UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20062008

Or

For the transition period fromto.

Commission File No. 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

40 East 52nd Street, New York, NY 10022

(Address of principal executive offices)

(212) 810-5300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known, seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a non-accelerated filer.smaller reporting company. See definitionthe definitions of “large accelerated filer,” “accelerated filerfiler” and large accelerated filer”“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    Nox

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 20062008 was approximately $2.2$2.9 billion. There is no non-voting common stock of the registrant outstanding.

As of March 9, 2007,January 31, 2009, there were 116,332,365118,171,765 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference herein:

Portions of the definitive Proxy Statement of BlackRock, Inc. to be filed pursuant to Regulation 14A of the general rules and regulations under the Securities Exchange Act of 1934, as amended, for the 20072009 annual meeting of stockholders to be held on May 23, 200721, 2009 (“Proxy Statement”) are incorporated by reference into Part III of this Form 10-K.

BlackRock, Inc.

Index to Form 10-K

TABLE OF CONTENTS

Part I

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is one of the largest publicly traded investment management firms in the United States with $1.125$1.307 trillion of assets under management (“AUM”) at December 31, 2006. Assets are managed2008. BlackRock manages assets on behalf of retailinstitutional and institutional clients inindividual investors worldwide through a variety of fixed income, cash management, equity and balanced cash management and alternative investment strategies.separate accounts and funds. In addition, throughBlackRock provides investment system,Solutions^®, the Company offers risk management and advisory services that combine capital markets expertise with proprietarily-developed systems and transitiontechnology.BlackRock Solutions provides risk management and enterprise investment services tofor $7 trillion in assets, liabilities and derivatives.

BlackRock is independent in ownership and governance, with no single majority stockholder and a select numbermajority of global institutional investors.

On September 29, 2006,independent directors. At December 31, 2008, Merrill Lynch & Co., Inc. (“Merrill Lynch”) owned approximately 44.2% of BlackRock’s voting common stock outstanding and held approximately 48.2% of the Company’s capital stock on a fully diluted basis. The PNC Financial Services Group, Inc. (“PNC”) owned approximately 36.5% of BlackRock’s voting common stock outstanding and held approximately 32.1% of the Company’s capital stock on a fully diluted basis.

On January 1, 2009, Bank of America Corporation (“Bank of America”) acquired Merrill Lynch. In connection with this transaction, BlackRock entered into exchange agreements with each of Merrill Lynch and PNC pursuant to which each agreed to exchange a portion of the BlackRock voting common stock they held for non-voting preferred stock. Following the closing of these exchanges on February 27, 2009, Bank of America/Merrill Lynch and PNC owned approximately 4.9% and 46.5% of BlackRock’s voting common stock, respectively. The capital stock held by Bank of America/Merrill Lynch and PNC in BlackRock remained largely unchanged at approximately 47.4% and 31.5% on a fully diluted basis, respectively.

BlackRock closed 2008 with AUM of $1.307 trillion, a decrease of 4% over year-end 2007 levels. Over the past five years, BlackRock’s AUM has had a compound annual growth rate of 33%.

Assets Under Management

By Product Type

NM – Not Meaningful

CAGR = Compound Annual Growth Rate

1

Overview (continued)

Growth in AUM over the past five years includes acquired AUM of $660.8 billion. On September 29, 2006, Merrill Lynch contributed the entities and assets that constituted its investment management business (the “MLIM Business,” formerly named Merrill Lynch Investment Managers or “MLIM”), to the Company. In exchange for this contribution, BlackRock issued to Merrill Lynch 52,395,082 sharesCompany (the “MLIM Transaction”), adding $589.2 billion in AUM. Acquired AUM also includes approximately $21.9 billion in AUM acquired as a result of common stock and 12,604,918 shares of Series A non-voting participating preferred stock. Immediately following the closing, Merrill Lynch owned 45%BlackRock’s acquisition of the voting common stockfund of funds business of Quellos Group, LLC (the “Quellos Business” or “Quellos”), which closed on October 1, 2007 (the “Quellos Transaction”) and approximately 49.3%$49.7 billion in AUM acquired in BlackRock’s acquisition of the fully-diluted capital stock of the combined company (such transactions, collectively, are referred to as the “MLIMSSRM Holdings, Inc. from MetLife, Inc. in January 2005 (the “SSR Transaction”). The PNC Financial Services Group, Inc. (“PNC”), which owned approximately 69% of the total capital stock of the Company immediately prior to the MLIM Transaction, owned approximately 34% of the total capital stock of the Company immediately following the closing.

BlackRock closed 2006 with AUM of $1.125 trillion, up $133.0 billion over year-end pro forma 2005 combined (BlackRock and MLIM) AUM of $991.6 billion. Net new business accounted for $60.5 billion, or 46%, of the total increase. Over the past five years, BlackRock’s AUM has increased by 371.4%, including net inflows of $150.4 billion, market appreciation of $96.5 billion and acquired AUM of $639.1 billion.

Assets Under Management

By Asset ClassProduct Mix

BlackRock increasedoffers a broad range of investment and risk management services to institutional and retail investors worldwide. These diverse capabilities span the diversificationglobal capital markets and permit the Company to serve a wide variety of its product offerings throughinvestor interests. As of year-end 2008, more than 25% of the MLIM Transaction. At December 31, 2006, fixed income products represented 41%,Company’s separate account clients had awarded BlackRock mandates in more than one asset class. The Company’s $1.307 trillion of AUM at year-end 2008 consisted of approximately 21% equity and balanced, products 35%,37% fixed income, 26% cash management, products 20%5% alternative investments and alternative investment products 4%11% advisory portfolios.

The Company manages assets on behalf of BlackRock’s total AUM. Similarly, BlackRock achieved greaterinvestors in more than 60 countries. Approximately 41% of long-dated AUM, 12% of cash management AUM and 5% of advisory AUM were managed on behalf of international clients, with the balance in its client base through the MLIM Transaction.managed for U.S. investors. In all regions, clients include both institutional and retail investors. At year-end 2006, 69%2008, approximately 76% of long-dated AUM, 91% of cash management AUM and 100% of advisory AUM were managed for institutions and 31%institutional clients, with the remainder managed for retail and high net worth investors. The Company’s global scope also was enhanced by the MLIM Transaction. At December 31, 2006, 66% of

BlackRock assets were managed for U.S. investorshas developed and 34% for international clients. In addition, the Company continued to expand itsBlackRock Solutionsmaintains an extensive operating platform, Aladdin^®products, to support its global investment and risk management operations. The Company offers Aladdin and a variety of related services which achieved aggregate revenue growthto institutional investors under theBlackRock Solutions brand name. At year-end 2008, over $7 trillion of 20%assets, liabilities and derivatives were processed on the Aladdin platform in 2006.connection with outsourcing, risk management and advisory services provided to 135 clients.

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Overview (continued)

BlackRock operates in a global marketplace characterized by a high degree of market volatility and economic uncertainty, factors that can significantly affect earnings and stockholder returns in any given period. Management seeks to achieve attractive returns for stockholders over time by, among other things, capitalizing on the following factors:

The Company’s ability to increase revenue, earnings and stockholder value over time is predicated on its ability to generate new business in investment management andBlackRock Solutions products and services. New business efforts are dependent on BlackRock’s ability to achieve clients’ investment objectives in a manner consistent with their risk preferences and to deliver excellent client service. All of these efforts require the commitment and contributions of BlackRock employees. Accordingly, the ability to retain and attract talented professionals is critical to the Company’s long-term success.

3

Overview (continued)

Selected financial results for the last six years are shown below:

Selected GAAP Financial Results

Selected Non-GAAP Financial Results¹

See additional information in Item 6, Selected Financial Data.

While BlackRock reports its financial results using accounting principles generally accepted in the United States of America (“GAAP”),; however, management believes that evaluating the Company’s ongoing operating results may not be as usefulenhanced if investors are limited to reviewing only GAAPhave additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess the Company’s ongoing operations, and for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Certain prior year non-GAAP data hasfinancial measures have been restated to conform to current year presentation.

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Overview (continued)

Operating Income, as Adjusted:

GAAP reported operating income includes all compensation related expenses associated with certain of BlackRock’s 2002 Long-Term Retention and Incentive Planlong-term incentive plans (“LTIP”), which are partially funded by BlackRock stock currently held by PNC and by anticipated capital contributions from Merrill Lynch, certain one-time costs related to the integration of the MLIM Transactionand Quellos Transactions in 2006 and 2007, certain costs associated with the SSRM Holdings, Inc. (“SSR”) acquisitionSSR Transaction in 2005, a one-time2007 termination fee sharing payment in 2006 relating to the SSR acquisition,for closed-end fund administration and servicing arrangements with Merrill Lynch, a 2008 restructuring charge and compensation expense associated with appreciation / (depreciation) on assets related to BlackRock’s deferred compensation plans and compensation charges which the Company anticipates will be reimbursed by Merrill Lynch in the future. plans.

Operating income, as adjusted (a non-GAAP measure), excludes the portionexpense related to the 2008 restructuring charges, the 2007 termination of the LTIPclosed-end fund administration and servicing arrangements with Merrill Lynch, and MLIM and Quellos integration costs consisting principally of certain professional fees, rebranding costs and compensation costs incurred in conjunction with the integration. These expenses have been excluded from operating income, as adjusted, because they have been deemed non-recurring by management and to help ensure the comparability of this information to prior periods. The portion of expense associated with awards met by the distribution to participants of shares ofLTIP that will be funded through BlackRock common stock previously held by PNC and the anticipated Merrill Lynch compensation contribution have been excluded because, exclusive of the impact related to the exercise of LTIP participants’ put options, primarily in the three months ended March 31, 2007, these charges havedo not impactedimpact BlackRock’s book value. A detailed discussion of the LTIP is included in Note 13 to the consolidated financial statements beginning on page F-1 of this Form 10-K. MLIM Transaction and SSR acquisition costs consist principally of certain professional fees and compensation costsCompensation expense associated with appreciation (depreciation) on assets related to those transactions. Also includedcertain BlackRock deferred compensation plans has been excluded as returns on investments directed for these plans are reported in MLIM Transactionnon-operating income (expense). Management believes that operating income exclusive of these costs are rebranding costs. MLIM Transaction and SSR acquisition costs have been deemed non-recurring by management and have been excluded frommore representative of the operating performance for the respective periods.

Operating Margin, as Adjusted:

Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of closed-end fund launch costs and commissions. Management believes that excluding such costs and commissions is useful because these costs can fluctuate considerably and revenues associated with the expenditure of these costs will not fully impact the Company’s results until future periods.

Revenue used for operating margin, as adjusted, excludes portfolio administration and servicing costs paid to help ensurerelated parties and to other third parties. Management believes that excluding such costs is useful because the Company receives offsetting revenue for these services. Amortization of deferred mutual fund sales commissions are excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, offset distribution fee revenue earned by the Company. Reimbursable property management compensation was excluded from operating margin, as adjusted, as it represents compensation and benefits paid to personnel of Metric Property Management, Inc. (“Metric”), a subsidiary of BlackRock Realty Advisors, Inc. (“Realty”), which is fully reimbursed by Realty’s clients resulting in no economic cost to BlackRock.

Non-Operating Income (Expense), Net of Non-controlling Interests, as Adjusted:

Non-operating income (expense), net of non-controlling interests, as adjusted, equals non-operating income (expense), GAAP basis, net of non-controlling interests, GAAP basis, adjusted for compensation expense associated with depreciation (appreciation) on assets related to certain BlackRock deferred compensation plans, which is recorded in operating income. This compensation expense has been included in non-operating income (expense), net of non-controlling interests, as adjusted, to offset returns on investments set aside for these plans, which are reported in non-operating income (expense), GAAP basis.

