UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended ~~September~~June 30, ~~2007~~2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number 001-33099

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

40 East 52nd Street, New York, NY 10022

(Address of principal executive offices)

(Zip Code)

(212) 810-5300

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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


Large accelerated filer x		~~Large accelerated filer~~ xAccelerated filer ¨ ~~Non-accelerated filer~~ ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~October~~July 31, ~~2007,~~2008, there were ~~116,824,060~~118,059,866 shares of the registrant’s common stock outstanding.

BlackRock, Inc.

Index to Form 10-Q

PART I

FINANCIAL INFORMATION


		Page
	~~PART I~~ ~~FINANCIAL INFORMATION~~

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Financial Condition	1

	Condensed Consolidated Statements of Income	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Cash Flows	4

	Notes to Condensed Consolidated Financial Statements	56

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2127

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5354

Item 4.	Controls and Procedures	55

PART II

OTHER INFORMATION


	~~PART II~~ ~~OTHER INFORMATION~~

Item 1.	Legal Proceedings	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56

Item 4.	Submission of Matters to a Vote of Security Holders	57

Item 6.	Exhibits	5758

- ii -

PART I —- FINANCIAL INFORMATION

Item 1.

Financial Statements

BlackRock, Inc.

Condensed Consolidated Statements of Financial Condition

(Dollar amounts in ~~thousands)~~thousands, except per share data)

(unaudited)


	September 30, 2007			December 31, 2006
	September 30, 2007			December 31, 2006			June 30, 2008			December 31, 2007
Assets
Cash and cash equivalents	$	2,320,579		$	1,160,304		$	1,427,522		$	1,656,200
Accounts receivable		1,155,996			964,366			1,569,116			1,235,940
Due from affiliates		96,606			113,184
Due from related parties								204,476			174,853
Investments		2,680,751			2,097,574			1,941,525			1,999,944
Separate account assets		4,829,861			4,299,879			4,026,713			4,669,874
Deferred mutual fund sales commissions, net		178,407			177,242			168,271			174,849
Property and equipment, net		250,481			214,784
Intangible assets, net		5,789,240			5,882,430
Property and equipment (net of accumulated depreciation of $267,074 at June 30, 2008 and $225,645 at December 31, 2007)								265,399			266,460
Intangible assets (net of accumulated amortization of $251,591 at June 30, 2008 and $178,450 at December 31, 2007)								6,507,087			6,553,122
Goodwill		5,454,521			5,257,017			5,535,174			5,519,714
Other assets		322,092			302,712			371,969			310,559

Total assets	$	23,078,534		$	20,469,492		$	22,017,252		$	22,561,515


Liabilities
Accrued compensation	$	807,870		$	1,051,273
Accrued compensation and benefits							$	666,190		$	1,086,590
Accounts payable and accrued liabilities		776,928			753,839			1,029,636			788,968
Due to affiliates		245,890			243,836
Due to related parties								93,972			114,347
Short-term borrowings		450,000			—			300,000			300,000
Long-term borrowings		946,879			253,167			946,552			947,021
Separate account liabilities		4,829,861			4,299,879			4,026,713			4,669,874
Deferred taxes		1,792,199			1,738,670
Deferred tax liabilities								1,993,398			2,059,980
Other liabilities		501,716			237,856			286,694			419,570

Total liabilities		10,351,343			8,578,520			9,343,155			10,386,350

Non-controlling interest		1,458,879			1,109,092
Non-controlling interests								544,388			578,210


Commitments and contingencies (Note 9)

Stockholders’ equity
Common stock ($0.01 par value, 500,000,000 shares authorized, 117,381,582 shares issued at September 30, 2007 and December 31, 2006)		1,174			1,174
Series A participating preferred stock ($0.01 par value, 500,000,000 shares authorized and 12,604,918 shares issued and outstanding)		126			126
Common stock ($0.01 par value, 500,000,000 shares authorized, 118,573,367 shares issued, 117,071,411 and 116,059,560 shares outstanding at June 30, 2008 and December 31, 2007, respectively)								1,186			1,186
Series A participating preferred stock ($0.01 par value, 500,000,000 shares authorized and 12,604,918 shares issued and outstanding at June 30, 2008 and December 31, 2007)								126			126
Additional paid-in capital		10,070,480			9,799,447			10,342,601			10,274,096
Retained earnings		1,387,478			993,821			1,929,726			1,622,041
Accumulated other comprehensive income, net		85,478			44,666
Treasury stock, common, at cost (2,025,045 and 972,685 shares held at September 30, 2007 and December 31, 2006, respectively)		(276,424	)		(57,354	)
Accumulated other comprehensive income								91,504			71,020
Escrow shares, common, at cost (911,266 and 1,191,785 held at June 30, 2008 and December 31, 2007, respectively)								(143,367	)		(187,500	)
Treasury stock, common, at cost (590,690 and 1,322,022 shares held at June 30, 2008 and December 31, 2007, respectively)								(92,067	)		(184,014	)

Total stockholders’ equity		11,268,312			10,781,880			12,129,709			11,596,955

Total liabilities, non-controlling interest and stockholders’ equity	$	23,078,534		$	20,469,492
Total liabilities, non-controlling interests and stockholders’ equity							$	22,017,252		$	22,561,515

See accompanying notes to condensed consolidated financial statements.

- 1 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Income

(Dollar amounts in thousands, except per share data)

(unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006			2008			2007			2008			2007
Revenue
Investment advisory and administration fees
Unaffiliated	$	495,127		$	158,707		$	1,169,760		$	606,748
Affiliated		680,685			115,799			1,878,308			331,395
Investment advisory and administration base fees
Related parties													$	773,477		$	625,424		$	1,521,439		$	1,200,204
Other third parties														387,880			325,186			772,796			623,914
Investment advisory performance fees														57,079			25,720			98,622			48,138

Investment advisory and administration base and performance fees														1,218,436			976,330			2,392,857			1,872,256
Distribution fees		32,310			2,263			89,997			7,177			33,683			32,867			69,002			57,687
Other revenue		89,957			46,289			262,411			134,131
Other third parties														125,777			80,780			211,318			161,011
Related parties														9,055			7,046			13,912			11,443

Total revenue		1,298,079			323,058			3,400,476			1,079,451			1,386,951			1,097,023			2,687,089			2,102,397

Expenses
Employee compensation and benefits		505,107			198,099			1,270,883			566,993			551,954			408,773			1,020,903			756,075
Portfolio administration and servicing costs
Unaffiliated		16,308			9,201			47,405			28,378
Affiliated		122,542			7,181			353,609			20,151
Amortization of deferred sales commissions		28,763			1,341			79,034			4,645
Related parties														126,968			115,452			257,214			232,969
Other third parties														26,650			15,625			52,143			29,194
Amortization of deferred mutual fund sales commissions														33,422			28,713			63,630			50,271
General and administration		194,442			75,834			602,290			192,666
Termination of closed-end fund administration and servicing arrangements		128,114			—			128,114			—
Fee sharing payment		—			—			—			34,450
Other third parties														203,794			190,752			407,576			382,445
Related parties														2,601			24,632			11,802			35,104
Amortization of intangible assets		31,085			2,394			93,193			6,451			36,572			31,075			73,141			62,107

Total expenses		1,026,361			294,050			2,574,528			853,734			981,961			815,022			1,886,409			1,548,165

Operating income		271,718			29,008			825,948			225,717			404,990			282,001			800,680			554,232

Non-operating income (expense)
Net gain (loss) on investments		117,895			(1,737	)		478,458			9,165			(467	)		210,203			(19,956	)		360,563
Interest and dividend income		20,109			5,668			52,204			16,675			13,924			13,738			32,263			32,095
Interest expense		(9,815	)		(2,022	)		(31,023	)		(6,021	)		(16,720	)		(10,223	)		(34,098	)		(21,209	)

Total non-operating income		128,189			1,909			499,639			19,819
Total non-operating income (expense)														(3,263	)		213,718			(21,791	)		371,449

Income before income taxes and non-controlling interest		399,907			30,917			1,325,587			245,536
Income before income taxes and non-controlling interests														401,727			495,719			778,889			925,681
Income tax expense		63,168			11,108			298,086			89,963			147,569			125,012			277,700			234,918

Income before non-controlling interest		336,739			19,809			1,027,501			155,573
Non-controlling interest		81,539			895			354,669			2,394
Income before non-controlling interests														254,158			370,707			501,189			690,763
Non-controlling interests														(19,900	)		148,463			(14,540	)		273,131


Net income	$	255,200		$	18,914		$	672,832		$	153,179		$	274,058		$	222,244		$	515,729		$	417,632

Earnings per share
Earnings per share:
Basic	$	1.99		$	0.29		$	5.24		$	2.38		$	2.12		$	1.73		$	3.99		$	3.25
Diluted	$	1.94		$	0.28		$	5.12		$	2.29		$	2.05		$	1.69		$	3.87		$	3.17

Dividends declared and paid per share	$	0.67		$	0.42		$	2.01		$	1.26
Cash dividends declared and paid per share													$	0.78		$	0.67		$	1.56		$	1.34

Weighted-average shares outstanding
Weighted-average shares outstanding:
Basic		128,161,027			64,761,447			128,501,575			64,326,752			129,569,325			128,544,894			129,242,591			128,676,577
Diluted		131,316,455			67,477,536			131,534,188			66,903,553			133,526,713			131,383,470			133,189,957			131,580,121

See accompanying notes to condensed consolidated financial statements.

