketplace."

"The new standard also addresses the related need for more consistent tools in asset allocation and portfolio analysis, including over-the-counter derivatives and exchange-tradable products," Mr. Kranenberg added. "Moreover, pension plan sponsors and other investors increasingly are demanding that asset managers maintain style adherence across asset classes and across borders. This global industry and company classification standard will offer investors and their managers a uniform, standardized set of criteria to benchmark performance on a global basis."

The classification standard consists of 10 Sectors aggregated from 23 Industry Groups, 59 Industries, and 123 Sub-industries covering almost 6,000 companies globally. (For a detailed description of the classification standard, please refer to the MSCI web site at www.msci.com, or the S&P Index Services web site at www.spglobal.com).

MSCI and S&P will separately release the implementation schedule for their respective index products according to the new classification standard.

Notes to Editors

Morgan Stanley Capital International indices -including EAFE^®, The World Index, and EMF– are the most widely used benchmarks by international portfolio managers. In North America and Asia over 90% of institutional international equity assets are benchmarked to MSCI indices. In Europe over half of Continental fund managers currently use MSCI indices as their benchmark. This year, MSCI celebrates 30 years of providing global benchmark products and services. These years of experience, together with an extensive product line and dedicated staff of over 100 full-time professionals in offices around the globe, contribute to MSCI's market-leading position in international indices.

Standard & Poor's, a division of The McGraw-Hill Companies, provides financial information, analysis, advice, and credit ratings globally. Its Index Services unit maintains a wide variety of investable portfolio indices, including the S&P 500 for the U.S., the S&P/TSE 60 for Canada, the S&P Euro and Euro Plus for Continental Europe and the S&P/TOPIX 150 for Japan. Indices for Asia/Pacific, Latin America and the United Kingdom are expected to be launched early this fall. For information, visit www.spglobal.com. Founded in 1888, The McGraw-Hill Companies is a leading information services provider meeting worldwide needs in education, business, finance, the professions and government. The corporation employs 16,500 people located in more than 400 offices in 32 countries. Sales in 1998 were $3.7 billion.

Contacts

MSCI:    Kurt Baumann    212-762-5771

S&P:      Leah C. Johnson   212-438-2755
              Bill Jordan            212-438-3531