5

Overview (continued)

Non-Operating Income (Expense), Net of Non-controlling Interests, as Adjusted (continued):

Management believes that non-operating income (expense), as adjusted, provides for comparability of this information to prior periods. The 2006 fee sharing payment has been excluded from operating income, as adjusted, because it represents a non-recurring payment pursuantperiods and is an effective measure for reviewing BlackRock’s non-operating contribution to the SSR acquisition agreement, which, while impacting BlackRock’s book value, is not representative of BlackRock’s core business. Compensationits results. As compensation expense associated withon the appreciation of assets related to BlackRock’s deferred compensation plans, has been excluded fromwhich is included in operating income, offsets the gain/(loss) on the investments set aside for these plans, management believes that non-operating income (expense), net of non-controlling interests, as adjusted, because investment returns on these assets reported inprovides useful measures to investors of BlackRock’s non-operating income, net of the related impact on compensation expense, result in a nominal impact on net income. Compensation charges to be reimbursed by Merrill Lynch have been excluded from operating income,results.

Net Income, as adjusted, because these charges are not expected to impact BlackRock’s book value. Bonus expense related to the Company’s sale of its equity interest in Trepp, LLC has been deemed to be non-recurring by management and has been excluded from operating income, as adjusted, in 2004 to help ensure the comparability of this information to subsequent reporting periods.Adjusted:

GAAP reported net income and GAAP diluted earnings per share include certain charges and gains,significant items, the after-tax impact of which management considers non-recurring or ultimately will not impact BlackRock’s book value and, therefore, excludesare excluded in assessing ongoing profitability. calculating net income, as adjusted.

Net income and diluted earnings per share, as adjusted (a non-GAAP measure), excludesexclude the after-tax impact of the 2008 restructuring charges, the 2007 termination of closed-end fund administration and servicing arrangements with Merrill Lynch, LTIP expense to be funded by PNC MLIM Transaction costs, SSR acquisition costs,and by an expected Merrill Lynch compensation contribution, gains recognizedMLIM, Quellos and SSR integration costs and the effect on the release of reserves relateddeferred income tax expense attributable to New York State and New York Citycorporate income tax audits and a net gain recognized on the sale of BlackRock’s equity interest in Trepp, LLC.rate reductions.

See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a detailed reconciliation of GAAP reported operating income, non-operating income (expense), net of non-controlling interests, net income and diluted earnings per share to adjusted non-GAAP operating income, non-operating income (expense), net income and diluted earnings per share.

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Products^*

BlackRock offers a wide variety of fixed income, equity and balanced, cashinvestment management and alternativerisk management products and services. Investment management offerings include single- and multi- asset class portfolios, which may be structured to focus on a particular investment products.style, capitalization range, region or market sector, credit or maturity profile, or liability structure. Revenue from these products primarily consists of advisory fees, typically structured as a percentage of AUM and, in some instances, performance fees expressed as a percentage of returns realized in excess of agreed-upon targets. BlackRock also offers riskRisk management investment systemproducts, including BlackRock’s Aladdin platform, outsourcing, financial advisory and transition management services, are offered to institutional investors under theBlackRock Solutions brand name. Revenue on these services may be based on several criteria including asset volume, number of users, accomplishment of specific deliverables or other performance objectives.

The MLIM Transaction increased

6

Products (continued)

BlackRock, Inc.

Assets Under Management

(Dollar amounts in millions)

(unaudited)

Equity and Balanced

BlackRock manages a range of equity strategies across the risk/return spectrum, including global and regional portfolios; value, growth and core mandates; large, mid and small cap strategies; and selected sector funds. Amidst particularly volatile conditions and challenging markets for equity managers, BlackRock’s product offerings. The Company now offers bondapplication of risk analytics to equity portfolio construction helped managers reposition their portfolios denominated in U.S. dollars, pounds sterling, euros, yen and Australian dollars. MLIM’s equity capabilities were substantially broader than BlackRock’s, andeffectively for the combined platform spans global markets, styles and capitalization ranges. BlackRock also expanded its alternative investment capabilities, adding real estate expertise in Australia and the U.K., single strategy hedge funds and privatenew environment.

BlackRock’s equity and hedgebalanced AUM closed the year at $280.8 billion. The sharp fall in global equity markets caused AUM to decline $160.4 billion or 35% since December 31, 2007. Foreign exchange translation accounted for an additional $18.8 billion or 4% decay in reported AUM. Despite the challenging market environment, the Company attracted $0.9 billion of net new business during the year, with inflows in asset allocation and index products partially offset by outflows in sector funds, U.S. equity and emerging market portfolios. BlackRock’s equity investment teams achieved strong relative performance, with 70%, 85%, and 91% of funds, asequity fund assets ranked in the top two peer group quartiles for the one-, three- and five-year periods ended December 31, 2008.

At year-end 2008, 49% of the Company’s equity and balanced AUM, or $136.4 billion, were managed for U.S. investors and 51%, or $144.4 billion, were managed for international investors in over 35 countries. In addition, BlackRock’s channel mix was well as deeper capabilitiesbalanced with 53% of assets managed on behalf of institutional clients and 47% managed on behalf of retail and high net worth investors. During 2008, we were awarded $10.9 billion and $3.0 billion of net new business from U.S. retail and institutional investors, respectively. These inflows were offset by net outflows of $7.0 billion from international retail investors and $5.9 billion from U.S. high net worth investors, principally in portable alpha strategies, liability driven investing and multi-asset class solutions.broker-sold separately managed accounts.

7

Products (continued)

Fixed Income

BlackRock offers a wide rangean array of fixed income products across variouscurrencies, sectors and maturities. Portfolios can be tailored relative to clients’ liabilities, accounting, regulatory or rating agency requirements, or other investment policies. In 2008, investors worldwide sought the safety of government-guaranteed debt, particularly late in the year in the face of extreme market disruption and deteriorating economic conditions. Clients continued to migrate from broad bond marketsmarket portfolios and sectors as well as various maturities along the yield curve. BlackRock designs portfoliosstructured products to meet specific client risklong duration and return profiles. other liability driven strategies. Widespread de-leveraging of balance sheets caused significant devaluation of assets, which in turn led to demand for advisory services and investor interest in a variety of distressed and opportunistic products.

BlackRock’s fixed income AUM grew 50% year-over-year to $455.9ended the year at $483.2 billion, including $132.8a decrease of $29.8 billion or 6% year-over-year. A substantial majority of assets acquiredthis decline (78% or $23.2 billion) resulted from adverse market movements, primarily in the MLIM Transaction.

form of dramatic widening of credit spreads as liquidity dried up. Net outflows accounted for the remaining $6.6 billion or 1% fall-off in AUM, driven by investors’ cash needs, structured product liquidations, a shift toward liability driven investing and insourcing following a single client’s merger activity. The year was exceptionally challenging for bond managers, and BlackRock applies a consistent style to all fixed income strategies, emphasizing controlled duration and active sector rotation. All bond portfolios are managed by BlackRock’s fixed income team, which is comprised of regional and sector specialists as well as credit and quantitative analysts, all of whom work closely together to share information, formulate investment themes and implement specific strategies in accordance with each portfolio’s investment objectives and guidelines. They are supported by extensive analytical tools and a shared research database that includes reports from both equity and credit analysts throughout the Company. Investment operations are facilitated by Aladdin^®, BlackRock’s proprietary enterprise investment system, which integrates risk analytics and information processing capabilities to support efficient workflow, and by an experienced team of operations, administration and compliance professionals.

BlackRock’s fixed income portfolio management team seekswas not immune. Although we remained competitive within our institutional peer group, investment performance by consistently employing a disciplined process designed to add incremental returnsfell short of our expectations, particularly in excess of benchmarks. While competitive performance is key, ensuring that portfolio risks are consistent with client objectives is paramount. Approximately 92% percent of BlackRock’s institutional composites outperformed their benchmarks formulti-sector portfolios. For the one-year period, and 100% for theone-, three- and five-year periods ended December 31, 2006.*2008, 37%, 36% and 45% of bond fund assets ranked in the top two peer group quartiles.

BlackRock’s fixed income client base remains largely institutional, with 86% of AUM, or $415.8 billion, managed on behalf of institutional clients and 14%, or $67.4 billion, managed for retail and high net worth investors. Net inflows of $11.4 billion from international clients were overwhelmed by net outflows of $18.0 billion from U.S. investors, resulting in a slight shift in the client mix from 35% international at year-end 2007 to 36% at year-end 2008.

Cash Management

The cash management industry was particularly challenged by the credit and liquidity crisis that persisted throughout 2008. Difficulties intensified in the third quarter when the bankruptcy of Lehman Brothers caused the Reserve Primary Fund’s net asset value to drop below $1, thereby becoming the second fund ever to “break the buck” in the nearly 40-year history of money market mutual funds. This landmark event triggered large redemptions in prime money market funds as investors sought safety in Treasuries and government money market funds. This massive “flight to safety” necessitated substantial selling by prime funds, which in turn froze short-term funding markets until government intervention encouraged investors to reallocate back into prime money market funds.

Throughout the year, BlackRock navigated these extraordinary market conditions to ensure safety and liquidity for our cash management clients. Flows were volatile, particularly in the third and fourth quarters, when the Company’s liquidity products had net outflows of $53.5 billion and net inflows of $48.6 billion, respectively. Cash management AUM closed the year at $338.4 billion, an increase of 8% or $25.1 billion since year-end 2007. For the year-ended December 31, 2008, average assets were approximately 26% higher than for calendar year 2007.

BlackRock’s cash management activities are primarily conducted on behalf of U.S. investors, with increasing demand from international clients, especially in the United Kingdom and Middle East. At December 31, 2008, cash management AUM for U.S. investors reached $297.7 billion, up 4% from 2007, and $40.7 billion for international clients, up 52% from a year ago. For the first time, net inflows from international clients surpassed net subscriptions from U.S. investors, $15.1 billion and $10.6 billion respectively. BlackRock’s cash management clientele remains largely institutional, with $309.2 billion or 91% managed on behalf of institutions and $29.2 billion or 9% managed on behalf of retail and high net worth investors.

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Products (continued)

Fixed Income (continued)

The MLIM Transaction accelerated the Company’s expansion into the international fixed income market. Global bond mandates grew from $20.4 billion at year-end 2005 to $38.0 billion at year-end 2006. In addition, the merger increased local market capabilities with the addition of established investment teams in London, Sydney and Tokyo, bringing assets in these strategies to $32.6 billion. Capabilities in distressed, high yield, municipal bonds and credit research were also strengthened.

Net new business in fixed income totaled $3.0 billion, a slower rate of growth than historical experience due in part to a slowdown in institutional investor activity given persistent low rates in the United States, consultant wariness of the MLIM Transaction and a number of account terminations in connection with client mergers and decisions to internalize asset management. In the face of these challenges, BlackRock sustained positive momentum in key products, including core, global and local currency strategies, which contributed $5.9 billion of net inflows during the year. The varied rates of growth and expansion of the product line have enhanced diversification of fixed income AUM. Core bond mandates, for example, have grown at a compound annual rate of 17% over the past five years to $132.2 billion at December 31, 2006. Targeted duration portfolios have increased from 27% to 29% since 2001, and global bond mandates expanded from 0.4% to 8% of total fixed income assets over the same period.