- 2 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Dollar amounts in thousands)

(unaudited)


	Three months ended September 30,					Nine months ended September 30,					Three Months Ended June 30,					Six Months Ended June 30,
	2007			2006		2007			2006		2008			2007		2008			2007
Net income	$	255,200		$	18,914	$	672,832		$	153,179	$	274,058		$	222,244	$	515,729		$	417,632
Other comprehensive income, net of tax:
Net unrealized gain (loss) from available-for-sale investments		(1,417	)		456		(2,288	)		507
Foreign currency translation adjustment		24,527			467		43,100			3,793
Other comprehensive income:
Net unrealized gain (loss) from available-for-sale investments, net of tax												1,228			586		(3,937	)		(871	)
Minimum pension liability adjustment		—			379		—			379		—			—		(542	)		—
Foreign currency translation adjustments												(1,344	)		16,371		24,963			18,574

Comprehensive income	$	278,310		$	20,216	$	713,644		$	157,858	$	273,942		$	239,201	$	536,213		$	435,335

See accompanying notes to condensed consolidated financial statements.

- 3 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollar amounts in thousands)

(unaudited)

   Nine months ended
September 30,
   2007 2006
Cash flows from operating activities

Net income
   $ 672,832 $ 153,179
Adjustments to reconcile net income to cash from operating activities:

Non-controlling interest
   354,669 2,394
Depreciation and amortization
   143,387 29,301
Amortization of deferred mutual fund sales commissions
   79,034 4,645
Stock-based compensation
   142,329 78,567
Deferred income taxes
   (100,576 ) (32,965 )
Other net gains and net purchases of investments
   (584,373 ) (3,976 )
Earnings from equity method investees
   (55,783 ) (2,413 )
Distributions of earnings from equity method investees
   9,375 820
Other adjustments
   (1,644 ) (2,828 )
Changes in operating assets and liabilities:

Accounts receivable
   (195,236 ) (66,582 )
Due from affiliates
   16,578 9,397
Deferred mutual fund sales commissions
   (46,203 ) 1,860
Investments, trading
   (20,518 ) (17,121 )
Other assets
   (79,195 ) (9,051 )
Accrued compensation
   (73,381 ) 21,950
Accounts payable and accrued liabilities
   (5,401 ) (5,417 )
Due to affiliates
   (5,981 ) 67,214
Other liabilities
   111,402 8,883

Cash flows from operating activities
   361,315 237,857

Cash flows from investing activities

Purchase of investments
   (313,837 ) (62,046 )
Sale of investments
   193,731 18,022
Distributions of capital from equity method investees
   5,695 —
Net deconsolidations of sponsored investment funds
   (7,703 ) —
Acquisitions, net of cash acquired
   (42,272 ) 389,886
Purchases of property and equipment
   (84,940 ) (47,014 )

Cash flows from investing activities
   (249,326 ) 298,848

Cash flows from financing activities

Short-term borrowings, net
   450,000 —
Long-term borrowings, net
   694,372 —
Dividends paid
   (265,587 ) (81,134 )
Reissuance of treasury stock
   47,987 7,464
Purchases of treasury stock
   (370,103 ) (24,615 )
Issuance of common stock
   —   1,196
Subscriptions received from non-controlling interest holders, net of redemptions
   204,734 15,735
Excess tax benefits from stock-based compensation
   69,390 4,156
Debt held by consolidated sponsored investment funds
   180,383 —
Other financing activities
   (5,990 ) (3,622 )

Cash flows from financing activities
   1,005,186 (80,820 )

Effect of exchange rate changes on cash and cash equivalents
   43,100 3,793

Net change in cash and cash equivalents
   1,160,275 459,678
Cash and cash equivalents, beginning of period
   1,160,304 484,223

Cash and cash equivalents, end of period
   $ 2,320,579 $ 943,901


	Six Months Ended June 30,
	2008			2007
Cash flows from operating activities
Net income	$	515,729		$	417,632
Adjustments to reconcile net income to cash from operating activities:
Depreciation and other amortization		115,346			94,686
Amortization of deferred mutual fund sales commissions		63,630			50,271
Non-controlling interests		(14,540	)		273,131
Stock-based compensation		133,071			91,430
Deferred income tax expense (benefit)		(66,323	)		41,462
Other net gains and net proceeds (purchases) of investments		16,185			(329,149	)
Earnings from equity method investees		(10,410	)		(22,475	)
Distributions of earnings from equity method investees		13,946			5,118
Other adjustments		(757	)		(1,669	)
Changes in operating assets and liabilities:
Accounts receivable		(323,765	)		(113,288	)
Due from related parties		(29,623	)		35,095
Deferred mutual fund sales commissions		(57,052	)		(26,948	)
Investments, trading		221,682			(134,615	)
Other assets		59,879			(219,485	)
Accrued compensation and benefits		(415,186	)		(362,267	)
Accounts payable and accrued liabilities		255,659			150,583
Due to related parties		(20,375	)		(158,788	)
Other liabilities		24,377			131,667

Cash flows from operating activities		481,473			(77,609	)


Cash flows from investing activities
Purchases of investments		(285,221	)		(214,786	)
Purchases of assets held for sale		(58,719	)		—
Proceeds from sales of investments		52,231			128,311
Distributions of capital from equity method investees		7,995			—
Purchases of property and equipment		(39,903	)		(62,305	)
Net consolidations (deconsolidations) of sponsored investment funds		—			(5,709	)
Acquisitions, net of cash acquired		—			(42,198	)
Proceeds from other investing activities		4,361			—

Cash flows from investing activities		(319,256	)		(196,687	)

- 4 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(Dollar amounts in thousands)

(unaudited)


	Six Months Ended June 30,
	2008			2007
Cash flows from financing activities
Repayment of long-term borrowings		(751	)		—
Repayment of short-term borrowings		(100,000	)		—
Proceeds from short-term borrowings		100,000			360,000
Cash dividends paid		(208,044	)		(176,766	)
Proceeds from stock options exercised		17,712			36,737
Reissuance of treasury stock		2,873			3,810
Purchase of treasury stock		(43,236	)		(286,758	)
Subscriptions received from non-controlling interest holders, net of distributions		(9,874	)		192,864
Excess tax benefit from stock-based compensation		46,750			61,348
Net proceeds/(repayments) of borrowings by consolidated sponsored investment funds		(202,393	)		261,616
Other financing activities		—			(1,183	)

Cash flows from financing activities		(396,963	)		451,668

Effect of exchange rate changes on cash and cash equivalents		6,068			18,574

Net increase (decrease) in cash and cash equivalents		(228,678	)		195,946
Cash and cash equivalents, beginning of period		1,656,200			1,160,304

Cash and cash equivalents, end of period	$	1,427,522		$	1,356,250


Supplemental cash flow information:
Cash paid for interest	$	32,537		$	13,684
Cash paid for income taxes	$	294,575		$	102,758

Supplemental non-cash flow information:
Issuance of treasury stock	$	109,481		$	81,390
Decrease in investments due to net deconsolidations of sponsored investment funds	$	5,935		$	181,953
Decrease in non-controlling interests due to net deconsolidations of sponsored investment funds	$	5,935		$	167,016
PNC LTIP capital contributions	$	5,090		$	174,932

See accompanying notes to condensed consolidated financial statements.

- 45 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

BlackRock, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(unaudited)

BlackRock, Inc. and its subsidiaries (“BlackRock” or the “Company”) provide diversified investment management services to institutional clients and individual investors through various investment ~~products.~~vehicles. Investment management services primarily consist of the active management of fixed income, cash management and equity client accounts, the management of ~~a number of~~ open-end and closed-end fund families and other non-U.S. equivalent retail products serving the institutional and retail markets, and the management of alternative ~~investment~~ funds developed to serve various customer needs. ~~Through~~In addition, BlackRock ~~Solutions~~^®~~, the Company~~ provides risk management, ~~system outsourcing, investment accounting services,~~financial markets advisory and ~~transition~~enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation of illiquid securities, dispositions and workouts, risk management ~~services~~and strategic planning and execution.

In October 2007, BlackRock acquired certain assets and assumed certain liabilities of the fund of funds business of Quellos Group, LLC (“Quellos”), referred to as the “Quellos Transaction” and in September 2006, Merrill Lynch & Co., Inc. (“Merrill Lynch”) contributed the entities and assets that ~~combine~~constituted its investment management business (the “MLIM Business”) to BlackRock via a capital ~~markets expertise with proprietarily-developed systems and technology.~~contribution, referred to as the “MLIM Transaction.”

~~1. Significant Accounting Policies~~

1.	Significant Accounting Policies

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its controlled ~~subsidiaries and other consolidated entities.~~subsidiaries. Non-controlling ~~interest includes minority interest as well as~~interests include the portion of consolidated sponsored investment funds in which the Company does not have a direct equity ownership. All significant accounts and transactions between consolidated entities have been eliminated.

The preparation of ~~condensed consolidated~~ financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~condensed consolidated~~ financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those ~~estimates and assumptions.~~estimates. Certain financial information that normally is included in annual financial statements, including certain financial statement footnotes, is not required for interim reporting purposes and has been condensed or omitted herein. These ~~condensed consolidated~~ financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2006,~~2007, which was filed with the Securities and Exchange Commission (“SEC”) on ~~March 13, 2007.~~February 28, 2008.

