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22 Sep 2008

MSCI Barra Joins Morningstar Arrangement

MSCI Barra and Morningstar have entered into an arrangement to calculate and distribute hedge fund indices jointly.

“We are delighted to be working with Morningstar, and believe that this exciting development will greatly benefit all users of our hedge fund indices. Going forward they will have access to enhanced hedge fund indices from Morningstar based upon MSCI Barra’s methodology applied to one of the largest hedge fund databases,” said David Brierwood, Chief Operating Officer, MSCI Barra.

“For more than 35 years, MSCI Barra has produced some of the most widely used and well-respected indices in the industry, and we’re pleased to apply the MSCI Hedge Fund Index Methodology to our extensive hedge fund database,” said Liz Kirscher, President of Data Services for Morningstar. “The combination of MSCI Barra’s methodology and Morningstar’s large hedge fund universe will allow us to offer a valuable set of robust benchmarks to both MSCI Barra clients and ours.”

These indices and the Morningstar database will replace the current MSCI Hedge Fund Indices and Database after a brief transition period. MSCI Barra will continue to calculate and distribute the MSCI Investable Hedge Fund Indices and the Barra Hedge Fund Risk Model. Morningstar will continue to calculate and distribute its existing Morningstar Hedge Fund Indices, including the Morningstar® 1000 Hedge Fund Index.

The MSCI Hedge Fund Index Methodology uses primary and secondary hedge fund characteristics to build the indices based on investment process, asset class, geography, and Global Industry Classification Standard (GICS®) sectors. This granularity is unique among hedge fund indices and allows investors to benchmark precise investment opportunities. Morningstar collects 300 data points from 8,500 hedge funds and funds of hedge funds for its database including information about portfolio holdings, strategy allocation and hedging techniques.

MSCI Barra is headquartered in New York, with research and commercial offices around the world. Morgan Stanley, a global financial services firm, is the controlling shareholder of MSCI Barra.

Recently named Index Provider of the Year at the 2008 European Pensions Awards, MSCI Barra is a provider of investment decision support tools worldwide, including indices and portfolio risk and performance analytics.

Morningstar, Inc. is a provider of independent investment research in North America, Europe, Australia, and Asia.
PROXY Governance, Inc.(PGI), a leading proxy advisory firm, has recommended that shareholders support management in the Cleveland-Cliffs proxy battle.

Cleveland-Cliffs is a mining company that produces iron ore pellets and supplies metallurgical coal to the steelmaking industry; the company also has announced plans to build a biomass fuel plant.

As an Ohio corporation, Cleveland-Cliffs is subject to the state's "control share acquisition," which requires shareholder approval for any acquisition of shares which, when added to its existing ownership stake, would entitle the acquirer to control any of the following ranges of voting power in the election of directors: One-fifth or more but less than one-third, one-third or more but less than a majority, or a majority.

In this instance, Harbinger Capital Partners Master Fund 1, Ltd., and Harbinger Capital Partners Special Situations Fund, LP (“Harbinger”), which presently own approximately 15.6% of outstanding shares, seek to increase their aggregate holdings to greater than 20%, but less than 33 1/3%, of the company’s outstanding common shares.

PGI notes that Harbinger's acquisition could allow it to influence corporate strategy and decision-making, yet provides no immediate or obvious economic advantages to existing shareholders.