The Company also further diversified its fixed income client base geographically as non-U.S. investors allocated capital to the global bond markets. At December 31, 2006, 68% of fixed income AUM was managed for U.S. investors and 32% for non-U.S. investors. During 2006, international clients awarded BlackRock with $7.4 billion of net inflows, while U.S. clients had $4.4 billion of net outflows due to client mergers and product maturities. Although the fixed income business remains predominantly institutional (82% of total bond AUM), significant retail assets were added with the MLIM Transaction. Net new business across all institutional clients globally was $3.2 billion during the year, while the retail channel experienced outflows of $167 million.

Equities and Balanced

BlackRock closed 2006 with equity and balanced AUM of $392.7 billion. The MLIM Transaction dramatically changed BlackRock’s equity platform. In addition to U.S., international and emerging market offerings, the combined Company manages equity portfolios with strategies specific to the United Kingdom, Europe, Japan and Australia. BlackRock’s equity professionals serve global investors from offices in New York, London, Boston, Edinburgh, Hong Kong, Melbourne, Philadelphia, Princeton, Singapore and Tokyo. The growth in BlackRock’s equity AUM was the result of $10.7 billion of net new business, $314.4 billion of assets acquired in the MLIM Transaction and favorable equity markets over the course of the year.

The Company’s equity products, which cover a range of risk profiles, employ primarily either an active quantitative approach or an active fundamental approach, both of which seek to add value principally through stock selection. The Company’s quantitative strategies employ sophisticated, proprietary models to drive the investment process. The firm’s fundamental strategies emphasize in-depth company and industry research as well as macro-economic analysis as the basis for stock selection. Portfolios are managed by distinct teams that each invest according to their own philosophy, process and style and all benefit from shared information and a common trading, systems, operations, administration and compliance platform.

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Products (continued)

Equities and Balanced (continued)

BlackRock’s diversified equity platform is reflected in its client and channel mix, as well as its product mix. At December 31, 2006, 48% of the Company’s total equity and balanced AUM, or $187.8 billion, were managed for U.S. investors and 52%, or $204.9 billion, were managed for non-U.S. investors. In addition, BlackRock’s channel mix was well balanced with 45% of assets managed on behalf of institutions and 55% managed on behalf of retail and high net worth investors. Notwithstanding the MLIM Transaction, most of BlackRock’s investment teams sustained strong performance track records. Approximately 66% of the Company’s equity mutual fund assets ranked in the top two peer group quartiles for the one-year period ended December 31, 2006* and over 70% ranked in the top two peer group quartiles for the three- and five-year periods ended December 31, 2006.*

Cash Management (continued)

BlackRock is a leading provider of cash management products with $227.8 billion in global cash management AUM at December 31, 2006, including a variety of money market funds and customized portfolios. AUM in these strategies increased $141.7 billion, or 165%, during 2006, including $127.7 billion of assets added in the MLIM Transaction. Net new business totaled $12.4 billion during the year across a variety of products.

In addition to the MLIM Transaction, a number of factors contributed to BlackRock’s growthManagement expects continued volatility in cash management assets during 2006. A continued neutral stance byflows given ongoing dislocations in the Federal Reserve Bankmarket and a flat U.S. yield curve contributed to favorable flows in institutional liquidity products. Competitive performancethe extremely low level of rates on Treasury bills and an abiding focus on client service were also vital to ongoing new business efforts. For the year ended December 31, 2006, 89% of BlackRock’s U.S. institutionalother money market fund assets ranked in the top two Lipper peer group quartiles.* Finally, the Company’s expanded product set, which includes enhanced yield strategies and a suite of non-U.S. cash management products that were added in the MLIM Transaction, helped to bolster BlackRock’s already strong cash management platform.

BlackRock’s cash management activities are primarily conducted on behalf of U.S. clients, although there is increasing demand among international clients for similar products. At December 31, 2006, cash management AUM for U.S. investors reached $213.5 billion and assets from international investors were $14.3 billion. For 2006, net inflows from U.S. investors totaled $10.4 billion and $2.0 billion was raised from international investors. Institutional clients represent the largest percentage of BlackRock’s cash management platform with $174.5 billion of assets at December 31, 2006. Retail client cash management assets have grown from $3.1 billion at year-end 2005 to $53.3 billion at year-end 2006, largely as a result of the MLIM Transaction.instruments.

Alternative Investment ProductsAlternatives

BlackRock’s alternative investment capabilities include real estate equity and debt; hedge fund, private equity and real asset funds of funds; single-strategy hedge funds, and distressed, opportunistic and other absolute return strategies. BlackRock invests alongside clients in many of these products as a way of evidencing our long-term commitment to these strategies and alignment of interest with our clients. These coinvestments are held on balance sheet and marked to market. While alternative investment strategies generally are designed to provide enhanced returns with the same or less risks as the broad equity and bond markets or returns with low correlations to the broad equity and bond markets, market turmoil affected all strategies in 2008 and return correlations increased dramatically.

In many ways, 2008 was a “perfect storm” for alternative investments – frozen capital markets, lack of financing, forced deleveraging, poor absolute returns, imposition of redemption constraints and revelation of a massive alleged hedgefund fraud (in which none of BlackRock’s fund of funds were invested). Industry-wide, investors sought to redeem hedge fund and fund of fund holdings in many cases, employ actual or structural leveragerecord numbers, and were often forced to liquidate better performing products that could provide liquidity. BlackRock was able to meet all redemption requests in an effortthese products in 2008. Despite these headwinds, BlackRock raised $2.9 billion of net new business across a range of alternative products during the year, which helped to enhance returns. offset market and foreign exchange declines of $14.3 billion. At year-end, alternative investment AUM totaled $59.7 billion.

BlackRock’s real estate offerings span a wide range of strategies, including core, value-added and opportunistic equity and high yield debt for institutional and private investors. Assets on the real estate platform as of December 31, 2008 were $25.8 billion, down $3.6 billion from 2007 year-end, largely as a result of declining market values worldwide. Net new business in real estate equity and debt products totaled $1.4 billion in 2008.

The Company’s offerings includefund of funds platform which operates under the name, BlackRock Alternative Advisors (“BAA”), manages a variety of multi-manager strategies investing in hedge funds, private equity funds and real estateasset funds. AUM in these products structured debt products,closed the year at $22.7 billion, a decrease of $6.7 billion, driven largely by negative market returns and, to a lesser extent, redemptions in funds of hedge funds. These declines were partially offset by net new business of $0.9 billion in BAA’s private equity fund of funds business. All of these assets are managed on behalf of institutional and high net worth clients, split almost evenly between U.S. and international investors.

BlackRock ended 2008 with $11.2 billion of AUM in equity and fixed income hedge funds, portable alpha, distressed, opportunistic and other absolute return strategies. Net new business during the year included $3.6 billion of inflows into distressed credit and mortgage vehicles, as clients turned to BlackRock for innovative and opportunistic investment solutions. These flows were offset by $2.2 billion of net outflows in fixed income and equity hedge funds hedge funds of funds, private equity funds and funds of funds,$2.9 billion in market and multi-asset class products. The MLIM Transaction significantly increased the global profile of the Company’s alternatives business, both in terms of products and distribution, positioning BlackRock as a leading worldwide provider of alternative investment products. During 2006, total assets managed in alternative investments increased by $22.8 billion to $48.1 billion at December 31, 2006. The MLIM Transaction added $14.2 billion of alternatives AUM as of the closing date.

- 6 -

Products (continued)

Alternative Investment Products (continued)

BlackRock’s real estate platform continued to expand, growing to $20.6 billion at year-end 2006. Growth was led by $5.7 billion of net inflows and $4.2 billion of assets acquired in the MLIM Transaction. Growth was driven in part by acquisition activity during the year. Notably in the fourth quarter of 2006, BlackRock and Tishman-Speyer formed a joint venture to acquire Peter Cooper Village and Stuyvesant Town, the largest apartment complex in New York City, from MetLife, Inc. (“MetLife”) for $5.4 billion. The MLIM Transaction added non-U.S. property products managed by teams in Australia and the United Kingdom, key additions to BlackRock’s growing global real estate platform.

Fixed income sector specialists manage $13.2 billion of assets in collateralized debt obligations (“CDOs”) as of December 31, 2006. During the year, BlackRock added $3.7 billion of assets through the issuance of six new CDO vehicles. BlackRock’s fixed income team also manages a number of alternative investment strategies using the same investment process that supports traditional bond portfolios. Assets in fixed income hedge funds, commodities portfolios and long-only absolute return strategies totaled $4.4 billion at December 31, 2006.

The Company’s equity hedge funds and hedge funds of funds AUM grew to $5.8 billion at December 31, 2006, including $3.2 billion of assets in products added at the closing of the MLIM Transaction. These products are managed by experienced teams in New York, Boston and London. BlackRock also enhanced its private equity offerings in 2006. In addition to BlackRock Kelso Capital Corporation, a business development company advised by BlackRock Kelso Capital Advisors LLC in which the Company has a 36.5% ownership interest, BlackRock now offers private equity funds of funds and has staffed a team investing directly in private equity. At December 31, 2006, assets in these products totaled $3.4 billion.foreign exchange declines.

BlackRock Solutions and Advisory

Since its formation, BlackRock has developed and maintained proprietaryoffers investment systems, to support its business. These capabilities are offered under the brand name,BlackRock Solutions. In 2006,BlackRock Solutions’ revenues from system outsourcing, risk management, advisory, transition and investment services increased by 20% in the aggregate to $148.0 million. During the year, 17 net new assignments were added. By year-end 2006,BlackRock Solutions had completed three system implementations and had three implementations in process. BlackRock’s Aladdin^® platform was selected by two official institutions, a validation of efforts to expand the Company’s global business forBlackRock Solutions. In addition, the advisory team added 17 and completed 18 short-term assignments. In 2006,BlackRock Solutions surpassed the milestone of having over 100 distinct assignments for more than 90 clients, while at the same time being extensively involved in the conversion of MLIM’s global fixed income and U.S. equity portfolios to the Aladdin platform.

BlackRock Solutions’ core products consist of tools that support the investment process. These include Aladdin and a variety of other proprietary analytical tools for clients that do not require all of the functionality of the enterprise system. In addition,BlackRock Solutions offers a variety of risk management and financial advisory services. In 2006,BlackRock Solutions was retained on six net new Aladdin assignments and seven net new long-term risk management and advisory assignments.services under theBlackRock Solutions brand name. TheBlackRock Solutions operating platform, Aladdin, serves as the investment system for BlackRock and a growing number of sophisticated institutional investors.BlackRock Solutions also providesuses Aladdin to support ongoing risk management, investment accounting outsourcing, typically bundled with assetfinancial markets advisory and transition management services, as well as ancillary outsourcing services,services. Clients have also retained BRS for shorter-term advisory engagements, such as performance measurementvaluation of illiquid assets, portfolio restructuring, workouts and middle and back office trade support,dispositions.

Demand for clients who wish to extend their relationships.BlackRock Solutions added four net new investment accounting relationshipsservices increased sharply in 2006. Finally, as a result2008 in the face of extreme market dislocations. Revenue more than doubled to $406 million, up from $198 million in 2007. A substantial portion of the MLIM Transaction,BlackRock Solutions now offers transition management services.

At year-end 2006,BlackRock Solutions had been retainedgrowth resulted from increased demand for numerousadvisory services including 21 Aladdin assignments, 63that bring together the Company’s analytical, risk management and advisorycapital markets capabilities. During the year, we added 72 new assignments, and 25 outsourcing assignments.BlackRock Solutions provided these services for a well-diversified list of clients including banks,46 short-term engagements. Clients include financial institutions, insurance companies, broker dealers,official institutions, pension funds, asset managers and hedge funds, pensions, endowmentsother institutional investors based in the U.S., Europe, Asia and foundations and other financial institutions.Australia.