The interim financial information ~~as of September~~at June 30, ~~2007~~2008 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2007~~2008 and ~~2006~~2007 is unaudited. However, in the opinion of management, the interim information includes all normal recurring adjustments necessary for the fair presentation of the Company’s results for the periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain amounts in the Company’s prior period ~~condensed consolidated~~ financial statements have been reclassified to conform to the current presentation.

- 56 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

1.	1. Significant Accounting Policies (continued)

Basis of Presentation(continued)

~~Income Taxes~~Fair Value Measurements

~~In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 48,~~~~Accounting for Uncertainty in Income Taxes and Related Implementation Issues~~~~. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with~~BlackRock adopted Statement of Financial Accounting Standards (“SFAS”) No. ~~109,~~~~Accounting for Income Taxes~~. FIN No. 48 prescribes a threshold and measurement attribute for recognition in the financial statements of an asset or liability resulting from a tax position taken or expected to be taken in a tax return. FIN No. 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

BlackRock adopted the provisions of FIN No. 48 on January 1, 2007. As a result of the adoption, the Company recognized approximately $15,200 in increased income tax reserves related to uncertain tax positions. Approximately $13,600 of this increase related to taxes that would affect the effective tax rate if recognized, and this portion was accounted for as a reduction to the January 1, 2007 balance in retained earnings. The remaining $1,600 balance, if disallowed, would not affect the annual effective tax rate. Total gross unrecognized tax benefits at December 31, 2006 were approximately $52,100. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2006 were approximately $25,700. As of September 30, 2007, the Company does not anticipate a significant change to the amount of unrecognized tax benefits within the next twelve months.

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. Interest accrued on uncertain tax positions was approximately $4,600 at December 31, 2006 and $7,100 at September 30, 2007. The Company has not accrued any tax-related penalties.

BlackRock is subject to U.S. federal income tax as well as income tax in multiple jurisdictions. The tax years after 2002 remain open to U.S. federal income tax examination, and the tax years after 2004 remain open to income tax examination in the United Kingdom. Prior to the closing of the Merrill Lynch Investments Managers (“MLIM”) transaction, BlackRock filed New York State and New York City income tax returns on a combined basis with The PNC Financial Services Group, Inc. (“PNC”) and the tax years after 2001 remain open to income tax examination in New York State and New York City.

~~Stock-based Compensation~~

The Company amortizes the grant-date fair value of stock-based compensation awards made to retirement eligible employees over the required service period. Upon notification of retirement, the Company accelerates the unamortized portion of the award over the contractually-required retirement notification period, if applicable.

~~Carried Interest~~

The Company receives carried interest from private equity funds upon exceeding performance thresholds. BlackRock may be required to return all, or part, of such carried interest depending upon future performance of the private equity funds. BlackRock records carried interest subject to such clawback provisions as revenue on its condensed consolidated statements of income upon the earlier of termination of each private equity fund or when the likelihood of clawback is mathematically improbable. At September 30, 2007, the Company had $17,399 of deferred carried interest recorded in other liabilities on the condensed consolidated statements of financial condition.

~~- 6 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~

~~Financial Statements (continued)~~

~~1. Significant Accounting Policies (continued)~~

~~Goodwill and Intangible Assets~~

~~Prior to 2007, the Company performed its annual impairment tests for goodwill and indefinite-lived intangible assets, as required by SFAS No. 142,~~~~Goodwill and Other Intangible Assets~~~~, as of September 30~~^th~~. During the quarter ended September 30, 2007, the Company changed its annual impairment test date to July 31~~^st in order to provide additional time during the quarter for testing due to the significant increase in these assets as a result of recent acquisitions. Impairment tests performed as of July 31, 2007 and September 30, 2006 indicated that no impairment charges were required. The Company’s management believes that this change in the method of applying an accounting principle is preferable under the circumstances and does not result in adjustments to the Company’s consolidated financial statements when applied retrospectively, nor would it result in the delay, acceleration or avoidance of recording a potential future impairment. This change in the method of applying SFAS No. 142 had no impact on the condensed consolidated statements of income for the three or nine months ended September 30, 2007 or other prior periods.

~~Recent Accounting Developments~~

~~In September 2006, the FASB issued SFAS No.~~ 157,Fair Value ~~Measurements.~~Measurements (“SFAS No. 157”) as of January 1, 2008, which requires, among other things, enhanced disclosures about investments that are measured and reported at fair value. SFAS No. 157 ~~defines~~establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value ~~establishes a framework for measuring fair value~~ and ~~requires enhanced disclosures about fair value measurements. SFAS No. 157~~ requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy (i.e., levels 1, 2, and 3 inputs, as defined). The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Additionally, companies are required to provide enhanced disclosure regarding instruments in the level 3 category (which have inputs to the valuation techniques that are unobservable and require significant management judgment), including a reconciliation of the beginning and ending balances separately for each major category of assets and liabilities.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 Inputs - Quoted prices (unadjusted) in active markets for identical assets or liabilities at the reporting date. Level 1 assets include listed mutual funds, equities and debt securities.

Level 2 Inputs - Other than quoted prices included within Level 1 that are observable for substantially the full term of the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and inputs other than quoted prices that are observable, such as models or other valuation methodologies. Investments which generally are included in this category may include securities held within consolidated hedge funds, certain limited partnership interests in hedge funds in which the valuation for substantially all of the investments within the fund is based upon Level 1 or Level 2 inputs, as well as restricted public securities valued at a discount.

Level 3 Inputs - Unobservable inputs for the valuation of the asset or liability. Level 3 assets include investments for which there is little, if any, market activity. These inputs require significant management judgment or estimation. Investments included in this category generally include general and limited partnership interests in private equity funds, funds of private equity funds, real estate funds, hedge funds, and funds of hedge funds.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

- 7 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

1.	Significant Accounting Policies (continued)

Basis of Presentation (continued)

Assets and Liabilities to be Disposed of by Sale

In the course of the business of establishing real estate and private equity sponsored investment funds, the Company may purchase land, properties and third party private equity funds while incurring liabilities directly associated with the assets, together a disposal group, with the intention to sell the disposal group to sponsored investment funds upon their launch. In accordance with the provisions of SFAS No. 144,Accounting for the Impairment or Disposal of Long-lived Assets, the Company treats these assets and liabilities as a “disposal group”, measured at the lower of the carrying amount or fair value. Losses are recognized for any initial or subsequent write-down to fair value and gains are recognized for any subsequent increase in fair value, but not in excess of the cumulative loss previously recognized.

At June 30, 2008, the Company held disposal group assets of $129,598 and related liabilities of $71,150 in other assets and other liabilities, respectively, on its condensed consolidated statements of financial condition. Disposal group liabilities include approximately $56,900 of borrowings directly associated with the disposal group assets. During the three and six months ended June 30, 2008, the Company recorded losses of $3,276 within non-operating income on its condensed consolidated statements of income related to the disposal group.

Recent Accounting Developments

Fair Value Measurements

In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) FAS 157-1,Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13(“FSP FAS 157-1”) and FSP FAS 157-2,Effective Date of FASB Statement No. 157. (“FSP FAS 157-2”). FSP FAS 157-1 amends SFAS No. 157 isto exclude from its scope transactions accounted for in accordance with SFAS No. 13,Accounting for Leases, and its related interpretive accounting pronouncements. FSP FAS 157-2 delays the effective ~~for financial statements issued for~~date of the application of SFAS No. 157 to fiscal years beginning after November 15, ~~2007.~~ 2008 for all non-financial assets and liabilities recognized or disclosed at fair value in the financial statements on a non-recurring basis. Non-recurring non-financial assets and liabilities include goodwill, indefinite-lived intangible assets, long-lived assets and finite-lived intangible assets each measured at fair value for purposes of impairment testing; asset retirement and guarantee obligations initially measured at fair value; and those assets and liabilities initially measured at fair value in a business combination or asset purchase.

The Company ~~currently is evaluating~~adopted SFAS No. 157 on January 1, 2008, with the exception of the application of FSP FAS 157-2 related to non-recurring non-financial assets and liabilities. The partial adoption of SFAS No. 157 had no material impact ~~adoption will have to its~~on the Company’s consolidated financial statements.

~~In September 2006,~~ The Company does not expect that the ~~FASB issued SFAS No. 158,~~~~Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans~~ –~~an amendment of FASB Statements No. 87, 88, 106 and 132~~. SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and recognize changes in the funded status in the year in which the changes occur. The statement also requires actuarial valuations to be performed asadoption of the ~~balance sheet date. The balance sheet recognition~~ provisions of ~~SFAS No. 158 were effective~~FSP FAS 157-2 for fiscal years ending after December 15, 2006. The valuation date provisions are effective for fiscal years ending after December 15, 2007. The Company adopted the balance sheet recognition provisions of SFAS No. 158non-recurring non-financial assets and liabilities will have a material impact on ~~December 31, 2006 and the impact of adoption was not material to~~ its condensed consolidated financial statements.