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BlackRock Solutions and Advisory (continued)

BlackRock Solutions’ core product is the Aladdin investment platform and associated risk analytics and advisory services that leverage Aladdin. In July 2008, BlackRock acquired Impact Investing, a provider of equity portfolio management, visualization and analytical software. These capabilities are currently being integrated into the Aladdin platform with the ultimate goal of extending Aladdin’s multi-asset class capabilities. Over time, these efforts are expected to enable us to expand ourBlackRock Solutions activities by serving a broader array of client needs. At December 31, 2008, 36 institutions on four continents had selected Aladdin as their investment operating platform, including 8 implementations completed in 2008.

During this recent period of market distress, our Financial Markets Advisory practice provided the holders of distressed assets with guidance on valuing, restructuring and managing their portfolios. Clients have included major public and private institutions around the world, including the Federal Reserve Bank of New York, which engaged BlackRock as manager and adviser for several special purpose facilities. With support from experts throughout the firm, the advisory team completed 43 short-term assignments in 2008, up from 18 such assignments in 2007. At year-end, BlackRock managed $145.0 billion in advisory assets under management.

Product Performance Notes

Past performance is no guaranteenot indicative of future results. Mutual fund performance data is net of fees and expenses, assumes the reinvestment of dividends and capital gains distributions. BlackRock waives certain fees, without which performance would be lower. Investments in mutual funds are neither insured nor guaranteed by the U.S. government. Relative peer group performance is based on quartiles from Lipper Inc. for U.S. funds and Standard & Poor’sMorningstar^©, Inc. for non-U.S. funds. Rankings are based on total returns with dividends and distributions reinvested and do not reflect sales charges. BlackRock waives certain fees, without which performance would be lower. Funds with returns among the top 25%50% of a peer group of funds with comparable objectives are in the first quartile and funds with returns in the next 25% of a peer group are in the second quartile.top two quartiles. Some funds have less than fivethree years of performance.

Composites Performance: Investment performance does not reflect the deduction of advisory fees and other expenses, which will reduce performance results and the return to investors. All performance results assume reinvestment of dividends, interest and/or capital gains. Some composites have less than five years of performance.

Clients

BlackRock serves a diverse universe of institutional and retail investors globally. Products are offered both directly and through financial intermediaries. BlackRock seeks to distinguish itself by usingleverage its enhancedbroad capabilities and global perspective to help clients address investment and scale to benefit clientsrisk management challenges and help them creatively solve problems. In 2006, clients turned to BlackRock for a variety of services. At year-end,access attractive investment opportunities. BlackRock’s funds are registered in 40 jurisdictions around the Company’s AUM had grown to $1.125 trillion, up $133.0 billion over year-end 2005 pro forma combined AUM of $991.6 billion (BlackRockglobe, and MLIM). In investment management, the Company was awarded $60.5serves clients in more than 60 countries. BlackRock’s AUM at year-end totaled $1.307 trillion, including $1.162 trillion of investment assets and $145.0 billion of combined net new business from new and existing clients, $27.7 billion of which was reported as “acquired AUM” in connection with the MLIM Transaction. Net inflows were well diversified geographically as well as by client type. During the year, the Company was also retained on 17 net newBlackRock Solutions assignments.

The international business that MLIM brought to the new organization gave BlackRock a significantly expanded global presence. The MLIM Transaction added $238.4 billion of AUMadvisory assets. Investment assets are managed on behalf of non-U.S. investors bringing total assets managed for international clients to $383.3a geographically diverse clientele, with $780.7 billion at December 31, 2006. During the year, BlackRock was awarded $15.5 billion of net new business from non-U.S. clients in over 50 countries. New business efforts encompass direct calling on institutional investors and their consultants, as well as wholesale distribution of funds and unit trusts through broker dealers and other financial intermediaries. International clients are served by employees in over 25 offices across the globe.

BlackRock also serves a large and growing base of U.S. investors. In 2006, net new business from U.S. clients totaled $17.3 billion across a wide range of products, increasing total assetsor 67% managed for U.S. investors to $741.3and $381.5 billion at year-end. Client channels served include pension and other tax exempt clients, insurance and other taxable investors, institutional cash management and institutional and retail fundor 33% managed for international investors. The professionals serving these clients are primarily based in the Company’s New York, Boston, Princeton (New Jersey), Florham Park (New Jersey), San Francisco and Wilmington (Delaware) offices.

BlackRock’sadvisory asset base is also diversified by the typessignificantly more concentrated among a small number of clients served. At December 31, 2006, BlackRock managed $772.1 billion,institutions, 95% or 69% of total AUM, on behalf of institutional investors and $352.5 billion, or 31% of total AUM, on behalf of retail and high net worth clients globally. During the year, institutional investor AUM grew $363.5 billion with $23.5 billion coming from net new business across client segments and $305.9$137.3 billion of assets contributed from the MLIM Transaction. Institutionalwhich is managed for U.S. clients served include tax-exempt, taxable, institutional cash management and institutional fund5% or $7.7 billion for international investors.

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Clients (continued)

BlackRock, Inc.

Assets Under Management

(Dollar amounts in millions)

(unaudited)

Institutional

BlackRock’s institutional clients span Europe, the Middle East, Africa (“EMEA”), Asia-Pacific and the Americas. The types of investors served include pension plans, charities and other tax-exempt institutions; insurance companies, corporations, banks and other taxable institutions; and central banks, government agencies, sovereign wealth funds and other official institutions. At December 31, 2008, BlackRock managed $1.079 trillion of assets on behalf of institutional investors globally, including $934.1 billion of investment assets and $145.0 billion of advisory assets. Investment AUM included $613.9 billion or 66% managed for U.S. clients and $320.2 billion or 34% managed for international institutions.

Assets managed for tax-exempt institutions, including defined benefit and defined contribution pension plans, foundations, endowments and other non-profit organizations, increased 94%decreased 11% to $352.7$271.2 billion at December 31, 2006. For the year,2008 due to adverse markets and foreign exchange translation. In 2008, BlackRock was awarded net new business of $19.6 billion from these investors totaled $15.3 billion.tax-exempt clients, including $3.3 billion of advisory assets, driven by significant inflows from U.S. and international pension funds. During the year, BlackRock workscontinued to gain traction with defined contribution pension plan sponsorsplans, particularly in the U.S. and their consultants to address changing asset allocation strategiesthe U.K., in recognition of the Company’s strong equity offerings and to consider appropriate investment opportunities. Management believes that thesenewer target date and target risk products. In addition, clients increasingly demonstrate a preference for more servicessought strategic relationships and customized investment solutions, and our work throughout the year with tax-exempt institutions ranged from fewer managerstailoring portfolios and that BlackRock can benefit from this trend. In addition, management believes a more robust mutual fund family should be of interestbenchmarks to defined contribution plansdesigning liability-driven investments and smaller institutional investors, while expanded alternative investment offerings should appealmulti-asset class solutions to foundations and endowments.comprehensive fiduciary outsourcing assignments.

AUM for taxable institutions worldwide increased 68% during the yeardecreased $12.4 billion or 7% to $240.5$165.3 billion at year-end 2006.2008. Approximately 44% of the decline was due to adverse market and foreign exchange movements. The MLIM Transaction added $88.7remainder reflected outflows in investment assets of $12.8 billion, 72% of which resulted from the merger of a single large insurance client, partially offset by $5.8 billion of assets to this channel. The Company’s insurance business encompasses customized investment management, specialized risk management and accounting services.inflows in advisory assets. BlackRock is one of the largest managers of insurance assets worldwide, benefitingand continues to benefit from an ongoing trendincreasing momentum toward investment outsourcing. This business is, however, subject to event risk arising from insurance company mergers, as well as client decisions to internalize asset management. In 2006, outflows resulting from such one-time events totaled $7.0 billion, which exceeded $5.9 billion of net inflows from other taxable institutions throughoutwe experienced during the year.

At year-end 2006, AUM in institutional cash management products were $174.5 billion, up 110% from December 31, 2005. New business efforts produced $9.4 billion of net inflows and the MLIM Transaction added $81.1 billion of assets at closing. BlackRock continually seeks ways to provide innovative cash management solutions to clients. In 2006, these efforts focused on helping clients identify opportunities to more profitably invest in a low rate environment, while assuming relatively little additional risk. BlackRock also focuses on providing flexible and responsive client service, which is conducted through its call center and online account management tools. Management believes that these efforts, together with competitive yields on the Company’s products, will enable BlackRock to better withstand volatility in asset flows, build its client base and increase market share over time.

The investment and risk management expertise that BlackRock brings to the management of institutional products is also available globally through separate accounts, open-end and closed-end funds, offshore funds, unit trusts and alternative investment vehicles for individual investors. The scope and scale of the Company’s retail business were substantially enhanced through MLIM’s substantial base of U.S. mutual funds and separately managed account offerings and industry-leading international mutual fund platform. As of December 31, 2005, MLIM managed $222.7 billion and $65.3 billion for U.S. and international retail investors, respectively. At December 31, 2006, the combined firm managed $352.5 billion of assets on behalf of retail and high net worth investors worldwide, including $247.6 billion for investors based in the U.S. and $104.9 billion for international individuals. Aggregate growth of $308.5 billion year-over-year includes $9.3 billion in combined net inflows during 2006. Of this total, $7.4 billion was raised from U.S. retail and high net worth clients and we closed the year with $247.6 billion under management for these investors. Net new business from international retail clients totaled $1.9 billion, driving an increase in total international retail AUM to $104.9 billion at year-end.

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Clients (continued)

Institutional (continued)

In 2008, BlackRock greatly expanded its work with central banks, government agencies and sovereign wealth funds, especially in the United States and the Middle East. Assets managed on behalf of official institutions ended the year at $168.9 billion, including $135.9 billion of advisory assets under management. Advisory assets represented almost all (98%) of the $138.1 billion of net new business with official institutions during the year, as clients sought BlackRock’s independent valuation and risk management advisory services to help navigate the deteriorating balance sheets of regulated institutions and manage the orderly liquidation of troubled portfolios.

In addition to the foregoing, BlackRock serves as a subadvisor to third party fund sponsors and directly advises a variety of funds and commingled vehicles offered to institutional investors. AUM for these clients totaled $174.8 billion at December 31, 2008, including $118.7 billion or 68% for clients or funds based in the U.S. and $56.0 billion or 32% based internationally. Products focus primarily on BlackRock’s fixed income, equity and alternative investment capabilities, which represented 36%, 30% and 29% of subadvised and institutional fund AUM at year-end. Equity and alternative markets took a heavy toll on these assets during 2008, contributing to a 23% decline due to adverse markets and a 2% decline from net outflows.

The remaining $298.9 billion of institutional assets are managed in the Company’s cash management products, which are discussed in the Product section above.

BlackRock, Inc.

Assets Under Management

(Dollar amounts in millions)

(unaudited)

12

Clients (continued)

Retail and High Net Worth

BlackRock’s investment management expertise is available to retail investors globally through separate accounts, open-end and closed-end funds, unit trusts and other collective investment vehicles. As of year-end 2008, BlackRock managed $228.1 billion on behalf of retail and high net worth investors worldwide, with 57% in equity and alternative investment products, 30% in fixed income and 13% in money market funds. The product mix differed considerably by region, with international investors holding a much greater proportion of assets in equity funds (90% vs. 50% going into 2008). Adverse markets and sharply higher investor redemption rates caused international retail AUM to fall much more significantly during the year, resulting in a meaningful shift in the client mix. Specifically, the Company started 2008 with a 62%/38% mix of AUM managed for U.S. and international investors, respectively, and ended the year with a 73%/27% mix.

As of December 31, 2008, BlackRock managed $166.8 billion of assets for U.S. retail and high net worth investors. Notwithstanding the significant challenges faced by retail distributors and investors, BlackRock was able to enhance its positioning and market share during the year. Net new business in retail totaled $11.3 billion, a 7% organic growth rate, which was partially offset by net outflows of $4.2 billion in U.S. high net worth products, principally broker-sold separately managed accounts. Importantly, BlackRock secured over 65 new product placements on broker-dealer platforms, and had 70 open-end and closed-end mutual funds with 4- or 5-star Morningstar ratings as of year-end 2008.

BlackRock has an extensive international retail platform, anchored by our flagship Luxembourg-based fund family, BlackRock Global Funds. BlackRock Global Funds are registered for sale in 37 countries and in 16 languages. As of December 31, 2008, BlackRock managed $61.3 billion on behalf of international retail investors. As referenced above, AUM were down significantly due to adverse equity markets and accelerating redemption rates. Year-over-year, international retail AUM dropped 45% or $55.6 billion due to market declines and foreign exchange translation alone.

Net inflows from international retail clients of $0.8 billion in the first half of the year were offset by $8.9 billion of outflows in the second half of the year. Outflows were particularly concentrated in Korea, where a change in taxation caused a large scale reallocation away from offshore products, and in Taiwan, where many retail investors redeemed products that included capital guarantees or other structuring elements, because of concern about the future of investment banks. The mass migration of retail investors away from mutual funds in Spain and Italy was another detrimental factor.

Despite 2008’s hostile markets, the robustness of the BlackRock brand and international retail platform ensured that the Company remained the second largest cross-border mutual fund provider internationally and one of the top net sellers in that market. In the UK, BlackRock was the top net seller in 2008. The Company benefitted from retail investor demand for balanced, absolute return and cash products during the period, with its flagship Global Allocation product dominating industry sales for most of the year.

Competition

BlackRock competes with investment management firms, mutual fund complexes, insurance companies, banks, brokerage firms and other financial institutions that offer products that are similar to, or alternatives to, those offered by BlackRock. In order to grow its business, BlackRock must be able to compete effectively for AUM. Key competitive factors include investment performance track records, investment style and discipline, client service and brand name recognition. Historically, the Company has competed principally on the basis of its long-term investment performance track record, its investment process, its risk management and analytic capabilities and the quality of its client service. BlackRock has historically grown aggregate AUM and management believes that the Company will continue to do so by focusing on strong investment performance and client service and by developing new products and new distribution capabilities. ManyCertain of the Company’s competitors, however, have greater financial or marketing resources and better brand name recognition than BlackRock, particularly in retail channels and outside the United States. These factors may place BlackRock at a competitive disadvantage and there can be no assurance that the Company’s strategies and efforts to maintain its existing AUM and to attract new business will be successful.

13

Geographic Information

Subsequent to the MLIM Transaction, BlackRock hadhas clients in over 5060 countries primarilyacross the globe, including the United States, the United Kingdom, Japan and Australia.Japan.

The following chart showstable illustrates the Company’s revenues and long livedlong-lived assets, including investments, separate account assets, in Europe of $4.3 billion,goodwill and property and equipment and other assets by region for the yearyears ended December 2008, 2007 and 2006. These amounts are aggregated on a legal entity jurisdiction basis and do not necessarily reflect in all cases, where the customer is sourced or the asset is physically located.sourced.

The Company’s revenues and long-lived assets inNorth America primarily is comprised of the United States, while Europe are primarily generated and held, respectively, inis comprised of the United Kingdom and include $4.3 billionAsia-Pacific primarily is comprised of separate account assets held by the Company’s registered life insurance subsidiary, which are held by the company on behalf of clientsJapan, Australia and are entirely offset by a corresponding separate account liability. Other primarily represents revenues and assets from the Company’s subsidiaries in Japan and Australia.Hong Kong.

Employees

At December 31, 2006,2008, BlackRock had a total of 5,1135,341 full-time employees including 447and no employees of Realty whose salaries are fully reimbursed by certain real estate funds.Metric. Of all full-time employees, 1,474 represent employees1,836 are located in offices outside the United States.

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Regulation

Virtually all aspects of BlackRock’s business are subject to various laws and regulations both in and outside the United States, some of which are summarized below. These laws and regulations are primarily intended to protect investment advisory clients, stockholders of registered and unregistered investment companies and PNC’sthe bank subsidiaries of Bank of America and PNC and their customers. Under these laws and regulations, agencies that regulate investment advisers, investment funds and bank holding companies and their subsidiaries, such as BlackRock and its subsidiaries, have broad administrative powers, including the power to limit, restrict or prohibit the regulated entity from carrying on business if it fails to comply with such laws and regulations. Possible sanctions for significant compliance failures include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment adviser and other registrations, censures and fines.

Recent market disruptions have led to numerous proposals both in and outside the United States for changes in the regulation of the financial services industry. New laws or regulations, or changes in enforcement of existing laws or regulations, could impact the scope or profitability of BlackRock’s business activities, could require BlackRock to change certain business practices and could expose BlackRock to additional costs (including compliance and tax costs) and liabilities as well as reputational harm. Regulatory changes could also lead to business disruptions, could impact the value of assets in which BlackRock has invested directly and/or on behalf of clients, and, to the extent the regulations strictly control the activities of financial services firms, could make it more difficult for BlackRock to conduct certain businesses or distinguish itself from competitors.

U.S. Regulation

Certain of BlackRock’s U.S. subsidiaries are subject to regulation, primarily at the federal level, by the Securities and Exchange Commission (the “SEC”), the Department of Labor (the “DOL”), the Board of Governors of the Federal Reserve SystemBank (the “FRB”), the Financial Industry Regulatory Authority (“FINRA”), the National Futures Association of Securities Dealers (the “NASD”“NFA”), the Commodity Futures Trading Commission (the “CFTC”) and other government agencies and regulatory bodies. Certain BlackRock U.S. subsidiaries are also subject to various anti-money laundering regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “PATRIOT Act”), the Bank Secrecy Act and regulations promulgated by the Office of Foreign Assets Control of the U.S. Treasury Department.

The Investment Advisers Act of 1940, as amended (the “Investment Advisers“Advisers Act”), imposes numerous obligations on registered investment advisers such as BlackRock, including record-keeping, requirements, operational requirements,and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. The Investment Company Act of 1940, as amended (the “Investment Company Act”), imposes similarstringent governance, operational, disclosure and related obligations on registered investment companies as well as detailed operational requirementsand on investment advisers to those companies and distributors, such as BlackRock. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act and the Investment Company Act, ranging from fines and censure to termination of an investment adviser’s registration. Investment advisers also are subject to certain state securities laws and regulations. Non-compliance with certain provisions of the Advisers Act, the Investment Company Act or other federal and state securities laws and regulations could result in investigations, sanctions and reputational damage.

15

Regulation (continued)

U.S. Regulation (continued)

BlackRock’s trading and investment activities for client accounts are regulated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as the rules of various U.S. and non-U.S. securities exchanges and self-regulatory organizations, including laws governing trading on inside information, market manipulation and a broad number of technical trading requirements (e.g., volume limitations, reporting obligations) and market regulation policies in the United States and globally. In addition, BlackRock manages a variety of investment funds listed on U.S. and non-U.S. exchanges, which are subject to the rules of such exchanges. Violation of these laws and regulations could result in recent years,restrictions on the SECCompany’s activities and in damage to its reputation. BlackRock manages a variety of private pools of capital, including hedge funds, funds of hedge funds, private equity funds, real estate funds, collective investment trusts, managed futures funds and hybrid funds. Congress, regulators, tax authorities and others continue to explore, on their own and in response to demands from the investment community, increased regulation related to private pools of capital, including changes with respect to investor eligibility, certain limitations on trading activities, the scope of anti-fraud protections and a variety of other governmental agencies have been investigatingmatters. BlackRock may be adversely affected by new legislation or rule-making or changes in the mutual fund industry. During this time, the SEC adoptedinterpretation or enforcement of existing rules and regulations imposed by various rules, the effect of which has been to further regulate the mutual fund industry and has imposed onregulators.

Certain BlackRock additional compliance obligations and costs for fulfilling such obligations.

BlackRock’s subsidiaries are subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and to regulations promulgated thereunder by the DOL, insofar as they act as a “fiduciary” under ERISA with respect to benefit plan clients. ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients and provide monetary penaltiesimpose excise taxes for violations of these prohibitions.prohibitions, mandate certain required periodic reporting and disclosures and require BlackRock to carry bonds ensuring against losses caused by fraud or dishonesty. ERISA also imposes additional compliance, reporting and operational requirements on BlackRock that otherwise are not applicable to non-benefit plan clients.

BlackRock has two subsidiaries that are registered as commodity pool operators and commodity trading advisers, and one additional subsidiary registered as only a commodity pool operator, with the CFTC. All three of these subsidiaries are members of the National Futures Association (the “NFA”).NFA. The CFTC and NFA each administer a comparable regulatory system covering futures contracts and various other financial instruments in which certain BlackRock clients may invest. OneTwo of BlackRock’s other subsidiaries, BlackRock Investments, Inc. (“BII”) and BlackRock Capital Markets, LLC (“BRCM”), isare registered with the SEC as a broker-dealerbroker-dealers and is a member-firmare member-firms of the NASD.FINRA. BII’s NASDFINRA membership agreement limits its permitted activities to the sale of investment company securities, certain private placements of securities, and certain investment banking and financial consulting activities. BRCM’s FINRA membership agreement limits its permitted activities to retailing corporate debt and government securities, arranging for transactions in listed securities by exchange members and commission sharing arrangements with third party brokers. Although BII hasand BRCM have limited business activities, it isthey are subject to the customer dealing, reporting and other requirements of the NASD,FINRA, as well as the net capital and other requirements of the SEC. As a result of the MLIM Transaction, BII is in the process of filingalso an applicationapproved person with the New York Stock Exchange (“NYSE”) to become an approved person,, which would subject BII’ssubjects its operations to NYSE regulation.

- 11 -16

Regulation (continued)

Non-U.S. Regulation

BlackRock’s international operations are subject to the laws of non-U.S. jurisdictions and non-U.S. regulatory agencies or bodies. As BlackRock has expanded its international business, a number of its subsidiaries and international operations have become subject to regulatory systems comparable to those affecting its operations in the United States.

The Financial Services Authority (the “FSA”) regulates BlackRock’s subsidiaries in the United Kingdom. Authorization by the FSA is required to conduct any financial services related business in the United Kingdom pursuant to the Financial Services and Markets Act 2000. The FSA’s rules govern a firm’s capital, senior management arrangements, conduct of business, interaction with clients and systems and controls. Breaches of these rules may result in a wide range of disciplinary actions against the Company’s U.K.-regulated subsidiaries. In addition, these subsidiaries and other European subsidiaries or branches must comply with the pan-European regime established by the Investment Services Directive which regulates the provision of investment services throughout the European Economic Area.