- 8 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

1.	Significant Accounting Policies (continued)

Recent Accounting Developments (continued)

Fair Value Option

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities(“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure eligible financial assets and liabilities at fair value. ~~The unrealized~~Unrealized gains and losses on items for which the fair value option ishas been elected should be reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis, ~~it should~~must be applied to an entire instrument and it is ~~irrevocable.~~irrevocable once elected. Assets and liabilities measured at fair value pursuant to ~~the fair value option should~~SFAS No. 159 would be reported separately in the ~~balance sheet~~statement of financial condition from those instruments measured using another ~~measurement attribute.~~accounting method. The Company adopted SFAS No. 159 ~~is effective as~~on January 1, 2008, however, elected not to apply the fair value option to any of ~~the beginning of the first fiscal year~~its eligible financial assets or liabilities at that ~~begins after November 15, 2007. The Company currently is analyzing~~date. Therefore, the ~~potential impact of~~ adoption of SFAS No. 159 tohad no impact on the Company’s condensed consolidated financial statements. The Company may elect the fair value option for any future eligible financial assets or liabilities upon their initial recognition.

Non-Controlling Interests

In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for a non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary and clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity, separate from the parent’s equity, in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. SFAS No. 160 requires retrospective adoption of the presentation and disclosure requirements for existing non-controlling interests. All other requirements of SFAS No. 160 shall be applied prospectively. The Company is currently evaluating the potential impact of SFAS No. 160 on its consolidated financial statements.

- 79 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

1.	1. Significant Accounting Policies (continued)

Recent Accounting Developments(continued)

Business Combinations

In ~~June~~December 2007, the ~~Emerging Issues Task Force (“EITF”) ratified EITF Issue~~FASB issued SFAS No. ~~06-11,~~141 (revised),~~Accounting~~Business Combinations(“SFAS No. 141(R)”). SFAS No. 141(R) replaces SFAS No. 141,Business Combinations, while retaining the fundamental requirements of SFAS No. 141 that the acquisition method of accounting (the purchase method) be used for ~~Income Tax Benefits~~all business combinations and for an acquirer to be identified for each business combination. SFAS No. 141(R) further defines the acquirer, establishes the acquisition date and broadens the scope of ~~Dividends on Share-Based Payment Awards~~ ~~(“EITF 06-11”). Under~~transactions that qualify as business combinations. Additionally, SFAS No. 141(R) changes the fair value measurement provisions ~~of EITF 06-11 a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings~~for assets acquired, liabilities assumed and are paid to employees for equity classified as nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. The amount recognizedany non-controlling interest in ~~additional paid-in capital~~the acquiree, provides guidance for the ~~realized income tax benefit from dividends~~measurement of fair value in a step acquisition, changes the requirements for recognizing assets acquired and liabilities assumed subject to contingencies, provides guidance on ~~those awards should~~recognition and measurement of contingent consideration and requires that acquisition-related costs of the acquirer generally be ~~included in the pool of excess~~expensed as incurred. In addition, if liabilities for unrecognized tax benefits ~~available~~related to ~~absorb~~ tax ~~deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively~~positions assumed in a business combination are settled prior to the adoption of SFAS No. 141(R), the reversal of any remaining liability will affect goodwill. If such liabilities reverse subsequent to the adoption of SFAS No. 141(R), such reversals will affect the income tax ~~benefits~~provision in the period of reversal. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company currently is evaluating the impact of the adoption of SFAS No. 141(R) on its consolidated financial statements and on potential future business combinations.

Disclosures about Derivative Instruments

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133 (“SFAS No. 161”). SFAS No. 161 expands the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 specifically requires enhanced disclosures addressing: a) how and why an entity uses derivative instruments, b) how derivative instruments and related hedged items are accounted for under SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”), and its related interpretations and c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for fiscal years and interim periods within those fiscal years beginning after November 15, 2008. The adoption of SFAS No. 161 is not expected to impact BlackRock’s consolidated financial statements.

Useful Life of Intangible Assets

In April 2008, the FASB issued FSP FAS 142-3,Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that ~~result from dividends on equity-classified employee share-based payment awards that are declared~~should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets (“SFAS No. 142”). FSP FAS 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other GAAP. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, ~~2007,~~2008, and interim periods within those fiscal years. The Company is currently evaluating the ~~potential~~ impact of ~~EITF 06-11 to~~the adoption of FSP FAS 142-3 on its consolidated financial statements.

~~2. Investments~~

~~A summary of the carrying value of total investments is as follows:~~

   Carrying Value
   September 30,
2007    December 31,
2006
Available-for-sale investments
   $ 187,337    $ 158,442
Trading investments
   361,631    370,718
Other investments:

Consolidated sponsored investment funds
   1,606,296    1,198,422
Equity method
   448,802    327,599
Cost method
   55,118    24,247
Deferred compensation plan investments
   21,567    18,146

Total other investments
   2,131,783    1,568,414

Total investments
   $ 2,680,751    $ 2,097,574

- 810 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

1.	Significant Accounting Policies (continued)

~~2. Investments~~ Recent Accounting Developments(continued)

Convertible Debt Instruments

In May 2008, the FASB issued FSP APB 14-1,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”). FSP APB 14-1 specifies that for convertible debt instruments that may be settled in cash upon conversion, issuers of such instruments should separately account for the liability and equity components in the statement of financial condition. The excess of the initial proceeds of the convertible debt instrument over the amount allocated to the liability component creates a debt discount which should be amortized as interest expense over the expected life of the liability. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and is to be applied retrospectively. At June 30, 2008 the Company had $249,997 principal amount of convertible debentures outstanding, which were issued in February 2005, bear interest at a rate of 2.625%, and are due in 2035. The Company is currently evaluating the impact of the adoption of FSP APB 14-1 on its consolidated financial statements.

Earnings Per Share

In June 2008, the FASB issued FSP EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities(“FSP EITF 03-6-1”). FSP EITF 03-6-1 specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities and shall be included in the computation of earnings per share (“EPS”) pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. All prior period EPS data presented shall be adjusted retrospectively. The Company has awarded restricted stock and restricted stock units with nonforfeitable dividend equivalent rights and is currently evaluating the impact of the adoption of FSP EITF 03-6-1 on the Company’s EPS.

- 11 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2.	Investments

A summary of the carrying value of investments is as follows:


	Carrying Value
	June 30, 2008		December 31, 2007
Available-for-sale investments	$	244,354	$	263,795
Trading investments		167,350		395,006
Other investments:
Consolidated sponsored investment funds		730,042		760,378
Equity method		776,462		554,016
Deferred compensation plan investments		23,218		22,710
Cost method		99		4,039

Total other investments		1,529,821		1,341,143

Total investments	$	1,941,525	$	1,999,944

At June 30, 2008, the Company had $792,219 of investments held by consolidated sponsored investment funds of which $62,177 and $730,042 were classified as trading investments and other investments, respectively.

A summary of the cost and carrying value of investments classified as available-for-sale is as follows:


			Gross Unrealized					Carrying Value				Gross Unrealized					Carrying
June 30, 2008								Carrying Value		Cost		Gains		Losses			Value
Total available-for-sale investments:
Sponsored investment funds										$	229,894	$	3,459	$	(2,893	)	$	230,460
Collateralized debt obligations (“CDOs”)											7,913		143		—			8,056
Other debt securities											4,365		—		(1,256	)		3,109
Other											2,815		—		(86	)		2,729
	Cost		Gains		Losses			Carrying Value
September 30, 2007								Carrying Value
Available-for-sale investments:
Total available-for-sale investments										$	244,987	$	3,602	$	(4,235	)	$	244,354


December 31, 2007
Total available-for-sale investments:
Sponsored investment funds	$	152,633	$	10,596	$	(1,982	)	$	161,247	$	245,677	$	5,894	$	(1,217	)	$	250,354
Collateralized debt obligations		23,328		1,079		(1,201	)		23,206		10,458		53		—			10,511
Other		2,812		72		—			2,884		2,815		115		—			2,930

Total available-for-sale investments	$	178,773	$	11,747	$	(3,183	)	$	187,337	$	258,950	$	6,062	$	(1,217	)	$	263,795

December 31, 2006
Available-for-sale investments:
Sponsored investment funds	$	118,147	$	8,085	$	(583	)	$	125,649
Collateralized debt obligations		27,496		1,866		—			29,362
Other		3,312		119		—			3,431

Total available-for-sale investments	$	148,955	$	10,070	$	(583	)	$	158,442

- 12 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2.	Investments (continued)

During the six months ended June 30, 2008 and 2007, the Company recorded other-than-temporary impairments of $4,853 and $1,831, respectively, related to other debt securities and CDO available-for-sale investments.

The Company has reviewed the gross unrealized losses of ~~$3,183~~$4,235 at ~~September~~June 30, ~~2007, all~~2008 related to available-for-sale investments, of which $291 had been in a loss position for ~~less~~greater than twelve months, and determined that these losses were not ~~other than temporary~~other-than-temporary primarily because the Company has the ability and intent to hold the securities for a period of time sufficient to recover such losses. As a result, the Company recorded no additional impairments on such securities.