In Japan, certain of BlackRock subsidiaries are subject to the Law Concerning the Regulation of Investment Advisory Business Pertaining to Securities (“IABL”) and the Law Concerning Investment Trusts and Investment Corporations (“ITICL”). These laws are administered and enforced by the Japanese Financial Services Agency (the “JFSA”), which establishes standards for compliance with these laws including capital adequacy and financial soundness requirements, customer protection requirements and conduct of business rules. The JFSA is empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease and desist orders or the suspension or revocation of the registration or license granted under the IABL and ITICL.

BlackRock’s Australian-based subsidiary is subject to various Australian federal and state laws and is regulated primarily by the Australian Securities and Investments Commission (the “ASIC”). The ASIC regulates companies and financial services in Australia and is responsible for promoting investor, creditor and consumer protection. Failure to comply with applicable law and regulations could result in the cancellation, suspension or variation of BlackRock’s license in Australia.

There are parallel legal and regulatory arrangements in force in many other non-U.S. jurisdictions where BlackRock’s subsidiaries are authorized to conduct business, including Taiwan, Hong Kong, Singapore, Luxembourg and The Netherlands.

U.S. Banking Regulation

Each of Bank of America and PNC is a bank holding company and a “financial holding company” regulated by the FRB under the Bank Holding Company Act. Since PNC’sAct of 1956, as amended (the “BHC Act”). Because the ownership interestinterests of each of Bank of America and PNC in BlackRock exceeds 25%, BlackRock is deemed to be a non-bank subsidiary of Bank of America and PNC and is therefore subject to the supervision and regulation of the FRB and to most banking laws, regulations and orders that are applicableapply to PNCBank of America and consequently to the supervision, regulation, and examination of the FRB. PNC and its subsidiaries are also subject to the jurisdiction of various state and federal “functional” regulators.PNC. The supervision and regulation of Bank of America, PNC and itstheir subsidiaries under applicable banking laws is intended primarily for the protection of PNC’stheir respective banking subsidiaries, their depositors, the deposit insurance funds of the Federal Deposit Insurance Corporation, (“FDIC”), and the banking system as a whole, rather than for the protection of stockholders, creditors or creditorsclients of Bank of America, PNC or BlackRock. Bank of America’s and PNC’s relationships and good standing with itstheir regulators are important to the conduct of BlackRock’s business. BlackRock may also be subject to foreign banking laws and supervision that could affect its business.

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Regulation (continued)

U.S. Banking Regulation (continued)

BlackRock generally may conduct only activities that are authorized for a “financial"financial holding company”company" under the Bank Holding CompanyBHC Act. Subject to applicable law and regulatory interpretations, investmentInvestment management is one suchan authorized activity.activity, but must be conducted within applicable regulatory requirements, which in some cases are more restrictive than those BlackRock faces under applicable securities laws. BlackRock may also invest in investment companies and private investment funds to which it provides advisory, administrative or other services, to the extent consistent with applicable law and regulatory interpretations. The FRB has broad powers to approve, deny or refuse to act upon applications or notices for BlackRock to conduct new activities, acquire or divest businesses or assets, or reconfigure existing operations. There are limits on the ability of bank subsidiaries of Bank of America and PNC to extend credit to or conduct other transactions with BlackRock. Bank of America, PNC and itstheir subsidiaries are also subject to examination by various banking regulators, which results in non-public examination reports and ratings that canmay adversely impact the conduct and growth of BlackRock’s businesses.

The FRB has broad enforcement authority over BlackRock, including the power to prohibit BlackRock from conducting any activity that, in the FRB’s opinion, is unauthorized or constitutes an unsafe or unsound practice in conducting its business, and toBlackRock’s business. The FRB may also impose substantial fines and other penalties.penalties for violations of applicable banking laws, regulations and orders.

Any failure of either Bank of America or PNC to maintain its status as a financial holding company could result in the imposition of substantial limitations on certain BlackRock activities and its growth. Such a change of status could be caused by any failure of PNC’sone of Bank of America’s or PNC's bank subsidiaries to remain “well"well capitalized,”" by anany examination downgrade of PNCone of Bank of America’s or itsPNC’s bank subsidiaries, or by any failure of PNC’sone of Bank of America’s or PNC's bank subsidiaries to maintain a satisfactory rating under the Community Reinvestment Act.

OtherNon-U.S. Regulation

BlackRock’s international operations are subject to the laws and regulations of non-U.S. jurisdictions and non-U.S. regulatory agencies and bodies. As BlackRock continues to expand its international business, a number of its subsidiaries and international operations have become subject to regulatory systems comparable to those affecting its operations in the United States.

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Regulation (continued)

Non-U.S. Regulation (continued)

The Financial Services Authority (the “FSA”) regulates BlackRock’s subsidiaries in the United Kingdom. Authorization by the FSA is required to conduct any financial services related business in the United Kingdom pursuant to the Financial Services and Markets Act 2000. The FSA’s rules govern a firm’s capital resources requirements, senior management arrangements, conduct of business, interaction with clients and systems and controls. Breaches of these rules may result in a wide range of disciplinary actions against the Company’s U.K.-regulated subsidiaries. In addition, these subsidiaries, and other European subsidiaries and branches, must comply with the pan-European regime established by the Markets in Financial Instruments Directive (“MiFID”), which came into effect on November 1, 2007 and regulates the provision of investment services throughout the European Economic Area, as well as the Capital Requirements Directive, which delineates regulatory capital requirements. MiFID replaced and expanded upon the Investment Services Directive (the “ISD”), which had been in place since 1995. MiFID sets out more detailed requirements governing the organization and conduct of business of investment firms and regulated markets. It also includes new pre- and post-trade transparency requirements for equity markets and more extensive transaction reporting requirements.

MiFID seeks to further harmonize the provision of financial services across Europe by implementing requirements for key areas such as senior management systems and controls. MiFID also attempts to clarify jurisdictional uncertainties that arose under the ISD to facilitate cross border services. The United Kingdom has adopted the MiFID rules into national legislation. However, the introduction of further new regulations that will apply to BlackRock’s European activities remains possible.

In addition to the FSA, the activities of certain BlackRock subsidiaries and investment funds are regulated by, among other regulators, the Irish Financial Regulator, the Cayman Islands Monetary Authority, the Commission de Surveillance du Secteur Financier in Luxembourg and the Financial Services Commission in Jersey. Regulators in these jurisdictions have authority with respect to financial services including, among other things, the authority to grant or cancel required licenses or registrations. In addition, these regulators may also subject certain BlackRock subsidiaries to net capital requirements.

In Japan, certain BlackRock subsidiaries are subject to the Financial Instruments and Exchange Law (the “FIEL”) and the Law Concerning Investment Trusts and Investment Corporations. These laws are administered and enforced by the Japanese Financial Services Agency (the “JFSA”), which establishes standards for compliance, including capital adequacy and financial soundness requirements, customer protection requirements and conduct of business rules. The JFSA is empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease and desist orders or the suspension or revocation of registrations and licenses granted under the FIEL.

BlackRock’s Australian-based subsidiary is subject to various Australian federal and state laws and is regulated primarily by the USA PATRIOT Act of 2001, which containsAustralian Securities and Investments Commission (the “ASIC”) and the International Money Laundering AbatementAustralian Prudential Regulatory Authority (the “APRA”). The ASIC regulates companies and Anti-Terrorist Financing Act of 2001. That Act contains anti-money laundering measures affecting insured depository institutions, broker-dealersfinancial services in Australia and certain financial institutions.is responsible for promoting investor, creditor and consumer protection. The Act requires U.S. financial institutions to adopt policies and procedures to combat money laundering and grantsAPRA is the Secretaryprudential regulator of the Treasury broad authorityAustralian financial services industry and oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies and most members of the superannuation (pension) industry. Failure to establishcomply with applicable law and regulations could result in the cancellation, suspension or variation of this subsidiary’s license in Australia.

There are parallel legal and to impose requirements and restrictions on financial institutions’ operations. Similarly,regulatory arrangements in force in many ofother non-U.S. jurisdictions where BlackRock’s subsidiaries outside the United States are subjectauthorized to comparable rulesconduct business, including Hong Kong, India, South Korea, Singapore, Taiwan and regulations with respect to anti-money laundering. BlackRock has established policies and procedures designed to ensure compliance with all applicable anti-money laundering laws and regulations.The Netherlands.

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Regulation (continued)

Changes in Regulation

Additional legislation, changes in rules promulgated by our regulators and self-regulatory organizations, or changes in the interpretation or enforcement of existing laws and rules may directly affect the method of operation and profitability of BlackRock. The profitability of BlackRock also could be affected by rules and regulations that impact the business and financial communities in general, including changes to the laws governing taxation, antitrust regulation and electronic commerce.

The rules governing the regulation of financial institutions and their holding companies and subsidiaries are very detailed and technical. Accordingly, the above discussion is general in nature and does not purport to be complete.

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Available Information

BlackRock files annual, quarterly and current reports, proxy statements and all amendments to these reports and other information with the SEC. BlackRock makes available free-of–charge, on or through its website athttp://www.blackrock.com, the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reports,filings, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The Company also makes available on its website the charters for the Audit Committee, Management Development and Compensation Committee and Nominating and Governance Committee of the Board of Directors, its Code of Business Conduct and Ethics, its Code of Ethics for Chief Executive and Senior Financial Officers and its Corporate Governance Guidelines. Further, BlackRock will provide, without charge, upon written request, a copy of the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reportsfilings as well as the committee charters, its Code of Business Conduct and Ethics, its Code of Ethics for Chief Executive and Senior Financial Officers and its Corporate Governance Guidelines. Requests for copies should be addressed to Investor Relations, BlackRock, Inc., 4055 East 52nd Street, New York, New York 10022.10055. Investors may read and copy any document BlackRock files at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Reports, proxy statements and other information regarding issuers that file electronically with the SEC, including BlackRock’s filings, are also available to the public from the SEC’s website athttp://www.sec.gov.

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As a leading investment management firm, risk is an inherent part of BlackRock’s business. Global markets, by their nature, are prone to uncertainty and subject participants to a variety of risks. While BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managingidentify, measure, monitor, manage and analyzinganalyze market and operating risks, BlackRock’s business, financial condition, operating results or non-operating results of operations could be materially adversely affected, however, by any of the following risks.

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Risks Related to BlackRock’s Business and Competition

Changes in the securitiesvalue levels of the capital markets or other asset classes could lead to a decline in revenues.revenues and earnings.

BlackRock’s investment management revenues are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns realizedearned on AUM. A declineMovements in theequity market prices, of stocksinterest rates, foreign exchange rates, or bonds within or outside the United Statesall three could cause revenues to decline because ofthe following, which would result in lower investment managementadvisory and administration fees by:or earnings:

Poor investment performance could lead to the loss of clients and a decline in revenues.revenues and earnings.

The Company’s management believes that investment performance is one of the most important factors for the growth and retention of AUM. Poor investment performance relative to theapplicable portfolio benchmarks andor to competitors could reduce revenues and growth because:cause earnings to decline as a result of:

BlackRock may elect to invest in or provide other support to its products from time to time.

BlackRock may, at its option, from time to time support investment products through seed investments, co-investments or follow-on investments, warehouse lending facilities or other forms of capital or credit support. See, for example, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Such investments or support utilize capital that would otherwise be available for other corporate purposes. Losses on such investments or support, or failure to have or devote sufficient capital to support products, could have an adverse impact on revenues and earnings.

Changes in the value levels of the capital markets or other asset classes could lead to a decline in the value of investments that BlackRock makesowns.