~~During the nine months ended September 30, 2007 and 2006, the Company recorded realized impairments of $3,228 and $2,211, respectively, on certain collateralized debt obligations (“CDOs”).~~

~~- 9 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~

~~Financial Statements (continued)~~

~~2. Investments (continued)~~

A summary of the cost and carrying value of trading and other investments is as follows:


	Cost		Carrying Value		June 30, 2008				December 31, 2007
September 30, 2007
					Cost		Carrying Value		Cost		Carrying Value
Trading investments:
Deferred compensation plan investments	$	40,218	$	43,196
Deferred compensation plan mutual fund investments					$	37,324	$	44,399	$	40,394	$	44,680
Equity securities		67,817		86,638		96,182		102,596		103,058		116,742
Municipal debt securities		235,646		231,797		10,302		10,266		239,398		233,584
Foreign government debt securities						8,311		7,945		—		—
Corporate debt securities						1,285		1,250		—		—
U.S. government debt securities						898		894		—		—

Total trading investments	$	343,681	$	361,631	$	154,302	$	167,350	$	382,850	$	395,006

Other investments:
Other fund investments	$	1,980,230	$	2,110,216
Deferred compensation plan investments		14,100		21,567
Consolidated sponsored investment funds					$	645,583	$	730,042	$	721,300	$	760,378
Equity method						694,291		776,462		463,497		554,016
Deferred compensation plan hedge fund investments						23,629		23,218		14,086		22,710
Cost method						99		99		4,039		4,039

Total other investments	$	1,994,330	$	2,131,783	$	1,363,602	$	1,529,821	$	1,202,922	$	1,341,143

December 31, 2006
Trading investments:
Deferred compensation plan and other investments	$	53,306	$	54,527
Equity securities		139,874		148,025
Municipal debt securities		154,015		154,510
Corporate notes and bonds		13,779		13,656

Total trading investments	$	360,974	$	370,718

Other investments:
Other fund investments	$	1,512,816	$	1,550,268
Deferred compensation plan investments		14,074		18,146

Total other investments	$	1,526,890	$	1,568,414

- 1013 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

~~2. Investments (continued)~~

2.	Investments (continued)

~~Included~~Trading investments include deferred compensation plan mutual fund investments, equity and debt securities within certain consolidated sponsored investment funds and equity securities held in ~~other investments at September 30, 2007 is $55,118~~separate accounts for the purpose of investments accounted for using the cost method. FASB Statement of Position FAS 115-1/124-1 requires that a company review cost method investments for other-than-temporary impairment whenever management estimates a fair value for such investments or when events or changesestablishing an investment history in circumstances have occurred that may have a significant adverse effect on the fair value of the investment. As of September 30, 2007, management reviewed the carrying value of these investments and estimated their aggregate fair valuevarious investment strategies before being marketed to ~~be $61,708. No impairments were recorded on such investments during the nine months ended September 30, 2007.~~investors.

The carrying value of ~~investments in~~ debt securities, classified as available-for-sale and trading investments, by contractual maturity at ~~September~~June 30, ~~2007~~2008 and December 31, ~~2006 was~~2007 is as follows:


	Carrying Value				Carrying Value
Maturity date	September 30, 2007		December 31, 2006		June 30, 2008		December 31, 2007
<1 year	$	—	$	776	$	1,762	$	—
1-5 years		10,061		7,989		1,470		9,567
5-10 years		30,010		2,772		3,955		28,677
After 10 years		191,726		156,629		16,277		195,340

Total	$	231,797	$	168,166	$	23,464	$	233,584

At June 30, 2008 and December 31, 2007, the debt securities in the table above primarily consisted of municipal, corporate, U.S. and foreign government debt securities held by several sponsored investment funds that are consolidated in the Company’s condensed consolidated statements of financial condition.

The Company consolidates certain sponsored investment funds primarily because it is deemed to control such investments in accordance with GAAP. The investments ~~that are~~ owned by these consolidated sponsored investment funds are classified as other or trading ~~and other~~ investments. At ~~September~~June 30, ~~2007~~2008 and December 31, ~~2006,~~2007, the following balances related to these funds were consolidated in the condensed consolidated statements of financial ~~position:~~condition:


	September 30, 2007			December 31, 2006			June 30, 2008			December 31, 2007
Cash and cash equivalents	$	191,488		$	90,919		$	56,317		$	66,971
Investments		1,872,782			1,469,930			792,219			1,054,208
Other net liabilities		(258,881	)		(127,266	)		(7,326	)		(218,337	)
Non-controlling interest		(1,458,879	)		(1,109,092	)
Non-controlling interests								(544,388	)		(578,210	)

Total exposure to consolidated investment funds	$	346,510		$	324,491		$	296,822		$	324,632

- 14 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

2.	Investments (continued)

BlackRock’s total exposure to consolidated sponsored investment funds of ~~$346,510~~$296,822 and ~~$324,491~~$324,632 at ~~September~~June 30, ~~2007~~2008 and December 31, ~~2006,~~2007, respectively, represents the fair value of the Company’s economic ownership interest in these sponsored investment funds. Valuation changes associated with these consolidated investment funds are reflected in non-operating income and non-controlling ~~interest. Other net liabilities includes $276,198~~interests. Approximately $7,336 and ~~$95,815~~$209,729 of ~~debt held~~borrowings by consolidated sponsored investment funds at ~~September~~June 30, ~~2007~~2008 and December 31, ~~2006,~~2007, respectively, ~~which are~~is included in other liabilities on the condensed consolidated statements of financial condition.

The Company may not be readily able to access cash and cash equivalents held by consolidated sponsored investment funds to use in its operating activities. In addition, the Company may not be readily able to sell investments held by consolidated sponsored investment funds in order to obtain cash for use in its operations.

3.	Fair Value Disclosures

Assets and liabilities measured at fair value on a recurring basis at June 30, 2008 were as follows:


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Other Investments Not Held at Fair Value ⁽¹⁾		Investments at June 30, 2008
Investments:
Available-for-sale	$	144,695	$	97,994	$	1,665	$		$	244,354
Trading		167,350		—		—		—		167,350
Other investments:
Consolidated sponsored investment funds		—		49,654		680,388		—		730,042
Equity method		—		56,946		681,151		38,365		776,462
Deferred compensation plan investments		—		—		23,218		—		23,218
Cost method		—		—		—		99		99

Total investments	$	312,045	$	204,594	$	1,386,422	$	38,464	$	1,941,525

⁽¹⁾	Includes investments in equity method investees which are not accounted for under a fair value measure in accordance with GAAP as well as investments held at cost.

- 1115 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

~~3. Derivatives and Hedging~~

3.	Fair Value Disclosures (continued)

~~During 2007,~~The Company has $4,026,713 of separate account assets, representing segregated funds held for purposes of funding individual and group pension contracts, and equal and offsetting separate account liabilities of which approximately $60,000 is not held at fair value. Excluding approximately $60,000 not subject to SFAS No. 157, approximately 97%, 3% and less than 1% of the ~~Company entered into a series of total return swaps to economically hedge market price exposures with respect to seed investments in sponsored~~separate account assets and liabilities are classified as Level 1, Level 2 and Level 3, respectively. The net investment ~~products. At September 30, 2007, the outstanding total return swaps had an aggregate notional value of approximately $82,000~~income and net gains and losses ~~of approximately $210~~attributable to separate account assets accrue directly to the contract owner and ~~$3,880 for~~are not reported as revenue on the ~~three and nine months ended September 30, 2007, respectively, which were included in non-operating income in the Company’s~~ condensed consolidated statements of income.

~~During first quarter 2007,~~Level 3 investments, such as investments in real estate funds, hedge funds, funds of hedge funds, private equity funds and funds of private equity funds are valued based upon valuations received from internal as well as third party fund managers. Direct investments in private equity companies held by funds of private equity funds are valued based on an assessment of each underlying investment, incorporating evaluation of additional significant third party financing, changes in valuations of comparable peer companies and the ~~Company entered into a forward contract to sell 1.2 billion yen in August 2007 as a hedge against the foreign exchange risk associated with a sponsored investment product in Japan. The change in value~~business environment of the ~~forward contract substantially offsets~~companies, among other factors.

Changes in Level 3 Investments Measured at Fair Value on a Recurring Basis for the ~~change~~Three and Six Months Ended June 30, 2008


	Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
Beginning of period	$	1,288,580		$	1,239,519
Realized and unrealized gains / (losses), net		(7,794	)		(500	)
Purchases, sales, other settlements and issuances, net		137,269			179,036
Net transfers in and/or out of Level 3		(31,633	)		(31,633	)

June 30, 2008	$	1,386,422		$	1,386,422

Total net (losses) for the period included in earnings attributable to the change in unrealized gains or (losses) relating to investments still held at the reporting date	$	(12,761	)	$	(18,859	)

Realized and unrealized gains and losses recorded for Level 3 investments are reported in non-operating income (expense) on the ~~value associated with foreign exchange related~~condensed consolidated statements of income. Non-controlling interest expense is recorded for certain consolidated investments to reflect the portion of gains and losses not attributable to the ~~Company’s investment in the sponsored investment fund. In August 2007 and November 2007, the forward contract was extended through November 2007 and December 2007, respectively.~~ Company.

- 16 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

4.	Derivatives and Hedging

For the ~~three and nine~~six months ended ~~September~~June 30, ~~2007, the change in fair value of the forward contracts were immaterial.~~

~~For the nine months ended September 30, 2007~~2008 and ~~2006,~~2007, the Company did not hold any derivatives designated in a formal hedge relationship under SFAS No. 133,~~Derivative Instruments and Hedging Activities~~, as amended.