At December 31, 2008, BlackRock held approximately $1.4 billion of investments that are reflected on its statement of financial condition. Approximately $0.7 billion of this amount is the result of consolidation of certain sponsored investment funds. BlackRock’s economic interest in these investments is primarily the result of seed and co-investments in its sponsored investment funds. A decline in the prices of stocks or bonds, or the value of real estate or other alternative investments within or outside the United States could lower the value of these investments and result in a decline of non-operating income and increased volatility to earnings.

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Continued capital losses on investments could have adverse income tax consequences.

The Company may generate realized and unrealized capital losses on seed investments and co-investments. Realized capital losses may be carried back three years and carried forward five years and offset against realized capital gains for federal income tax purposes. The Company has unrealized capital losses for which a deferred tax asset has been established. In the event such unrealized losses are realized, the Company may not be able to offset such losses within the carryback or carryforward period or from future realized capital gains, in which case the deferred tax asset will not be utilized. The failure to utilize the deferred tax asset could materially increase BlackRock’s income tax expense.

The soundness of other financial institutions could adversely affect BlackRock.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. BlackRock, and the products and accounts that it manages, have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, as well as investmentsand other institutional clients. Many of these transactions expose BlackRock or the funds and accounts that it manages to credit risk in the event of default of its counterparty or client. There is no assurance that any such losses would not materially and adversely impact BlackRock’s revenues and earnings.

The failure or negative performance of products of other securities, may decline.financial institutions could lead to reduced AUM in similar products of BlackRock without regard to the performance of BlackRock’s products.

The failure or negative performance of products of other financial institutions could lead to a loss of confidence in similar products of BlackRock without regard to the performance of BlackRock’s products. Such a negative contagion could lead to withdrawals, redemptions and liquidity issues in such products and have a material adverse impact on our AUM, revenues and earnings.

Loss of key employees could lead to the loss of clients and a decline in revenues.

The ability to attract and retain quality personnel has contributed significantly to BlackRock’s growth and success and is important to attracting and retaining clients. The market for qualified fund managers, investment analysts, financial advisers and other professionals is competitive. Key employees may depart because of issues relating to the difficulties in integrating the MLIM Business. There can be no assurance that the Company will be successful in its efforts to recruit and retain the required personnel. Loss of a significant number of key personnel could have an adverse effect on the Company.

BlackRock’s investment advisory contracts may be terminated or may not be renewed by clients.clients and the liquidation of certain funds may be accelerated at the option of investors.

Separate account clients may terminate their investment management contracts with BlackRock or withdraw funds on short notice. The Company has, from time to time, lost separate accounts and could, in the future, lose accounts or significant AUM under various circumstances such as adverse market conditions or poor performance.

Additionally, BlackRock manages its U.S. mutual funds pursuant to management contracts with the funds that must be renewed and approved by the funds’ boards of directors annually. A majority of the directors of each mutual fund are independent from BlackRock. Consequently, there can be no assurance that the board of directors of each fund thatmanaged by the Company manages will approve the fund’s management contract each year, or will not condition its approval on the terms of the management contract being revised in a way that is adverse to the Company.

Further, the governing agreements of many of the Company’s private investment funds generally provide that, subject to certain conditions, investors in those funds, and in some cases independent directors of those funds, may remove the investment adviser, general partner or the equivalent of the fund or liquidate the fund without cause by a simple majority vote, resulting in a reduction in the management or performance fees as well as the total carried interest BlackRock could earn.

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Risks Related to BlackRock’s Business and Competition (continued)

Failure to comply with client contractual requirements and/or guidelines could result in damage awards against BlackRock and loss of revenues due to client terminations.

When clients retain BlackRock to manage assets or provide products or services on their behalf, they specify guidelines or contractual requirements that the Company is required to observe in the provision of its services. A failure to comply with these guidelines or contractual requirements could result in damage to BlackRock’s reputation or to thein its clients seeking to recover losses, withdrawing their AUM or cancelling risk management advisory assignments, or terminating their contracts, any of which could cause the Company’s revenues and earnings or stock price to decline.

Competitive fee pressures could reduce revenues and profit margins.

The investment management business is highly competitive and has relatively low barriers to entry. To the extent that the Company is forced to compete on the basis of price, it may not be able to maintain its current fee structure. Fee reductions on existing or future new business could cause revenues and profit margins to decline.

Performance fees may increase earnings volatility, which could decrease BlackRock’s stock price.

A portion of the Company’s revenues areis derived from performance fees on investment and risk management advisory assignments. In most cases, performance fees are based on relative or absolute investment returns, although in some cases they are based on achieving specific service standards. Generally, the Company is entitled to performance fees only if the returns on the related portfolios exceed agreed-upon periodic or cumulative return targets. If these targets are not exceeded, performance fees for that period will not be earned and, if targets are based on cumulative returns, the Company may not earn performance fees in future periods. Performance fees will vary from period to period in relation to volatility in investment returns and the timing of revenue recognition, causing earnings to be more volatile than if assets were not managed on a performance fee basis.volatile. The volatility in earnings may decrease BlackRock’s stock price. Performance fees represented $242.3$177 million, or 11.5%3%, of total revenue for the year ended December 31, 2006.2008.

Additional acquisitions may decrease earnings and harm the Company’s competitive position.

BlackRock employs a variety of strategies intended to enhance earnings and expand product offerings in order to improve profit margins. These strategies have included smaller-sized lift-outs of investment teams and acquisitions of investment management businesses, such as the MLIM Transaction.and Quellos Transactions. In general, these strategies may not be effective and failure to successfully develop and implement these strategies may decrease earnings and harm the Company’s competitive position in the investment management industry. In the event BlackRock pursues additional sizeable acquisitions, it may not be able to find suitable businesses to acquire at acceptable prices and it may not be able to successfully integrate or realize the intended benefits from these acquisitions.

Risks Related to BlackRock’s Operations

Failure to maintain adequate infrastructure could impede the ability to support businessBlackRock’s productivity and growth.

BlackRock has experienced significant growth inThe Company’s infrastructure, including its business activities as a result of the MLIM Transaction and other efforts. The Company is in the process of building out its infrastructure to integrate the MLIM Business and to support continued growth, including technological capacity, data centers, backup facilities and sufficientoffice space, for expanding staff levels.is vital to the competitiveness of its business. The failure to maintain an adequate infrastructure commensurate with the size and scope of its business, including any expansion, could impede the Company’s productivity and growth, which could cause the Company’s earnings or stock price to decline.

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Risks Related to BlackRock’s Operations (continued)

Expansion intoOperating in international markets increases BlackRock’s operational, regulatory and other risks.

BlackRock has dramatically increased its international business activities as a result of the MLIM Transaction and other efforts. As a result of such expansion,BlackRock’s extensive international business activities, the Company faces increased operational, regulatory, reputationreputational and foreign exchange rate risks. The failure of the Company’s systems of internal control to properly mitigate such additional risks, or of its operating infrastructure to support such international expansion,activities, could result in operational failures and regulatory fines or sanctions, which could cause the Company’s earnings or stock price to decline.

Failure to maintain a technological advantage could lead to a loss of clients and a decline in revenues.

A key element to BlackRock’s continued success is the ability to maintain a technological advantage both in terms of operational efficiency and in providing the sophisticated risk analytics incorporated into BlackRock’s operating systems that support investment advisory andBlackRock Solutions clients. Moreover, the Company’s technological and software advantage is dependent on a number of third parties who provide various types of data. The failure of these third parties to provide such data or software could result in operational difficulties and adversely impact BlackRock’s ability to provide services to its investment advisory andBlackRock Solutions clients. There can be no assurance that the Company will be able to maintain this technological advantage or be able to effectively protect and enforce its intellectual property rights in these systems and processes.

Failure to implement effective information security policies, procedures and capabilities could disrupt operations and cause financial losses that could result in a decrease in BlackRock’s earnings or stock price.

BlackRock is dependent on the effectiveness of its information security policies, procedures and capabilities to protect its computer and telecommunications systems and the data that reside on or are transmitted through them. An externally caused information security incident, such as a hacker attack or a virus or worm, or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations or cause disclosure or modification of sensitive or confidential information and could result in material financial loss, regulatory actions, breach of client contracts, reputational harm or legal liability, which, in turn, could cause a decline in the Company’s earnings or stock price.

The continuing integration of the MLIMQuellos business creates numerous risks and uncertainties that could adversely affect profitability.

The MLIM BusinessQuellos business and personnel are in the process of being integrated with BlackRock’s previously existing business and personnel. These transition activities are complex and the Company may encounter unexpected difficulties or incur unexpected costs including:

As a result, the Company may not be able to realize the expected revenue growth and other benefits that it hopes to achieve from the MLIM Transaction.transaction. In addition, BlackRock may be required to spend additional time or money on integration that would otherwise be spent on the development and expansion of its business and services.

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Risks Related to the Recently Closed MLIM TransactionRelationships with Bank of America, Merrill Lynch and PNC

Merrill Lynch is aan important distributor of BlackRock’s products, and the Company is therefore subject to risks associated with the business of Merrill Lynch.

Pursuant toUnder a global distribution agreement entered into with Merrill Lynch, in connection with the MLIM Transaction, Merrill Lynch provides distribution, portfolio administration and servicing for certain BlackRock asset management products and services through its various distribution channels. The Company may not be successful in distributing products through Merrill Lynch or in distributing its products and services through other third party distributors, and the transfer of the MLIM Business to BlackRock might have an adverse effect on Merrill Lynch’s ability to distribute, and on the costs of distributing, the Company’s existing products and services.distributors. If BlackRock is unable to distribute its products and services successfully or if it experiences an increase in distribution-related costs, BlackRock’s business, results of operations or financial condition may be adversely affected.

Loss of market share with Merrill Lynch’s Global Private Client Group could harm operating results.

A significant portion of theBlackRock’s revenue of the MLIM business has historically come from AUM generated by Merrill Lynch’s Global Private Client Group (“GPC”). BlackRock’s ability to maintain a strong relationship with GPC, or any successor group at Bank of America, is material to the Company’s future performance. If one of the Company’s competitors gains significant additional market share within the GPC retail channel at the expense of BlackRock, then BlackRock’s business, results of operations or financial condition may be negatively impacted.

For so long as Bank of America/Merrill Lynch and PNC maintain certain levels of stock ownership, Bank of America/Merrill Lynch and PNC will vote as stockholders in accordance with the recommendation of BlackRock’s Board of Directors, and certain actions will require special board approval or the prior approval of Bank of America/Merrill Lynch and PNC.

As a result of the stockholder agreements entered into with PNC and Merrill Lynch, in connection with the MLIM Transaction, together with the Company’s ownership structure, stockholders may have no effective power to influence corporate actions. As of December 31, 2006,At February 27, 2009, Merrill Lynch owned approximately 45%4.9% of BlackRock’s issued and outstandingvoting common stock and approximately 49.3%47.4% of its total capital stock on a fully-diluted basis, and PNC owned approximately 34%46.5% of BlackRock’s outstanding voting common stock and approximately 31.5% of its total capital stock.stock on a fully-diluted basis.

Merrill Lynch and PNC have agreed to vote all of their shares in accordance with the recommendation of BlackRock’s Board of Directors to the extent consistent with the provisions of the Merrill Lynch stockholder agreement and the PNC implementation and stockholder agreement. As a consequence, matters submitted to a stockholder vote that require a majority or a plurality of votes for approval, including elections of directors, will be approved or disapproved solely in accordance with the determinations of the BlackRock Board of Directors, so long as the shares held by Merrill Lynch and PNC constitute a majority of the outstanding shares. This arrangement will havehas the effect of concentrating control over BlackRock in its Board of Directors, whether or not stockholders agree with any particular determination of the Board.