~~4. Earnings Per Share~~

~~The following table sets forth the computation of basic and diluted earnings per share:~~

   Three months ended
September 30,    Nine months ended
September 30,
   2007    2006    2007    2006
Net income
   $ 255,200    $ 18,914    $ 672,832    $ 153,179

Basic weighted-average shares outstanding
   128,161,027    64,761,447    128,501,575    64,326,752
Dilutive potential shares from stock options and restricted stock units
   2,502,798    2,208,829    2,376,400    2,074,384
Dilutive potential shares from convertible debt
   652,630    507,260    656,213    502,417

Dilutive weighted-average shares outstanding
   131,316,455    67,477,536    131,534,188    66,903,553

Basic earnings per share
   $ 1.99    $ 0.29    $ 5.24    $ 2.38

Diluted earnings per share
   $ 1.94    $ 0.28    $ 5.12    $ 2.29

During the ~~three and nine~~six months ended ~~September~~June 30, 2008 and 2007, ~~1,545,735 stock options~~the Company was a counterparty to a series of total return swaps to economically hedge against changes in fair value of certain seed investments in sponsored investment products. At June 30, 2008 the outstanding total return swaps had an aggregate notional value of approximately $73,628 and net realized and unrealized gains/(losses) of approximately $11,521 and ($3,670) for the six months ended June 30, 2008 and 2007, respectively, which were ~~excluded~~included in non-operating income (expense) on the Company’s condensed consolidated statements of income.

In December 2007, BlackRock entered into capital support agreements, up to $100,000, with two enhanced cash funds. These capital support agreements are backed by letters of credit (“LOCs”) issued under BlackRock’s revolving credit facility (see Note 7 for further discussion). During the six months ended June 30, 2008, the Company provided approximately $1,000 of capital contributions to these two funds under the capital support agreements. BlackRock determined that the capital support agreements qualified as derivatives under SFAS No. 133. At June 30, 2008 and December 31, 2007, the derivative liabilities for the fair value of the capital support agreements for the two funds totaled approximately $9,100 and $12,000, respectively, which are recorded in other liabilities on the condensed consolidated statements of financial condition. The amount of these liabilities will increase or decrease as BlackRock’s obligations under the capital support agreements fluctuate based on the fair value of the derivatives.

Goodwill

Goodwill at June 30, 2008 and changes during the six months ended June 30, 2008 were as follows:


December 31, 2007	$	5,519,714

Goodwill adjustments related to:
Quellos		18,297
Other		(2,837	)

Total goodwill adjustments		15,460

June 30, 2008	$	5,535,174

During the six months ended June 30, 2008 goodwill of the Company increased by $15,460. Approximately $44,100 was recorded as additional goodwill due to the release of 280,519 common shares to Quellos, which were held in escrow in accordance with the Quellos asset purchase agreement. This increase was partially offset by a decline in goodwill of approximately $15,900 as a result of the Company’s review of the Quellos purchase price allocation in the three months ended March 31, 2008 and a decrease of approximately $10,200 related to tax benefits realized from tax-deductible goodwill in excess of book goodwill. At June 30, 2008, the ~~calculation~~balance of ~~diluted earnings per share because~~the Quellos tax-deductible goodwill in excess of book goodwill was approximately $427,500. Goodwill will continue to ~~include them would have an anti-dilutive effect.~~be reduced in future periods by the amount of tax benefits realized from tax-deductible goodwill in excess of book goodwill.

- 1217 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

~~4. Earnings Per Share (continued)~~

Due to the similarities in terms between the Company’s series A non-voting participating preferred stock and the Company’s common stock, the Company considers the series A non-voting participating preferred stock to be common stock for purposes of earnings per share calculations. As such, the Company has included the outstanding series A non-voting participating preferred stock in the calculation of weighted average basic shares outstanding for the three and nine months ended September 30, 2007 and September 30, 2006.

~~5. Stock-Based Compensation~~

~~Share-Based Payment~~

~~The Company adopted SFAS No. 123R,~~~~Share-Based Payment~~, on January 1, 2006, using the modified-prospective transition approach, with no cumulative effect on net income. The total stock-based compensation expense associated with stock-based employee compensation plans was $142,329 and $78,567 for the nine months ended September 30, 2007 and 2006, respectively.

~~Long-Term Incentive Plans~~

The BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (the “2002 LTIP Awards”) permitted the grant of up to $240,000 in deferred compensation awards, of which the Company previously granted approximately $230,300. Approximately $210,000 of the 2002 LTIP Awards were paid in January 2007. The 2002 LTIP Awards were payable approximately 16.7% in cash and the remainder in BlackRock stock contributed by PNC and distributed to plan participants. Approximately $20,000 of previously issued 2002 LTIP Awards will result in the settlement of BlackRock shares held by PNC through 2010 at a conversion price approximating the market price on the settlement date.

The settlement of the 2002 LTIP Awards in January 2007 resulted in the surrender by PNC of approximately 1,000,000 shares of BlackRock common stock. Under the terms of the 2002 LTIP Awards, employees elected to put approximately 95% of the stock portion of the awards back to the Company at a total fair market value of approximately $165,700. On the payment date, the Company recorded a capital contribution from PNC for the amount of shares funded by PNC. For the shares not put back to the Company, no dilution resulted from the delivery of stock pursuant to the awards since they were funded by shares held by PNC and were issued and outstanding at December 31, 2006. Put elections made by employees were accounted for as treasury stock repurchases and are accretive to the Company’s earnings per share. The shares repurchased have been retained as treasury stock.

Under a related share surrender agreement, PNC committed to provide up to 4,000,000 shares of BlackRock common stock to fund long term incentive programs. The Company granted additional long-term incentive awards in January 2007 which included 1,540,050 restricted stock units that are intended to be settled using BlackRock shares held by PNC in accordance with the share surrender agreement. Of the committed shares available for future awards, BlackRock is able to grant up to approximately $11,000 in additional awards in the period prior to September 29, 2011 and additional awards to be settled with the remaining shares in periods subsequent to September 29, 2011.

~~- 13 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~6.

~~Financial Statements (continued)~~Intangible Assets

~~5. Stock-Based Compensation (continued)~~

~~Stock Options~~

~~Options outstanding at September 30, 2007 and changes during the nine months ended September 30, 2007 were~~The carrying amounts of identifiable intangible assets are summarized as follows:

Outstanding at
   Number of
Options Weighted
Average
Exercise
Price
December 31, 2006
   4,457,669 $ 36.90
Granted
   1,545,735 $ 167.76
Exercised
   (1,192,335 ) $ 37.22

September 30, 2007
   4,811,069 $ 78.86


	Indefinite-lived intangible assets		Finite-lived intangible assets			Total
December 31, 2007	$	5,351,132	$	1,201,990		$	6,553,122
Purchase price adjustments		27,000		106			27,106
Amortization expense		—		(73,141	)		(73,141	)

June 30, 2008	$	5,378,132	$	1,128,955		$	6,507,087

~~As of September 30, 2007, the Company had 3,265,334 outstanding options which were exercisable at a weighted average exercise~~The purchase price ~~of $36.78. The weighted average remaining life of stock options outstanding as of September 30, 2007 was 6.1 years.~~

~~The total intrinsic value of stock options exercised~~adjustments to intangible assets during the ~~nine~~six months ended ~~September~~June 30, ~~2007 was $155,428. As of September 30, 2007, the intrinsic value of in-the-money exercisable and outstanding options was $446,135 and $454,869, respectively.~~

On January 31, 2007, the Company awarded options to purchase 1,545,735 shares of BlackRock common stock to certain executives as long-term incentive compensation. The options vest on September 29, 2011, provided that the Company has actual GAAP earnings per share of at least $5.20 in 2009, $5.52 in 2010 or $5.85 in 2011. An alternative performance hurdle provides for vesting of the awards based on specific targets for the Company’s earnings growth performance to peers over the term of the awards. The options have a strike price of $167.76, which was the closing price of the shares on the grant date. Fair value, as calculated in accordance with a modified Black-Scholes model, was approximately $45.88 per option. The fair value of the options is being amortized over the vesting period as exceeding the performance hurdles was deemed probable of occurring.

~~Assumptions used in calculating the grant-date fair value for the stock options issued in January 2007 were as follows:~~

Exercise Price
   $ 167.76
Expected Term (years)
   7.335
Expected Volatility
   24. 5%
Dividend Yield
   1.0%-4.4 4%
Risk Free Interest Rate
   4. 8%

~~- 14 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~

~~Financial Statements (continued)~~

~~5. Stock-Based Compensation (continued)~~

~~Stock Options (continued)~~

The Company’s expected option term was derived using the mathematical average between the earliest vesting date and the option expiration date in accordance with SEC Staff Accounting Bulletin No. 107. The Company’s expected stock volatility assumption was based upon historical stock price fluctuations of BlackRock’s common stock. The dividend yield assumption was derived using estimated dividends over the expected term and the stock price at the date of the grant. The risk free interest rate is based on the U.S. Treasury yield at date of grant.

As of September 30, 2007, the Company had $60,841 in unrecognized stock-based compensation expense related to unvested stock options. The Company expects to recognize that cost over a remaining weighted-average period of 4.0 years.

~~Restricted Stock and Stock Units~~

~~Unvested restricted stock and stock unit awards at September 30, 2007 and changes during the nine months then ended were as follows:~~

Outstanding at
   Unvested
Restricted
Stock and
Units Weighted
Average
Grant Date
Fair Value
December 31, 2006
   1,516,063 $ 133.44
Granted
   2,517,718 $ 168.12
Forfeited
   (80,441 ) $ 161.37
Vested
   (136,955 ) $ 126.45

September 30, 2007
   3,816,385 $ 155.98

On January 25, 2007, the Company issued 901,609 restricted stock units (“RSUs”) to employees in conjunction with their annual service awards. The RSU awards vest over three years through January 2010. The value of the RSUs was calculated using BlackRock’s closing stock price on the date of grant, or $169.70. The grant date fair value of the RSUs is being amortized into earnings on the straight-line method over the requisite service period, net of expected forfeitures, for each separately vesting portion of the award as if the award was, in substance, multiple awards.

On January 31, 2007, the Company issued 1,540,050 RSUs to employees as long-term incentive compensation. The RSU awards vest on September 29, 2011 provided that BlackRock has actual GAAP earnings per share of at least $5.20 in 2009, $5.52 in 2010 or $5.85 in 2011. An alternative performance hurdle provides for vesting of the awards based on specific targets for the Company’s earnings growth performance to peers over the term of the awards. The value of the RSUs was calculated using BlackRock’s closing stock price on the date of grant, or $167.76. The grant-date fair value of the RSUs is being amortized into earnings on the straight-line method over the vesting period, net of expected forfeitures.

~~- 15 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~

~~Financial Statements (continued)~~

~~5. Stock-Based Compensation (continued)~~

~~Restricted Stock and Stock Units (continued)~~

At September 30, 2007, there was $434,875 in unrecognized stock-based compensation expense related to unvested RSU awards. The Company expects to recognize that cost over a remaining weighted-average period of 3.6 years.

~~6. Goodwill~~

~~During the first nine months of 2007, the Company recorded goodwill adjustments of $197,504~~2008 primarily related to the ~~MLIM transaction as the result of the~~ Company’s ~~ongoing~~ review of its purchase price allocation ofin the three months ended March 31, 2008 related to the net assets acquired in the MLIM transaction. Additional net deferred tax liabilities totaling $157,283 were recorded primarily as a result of $199,018 of adjustments to changes in expected applicable state tax rates, offset by $35,549 related to additional expected compensation deductions and $6,186 of other tax-related adjustments. Additionally, the Company established a reserve and the related deferred tax asset for an out-of-market lease assumed in the MLIM transaction in the net amount of $23,166..from Quellos.

~~7. Borrowings~~

7.	Borrowings

~~Short Term Borrowing:~~Short-Term Borrowings

In December 2006, the Company entered into an unsecured revolving credit facility with a syndicate of banking institutions. This facility, as amended in February 2007 (the “2006 facility”), permitted the Company to borrow up to $800,000.

In August 2007, the Company ~~terminated the 2006 facility and~~ entered into a ~~new five year~~five-year $2,500,000 unsecured revolving credit facility the (the “2007 ~~facility”~~Facility”), which permits the Company to request an additional $500,000 of borrowing capacity, subject to lender credit approval, up to a maximum of $3,000,000. The 2007 ~~facility~~Facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to EBITDA, where net debt equals total debt less domestic unrestricted cash) of 3 to 1, which was satisfied at ~~September~~June 30, ~~2007.~~2008.

~~The 2007 facility was used to refinance the 2006 facility and will provide back-up liquidity, fund ongoing working capital for general corporate purposes and fund various investment opportunities.~~ At ~~September~~June 30, ~~2007,~~2008, the Company had ~~$450,000~~$300,000 outstanding under the 2007 ~~facility~~Facility with interest rates between ~~5.105%~~2.655% to ~~5.845%~~5.105% and maturity dates between ~~October 2007~~July 2008 and September 2008. During July 2008 the Company repaid $100,000 of the balance outstanding.

In addition, in December 2007, in order to support two enhanced cash funds that BlackRock manages, BlackRock elected to procure two LOCs under the 2007 Facility totaling in aggregate $100,000.

In June 2008, BlackRock Japan Co., Ltd., a wholly owned subsidiary of the Company, entered into a five billion Japanese yen commitment-line agreement with a banking institution (the “Japan Commitment-line”). The term of the Japan Commitment-line is one year and interest will accrue at the applicable Japanese short-term prime rate. The Japan Commitment-line is intended to provide liquidity flexibility for operating requirements in Japan. At June 30, 2008, the Company had no borrowings outstanding on the Japan Commitment-line.

~~Long Term Borrowings:~~Long-Term Borrowings

~~In September 2007,~~At June 30, 2008, the ~~Company issued $700,000 in~~estimated fair value of the Company’s $249,997 aggregate principal amount of ~~6.25% senior unsecured notes maturing on September 15, 2017 (the “Notes”).~~convertible debentures was $447,225. The ~~Notes were issued at~~fair value was estimated using a discount of $5,628, which is being amortized over their ten-year term. The Company incurred approximately $4,000 in debt issuance costs, which are included in other assets on the condensed consolidated statements of financial condition and are being amortized over the termmarket price as of the ~~Notes. A portion~~end of June 2008.

At June 30, 2008, the carrying value and the estimated fair value of the ~~net proceeds~~Company’s $700,000 long-term notes was $694,819 and $695,926, respectively. The fair value was estimated using an applicable bond index as of the ~~Notes was used to fund the initial cash payment for its acquisition~~end of ~~the fund of funds business of Quellos Group, LLC (“Quellos”) and the remainder will be used for general corporate purposes.~~June 2008.

- 1618 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

~~8. Deferred Mutual Fund Sales Commissions~~

8.	Related Party Transaction

~~In April 2007,~~On February 29, 2008, the Company ~~assumed from~~committed to provide financing, if needed, of up to $60,000 to Anthracite Capital, Inc. (“Anthracite”), a specialty commercial real estate finance company that is managed by a subsidiary of ~~PNC certain distribution financing arrangements to receive certain cash flows from sponsored open-ended mutual funds sold without~~BlackRock. Financing is collateralized by Anthracite pledging its ownership interest in an investment fund which is also managed by a ~~front-end sales charge (“back-end load shares”). The fair value~~subsidiary of these assets was capitalized and is being amortized over periods up to six years. The Company also assumed the rights to related distribution and service fees from certain funds and contingent deferred sales commissions upon shareholder redemptionBlackRock. Borrowings of ~~certain back-end load shares prior to the end of the contingent deferred sales period. The Company paid $33,996 in exchange for the above rights.~~

~~9. Termination of Fund Administration and Servicing Arrangements with Merrill Lynch~~

Effective September 28, 2007, the Company insourced certain closed-end fund administration and servicing arrangements in place with Merrill Lynch & Co., Inc. (“Merrill Lynch”). In connection with this insourcing, the Company terminated 40 agreements with Merrill Lynch with original terms ranging from 30 to 40 years and made a one-time payment to Merrill Lynch of approximately $128,114 on October$52,500, which were outstanding at March 31, 2007. The payment is reported as “termination of closed-end fund administration and servicing arrangements” on the condensed consolidated statements of income and is recorded in “due to affiliates” on the condensed consolidated statements of financial condition. As a result of these terminations, Merrill Lynch was discharged of any further duty to provide the services and BlackRock was discharged from any further payment obligations..

~~10. Income Taxes~~

~~In the third quarter of 2007, the United Kingdom and Germany enacted legislation which will reduce the corporate income tax in those jurisdictions, effective~~2008, were repaid in April ~~and January~~2008. Subsequent to June 30, 2008, ~~respectively. Accordingly, the Company revalued its deferred tax liabilities attributable to the two jurisdictions. The revaluation~~Anthracite borrowed $30,000 at an interest rate of ~~deferred taxes resulted in a tax benefit of $51,400 in the third quarter of 2007.~~

~~- 17 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~5.295%.

~~Item 1.~~9.

~~Financial Statements (continued)~~Commitments and Contingencies

~~11. Supplemental Cash Flow Information~~Commitments

~~Supplemental disclosure of cash flow information is as follows:~~

   Nine Months Ended
September 30,
   2007    2006
Cash paid for interest
   $ 22,910    $ 6,876

Cash paid for income taxes
   $ 257,410    $ 127,364

~~Supplemental schedule of non-cash investing and financing transactions is as follows:~~

   Nine Months Ended
September 30,
   2007    2006
Common and preferred stock issued in MLIM Transaction
   $ —      $ 9,577,100
Issuance of treasury stock
   $ 102,735    $ 13,278
Decrease in investments due to net deconsolidations of sponsored investment funds
   $ 183,442    $ 7,638
Decrease in non-controlling interest due to net deconsolidations of sponsored investment funds
   $ 210,252    $ 8,881
PNC LTIP capital contribution
   $ 174,932    $ —

~~- 18 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~Investment / Loan Commitments

~~Item 1.~~

~~Financial Statements (continued)~~

~~12. Commitments~~At June 30, 2008, the Company had approximately $692,275 of certain investment and ~~Contingencies~~

loan commitments relating primarily to real estate funds, hedge funds, funds of private equity funds and a warehouse entity established for certain private equity funds of funds. Amounts to be funded generally are callable at any point prior to the expiration of the commitment.