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Legal and Regulatory Risks

BlackRock is subject to extensive regulation in the United States and internationally.

BlackRock’s business is subject to extensive regulation in the United States and around the world. See the discussion under the heading “Business -– Regulation.” Violation of applicable laws or regulations could result in fines, temporary or permanent prohibition of the engagement in certain activities, reputational harm, suspensions of personnel or revocation of their licenses, suspension or termination of investment adviser or broker-dealer registrations, or other sanctions, which could cause the Company’s earnings or stock price to decline. Additionally, BlackRock’s business

BlackRock may be adversely impacted by legal and regulatory changes in the United States and legislative initiatives imposed by various U.S.internationally.

Recent market disruptions have led to numerous proposals in the United States and non-U.S. regulatoryinternationally for changes in the regulation of the financial services industry. New laws or regulations, or changes in enforcement of existing laws or regulations, could impact the scope or profitability of BlackRock’s business activities, could require BlackRock to change certain business practices and exchange authorities,could expose BlackRock to additional costs (including compliance and industry participants that continuetax costs) as well as reputational harm. Regulatory changes could also lead to reviewbusiness disruptions, could impact the value of assets in which BlackRock has invested directly and in many cases, adopt changeson behalf of clients, and, to their established rules and policies.

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Legal and Regulatory Risks (continued)the extent the regulations strictly control the activities of financial services firms, could make it more difficult for BlackRock to conduct certain businesses or to distinguish itself from competitors.

Failure to comply with the Investment Advisers Act and the Investment Company Act and related regulations could result in substantial harm to BlackRock’s reputation and results of operations.

Certain of BlackRock’sBlackRock subsidiaries are registered with the SEC under the Investment Advisers Act and BlackRock’s U.S. mutual funds are registered with the SEC under the Investment Company Act. The Investment Advisers Act imposes numerous obligations and fiduciary duties on registered investment advisers, including record-keeping, operating and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. The Investment Company Act imposes similar obligations, as well as additional detailed operational requirements, on investment advisers to registered investment companies. The failure of any of BlackRock’s subsidiaries to comply with the Investment Advisers Act or the Investment Company Act could cause the SEC to institute proceedings and impose sanctions for violations of either of these acts, including censure, termination of an investment adviser’s registration or prohibition to serve as adviser to SEC-registered funds, and could lead to litigation by investors in those funds or harm to the Company’s reputation, any of which could cause its earnings or stock price to decline.

Failure to comply with ERISA regulations could result in penalties and cause the Company’s earnings or stock price to decline.

BlackRock’s asset managementCertain BlackRock subsidiaries are subject to ERISA regulations and to regulations promulgated thereunder, insofar as they act as a “fiduciary” under ERISA with respect to benefit plan clients. ERISA and applicable provisions of the Internal Revenue Code impose duties on persons who are fiduciaries under ERISA, prohibit specified transactions involving ERISA plan clients and provide monetary penalties for violations of these prohibitions. The failure of any of BlackRock’s subsidiaries to comply with these requirements could result in significant penalties that could reduce the Company’s earnings or cause its stock price to decline.

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BlackRock is subject to banking regulations that may limit its business activities.

Since PNC’sBecause the total equity ownership interest of each of Bank of America and PNC in BlackRock exceeds 25%, BlackRock is deemed to be a non-bank subsidiary of each of Bank of America and PNC, awhich are both financial holding company, which subjectscompanies under the Bank Holding Company Act of 1956, as amended. As a non-bank subsidiary of Bank of America and PNC, BlackRock is subject to general banking regulations that limitregulation, including the supervision and regulation of the FRB. Such banking regulation limits the activities and the types of businesses that BlackRock may conduct. The FRB has broad enforcement authority over BlackRock, including the power to prohibit BlackRock from conducting any activity that, in which it may engage. Banking regulationsthe FRB’s opinion, is unauthorized or constitutes an unsafe or unsound practice in conducting BlackRock’s business, and to impose substantial fines and other penalties for violations. Any failure of either Bank of America or PNC to maintain its status as a financial holding company could result in substantial limitations on certain BlackRock activities and its growth. In addition, being subject to banking regulation may put BlackRock at a competitive disadvantage because most of its competitors are not subject to these limitations. As

Failure to comply with laws and regulations in the United Kingdom, the European Union, Japan, Australia and other non-U.S. jurisdictions in which BlackRock operates could result in substantial harm to BlackRock’s reputation and results of operations.

The Financial Services Authority (the “FSA”) regulates BlackRock’s subsidiaries in the United Kingdom. Authorization by the FSA is required to conduct any financial services-related business in the United Kingdom under the Financial Services and Markets Act 2000. The FSA’s rules govern a non-bankfirm’s capital resources requirements, senior management arrangements, conduct of business, interaction with clients and systems and controls. Breaches of these rules may result in a wide range of disciplinary actions against the Company’s U.K.-regulated subsidiaries.

In addition, these subsidiaries, and other European subsidiaries or branches, must comply with the pan-European regime established by the Markets in Financial Instruments Directive, which regulates the provision of investment services throughout the European Economic Area, as well as the Capital Requirements Directive, which delineates regulatory capital requirements.

In Japan, certain BlackRock subsidiaries are subject to the Financial Instruments and Exchange Law (the “FIEL”) and the Law Concerning Investment Trusts and Investment Corporations. These laws are administered and enforced by the Japanese Financial Services Agency (the “JFSA”), which establishes standards for compliance, including capital adequacy and financial soundness requirements, customer protection requirements and conduct of business rules. The JFSA is empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease and desist orders or the suspension or revocation of registrations and licenses granted under the FIEL.

BlackRock’s Australian-based subsidiary of PNC, BlackRock is subject to various Australian federal and state laws and is regulated primarily by the supervision, regulationAustralian Securities and examinationInvestments Commission (the “ASIC”) and the Australian Prudential Regulatory Authority. The ASIC regulates companies and financial services in Australia and is responsible for promoting investor, creditor and consumer protection. Failure to comply with applicable law and regulations could result in the cancellation, suspension or variation of this subsidiary’s license in Australia.

There are parallel legal and regulatory arrangements in force in many other non-U.S. jurisdictions where BlackRock’s subsidiaries conduct business or where the FRB. The Company is also subject to the broad enforcement authority of the FRB,funds and products it manages are organized, including the FRB’s powerCayman Islands, Hong Kong, India, Ireland, Jersey, Luxembourg, South Korea, Singapore, Taiwan and The Netherlands. Failure to prohibit BlackRock from engagingcomply with laws and regulations in any activity that,of these jurisdictions could result in the FRB’s opinion, constitutes an unsafe or unsound practice in conducting the Company’s business. The FRB also may impose substantial finesharm to BlackRock’s reputation and other penalties for violationsresults of applicable banking regulations.operation.

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Legal proceedings could adversely affect operating results and financial condition for a particular period.

Many aspects of BlackRock’s business involve substantial risks of legal liability. The Company including a numberand certain of the legal entities acquired in the MLIM Transaction, hasits subsidiaries have been named as a defendantdefendants in various legal actions, including arbitrations, class actions and other litigation arising in connection with BlackRock’s activities. From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and regulatory authorities in connection with certain industry-wide or other investigations or proceedings. Additionally, certain of the investment funds that the Company manages are subject to lawsuits, any of which could potentially harm the investment returns of the applicable fund or result in the Company being liable to the funds for any resulting damages. While Merrill Lynch has agreed to indemnify the Company for certain of the pre-closing liabilities related to legal proceedings acquired in the MLIM Transaction, entities that BlackRock now owns may be named as defendants in these matters and the Company’s reputation may be negatively impacted. Liability for legal actions for which no indemnification is available could reduce earnings and cash flows and cause BlackRock’s stock price to decline.

The Company has no unresolved comments from the SEC staff relating to BlackRock’s periodic or current reports filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).1934.

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BlackRock’s principal office, which is leased, is located at 40 East 52nd Street, New York, New York. BlackRock leases additional office space in New York City at 55 East 52nd Street and throughout the world, including in Boston, Chicago, Edinburgh, Florham Park (New Jersey), Hong Kong, London, Melbourne, Munich, PrincetonPlainsboro (New Jersey), San Francisco, Seattle, Singapore, Melbourne and Tokyo. The Company also owns an 84,500 square foot office building in Wilmington (Delaware).

From time to time, BlackRock has receivedreceives subpoenas or other requests for information from various U.S. federal, and state governmental and regulatory authorities and various information requests from the SEC in connection with certain industry-wide or other investigations of U.S. mutual fund matters. BlackRockor proceedings. It is continuingBlackRock’s policy to fully cooperate fully in these matters. From time to time, BlackRock is also subject to other regulatory inquiries and proceedings.

with such inquiries. The Company including a numberand certain of the legal entities acquired in the MLIM Transaction, hasits subsidiaries have been named as a defendantdefendants in various legal actions, including arbitrations class actions, and other litigation and regulatory proceedings arising in connection with BlackRock’s activities. Additionally, certain of the investment funds that the Company manages are subject to lawsuits, any of which could potentially harm the investment returns of the applicable fund or result in the Company being liable to the funds for any resulting damages. While Merrill Lynch agreed to indemnify the Company for certain of the pre-closing liabilities related to legal and regulatory proceedings acquired in the MLIM Transaction, entities that BlackRock now owns may be named as defendants in these matters and the Company’s reputation may be negatively impacted.

Management, after consultation with legal counsel, currently does not currently anticipate that the aggregate liability, if any, arising out of such regulatory matters or lawsuits will have a material adverse effect on BlackRock’s earnings, financial position, or cash flows although, at the present time, management is not in a position to determine whether any such pending or threatened matters will have a material adverse effect on BlackRock’s results of operations in any future reporting period.

No matters were submitted to a vote of BlackRock’s security holders during the fourth quarter of the year ended December 31, 2006.2008.

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Part II

BlackRock’s common stock is listed on the NYSE and is traded under the symbol “BLK.”“BLK”. At the close of business on January 31, 2007,2009, there were 694504 common stockholders of record. Common stockholders include institutional or omnibus accounts that hold common stock for multiple underlying investors.

The following table sets forth for the periods indicated the high and low reported sale prices, period-end closing priceprices for the common stock and dividends paiddeclared per share for the common stock as reported on the NYSE:

BlackRock’s closing common stock price as of March 9, 2007February 27, 2009 was $158.62.$96.81.

Dividends

The Board of Directors has adopted a dividend policy establishing a targeted payout ratio of 40% of historical net income and reviews the dividend policy at least annually, subject in all cases to the Board of Directors’ exercise of its fiduciary duty to the Company. On February 27, 2007,26, 2009, the Board of Directors approved an increase of BlackRock’s quarterly dividend to $0.67of $0.78 to be paid on March 23, 20072009 to stockholders of record on March 7, 2007.9, 2009.

Merrill Lynch and its affiliates asand PNC and its affiliates receive dividends on the sole holders of BlackRock’s series A non-voting participating preferred stock receive dividends on the preferred stockthat they hold equivalent to the dividends received by common stockholders and may elect to receive such dividends in cash or BlackRock common stock, subject to the ownership limitations contained within the stockholders agreement with BlackRock.stockholders.

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Issuer Purchases of Equity Securities

During the three months ended December 31, 2006,2008, the Company made the following purchases of its common stock, which areis registered pursuant to Section 12(b) of the Exchange Act.

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The selected financial data presented below has been derived in part from, and should be read in conjunction with, the consolidated financial statements of BlackRock and Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operationsincluded in this Form 10-K. Prior year data reflects certain reclassifications to conform to the current year presentation.