Contingencies

Legal Proceedings

BlackRock has received subpoenas from various U.S. federal and state governmental and regulatory authorities and various information requests from the SEC in connection with industry-wide investigations of U.S. mutual fund matters. BlackRock is continuing to cooperate fully in these matters. From time to time, BlackRock is subject to other regulatory inquiries and proceedings.

The Company ~~including a number~~and certain of ~~the legal entities acquired in the MLIM Transaction, has~~its subsidiaries have been named as ~~a defendant~~defendants in various legal actions, including arbitrations, class actions, and other litigation and regulatory proceedings arising in connection with BlackRock’s activities. Additionally, the investment funds that the Company manages are subject to lawsuits, any of which could 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 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. 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.

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 ~~and cash flows~~ in any future reporting period.

- 19 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

9.	Commitments and Contingencies (continued)

Contingencies (continued)

Indemnifications

In the ordinary course of business, BlackRock enters into contracts ~~with clients and third party service providers. In many of the contracts, BlackRock agrees~~pursuant to which it may agree to indemnify ~~the client or~~ third ~~party service provider~~parties in certain circumstances. The terms of ~~such indemnity obligations~~these indemnities vary from contract to contract and the amount of indemnification liability, if any, cannot be determined.

~~In conjunction with~~Under the Transaction Agreement in the MLIM Transaction, the Company has agreed to indemnify Merrill Lynch for losses it may incur arising from (1) inaccuracy in or breach of representations or warranties related to the Company’s SEC reports, absence of undisclosed liabilities, litigation and compliance with laws and government regulations, without giving effect to any materiality or material adverse effect qualifiers, (2) any alleged or actual breach, failure to comply, violation or other deficiency with respect to any regulatory or fiduciary requirements relating to the operation of BlackRock’s business, ~~(3)~~(2) any fees or expenses incurred or owed by BlackRock to any brokers, financial advisors or comparable other person retained or employed by BlackRock in connection with the ~~transaction,~~MLIM Transaction, and ~~(4)~~(3) certain specified tax covenants.

Merrill Lynch is not entitled to indemnification for any losses arising from the circumstances and events described in (1) above until the aggregate losses (other than individual losses less than $100) of Merrill Lynch exceed $100,000. In the event that such losses exceed $100,000, Merrill Lynch is entitled to be indemnified only for such losses (other than individual losses less than $100) in excess of $100,000. Merrill Lynch is not entitled to indemnification payments pursuant to (1) above in excess of $1,600,000 or for claims made more than 18 months from the closing of the MLIM Transaction. These limitations do not apply to losses arising from the circumstances and events described in (2), (3) and (4) above, which survive indefinitely.

~~- 19 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 1.~~

~~Financial Statements (continued)~~

~~12. Commitments and Contingencies (continued)~~

~~Indemnifications (continued)~~

Management believes that the likelihood of any liability arising under these indemnification provisions ~~to be remote and, as such, no liability has been recorded on the condensed consolidated statements of financial condition.~~is remote. Management cannot estimate any potential maximum exposure due both to the remoteness of any potential claims and the fact that items that would be included within any such calculated claim would be beyond the control of BlackRock.

~~13. Subsequent Events~~

~~In June 2007,~~ Consequently, no liability has been recorded on the ~~Company announced that it had entered into an asset purchase agreement under which it would acquire certain assets~~condensed consolidated statements of the fund of funds business of Quellos for up to $1,720,000. This transaction closed on October 1, 2007, and BlackRock paid Quellos $562,500 in cash and $187,500 in BlackRock common stock. The common stock will be held in escrow for up to three years and is available to satisfy certain indemnification obligations of Quellos under the asset purchase agreement. In addition, Quellos may receive up to an additional $970,000 in cash and stock over three and a half years contingent upon certain operating measures.

~~In April 2003, the Company acquired 80% of an investment manager of a fund of hedge funds. On October 1, 2007, the Company paid $27,000 to purchase the remaining 20% of the investment manager.~~financial condition.

- 20 -

PART I —- FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

10.	Stock-Based Compensation

The components of the Company’s stock-based compensation expense are comprised of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Stock-based compensation:
Restricted stock and restricted stock units (“RSUs”)	$	47,780	$	32,463	$	98,927	$	59,565
Stock options		839		3,533		4,372		5,889
Long-term incentive plans (funded by PNC¹)		14,751		13,933		29,772		25,976

Total stock-based compensation	$	63,370	$	49,929	$	133,071	$	91,430

¹	The PNC Financial Services Group, Inc.

Stock Options

Options outstanding at June 30, 2008 and changes during the six months ended June 30, 2008 were as follows:


Outstanding at	Shares Under Option		Weighted Average Exercise Price
December 31, 2007	4,101,165		$	86.19
Exercised	(474,798	)	$	37.30
Forfeited	(298,635	)	$	169.07

June 30, 2008	3,327,732		$	85.73

The aggregate intrinsic value of options exercised during the six months ended June 30, 2008 was $82,543.

- 21 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

10.	Stock-Based Compensation (continued)

Stock Options (continued)

The three and six months ended June 30, 2008 included a cumulative adjustment to the estimated forfeiture rate for unvested stock options as a result of additional data on actual forfeiture activity.

At June 30, 2008, the Company had $39,752 in unrecognized stock-based compensation expense related to unvested stock options. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 3.3 years.

Restricted Stock and RSUs

Restricted stock and RSUs outstanding at June 30, 2008 and changes during the six months ended June 30, 2008 were as follows:


Outstanding at	Unvested Restricted Stock and RSUs		Weighted Average Grant Date Fair Value
December 31, 2007	3,709,008		$	158.01
Granted	1,551,502		$	202.48
Converted	(433,055	)	$	149.05
Forfeited	(183,239	)	$	160.03

June 30, 2008	4,644,216		$	173.62

The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRock’s common stock price.

In January 2008, the Company granted 295,633 RSUs as long-term incentive compensation, which will be partially funded by shares currently held by PNC (seeLong-Term Incentive Plans Funded by PNC below). The awards cliff vest five years from the date of grant.

In January 2008, the Company granted 1,212,759 RSUs to employees as part of annual incentive compensation under the BlackRock, Inc. 1999 Stock Award and Incentive Plan (the “Award Plan”) that vest ratably over three years from the date of grant.

At June 30, 2008, there was $565,459 in unrecognized compensation cost related to unvested restricted stock and RSUs. The unrecognized compensation cost is expected to be recognized over the remaining weighted average period of 2.7 years.

- 22 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

10.	Stock-Based Compensation (continued)

Long-Term Incentive Plans Funded by PNC

Under a share surrender agreement, PNC committed to provide up to 4,000,000 shares of BlackRock common stock, held by PNC, to fund certain BlackRock long-term incentive plans (“LTIP”).

During 2007, the Company granted additional long-term incentive awards out of the Award Plan of approximately 1,600,000 RSUs that will be settled using BlackRock shares held by PNC in accordance with the share surrender agreement. The RSU awards vest on September 29, 2011 provided that BlackRock has actual GAAP earnings per share of at least $5.20 in 2009, $5.52 in 2010 or $5.85 in 2011 or has attained an alternative performance hurdle based on the Company’s earnings per share growth rate versus certain peers over the term of the awards. The value of the RSUs was calculated using BlackRock’s closing stock price on the date of grant. The grant date fair value of the RSUs is being amortized as an expense on the straight-line method over the vesting period, net of expected forfeitures. The maximum value of awards that may be funded by PNC, prior to the earlier of September 29, 2011 or the date the performance criteria are met, is approximately $271,000, all of which has been granted as of June 30, 2008.

- 23 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

11.	Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Net income	$	274,058	$	222,244	$	515,729	$	417,632

Basic weighted-average shares outstanding		129,569,325		128,544,894		129,242,591		128,676,577

Dilutive potential shares from stock options and restricted stock units		2,725,447		2,275,810		2,702,458		2,363,035
Dilutive potential shares from convertible debt		655,806		562,766		668,773		540,509
Dilutive potential shares from acquisition-related contingent stock payments		576,135		—		576,135		—

Dilutive weighted-average shares outstanding		133,526,713		131,383,470		133,189,957		131,580,121

Basic earnings per share	$	2.12	$	1.73	$	3.99	$	3.25

Diluted earnings per share	$	2.05	$	1.69	$	3.87	$	3.17

Due to the similarities in terms between BlackRock series A non-voting participating preferred stock and the Company’s common stock, the Company considers the series A non-voting participating preferred stock to be common stock for purposes of earnings per share calculations. As such, the Company has included the outstanding series A non-voting participating preferred stock in the calculation of average basic and diluted shares outstanding for the three and six months ended June 30, 2008 and 2007.

Shares issued in acquisition

On October 1, 2007, the Company acquired the fund of funds business of Quellos and issued 1,191,785 shares of BlackRock common stock that were placed into an escrow account. In April 2008, 280,519 shares were released to Quellos in accordance with the Quellos asset purchase agreement, which resulted in an adjustment to the recognized purchase price and had a dilutive effect in the three and six months ended June 30, 2008. Additional shares may have a dilutive effect in future periods based on the timing of the release of shares from the escrow account in accordance with the Quellos asset purchase agreement.

- 24 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

12.	Segment Information

The Company’s management directs BlackRock’s operations as one business, the asset management business. As such, the Company believes it operates in one business segment in accordance with SFAS No. 131,Disclosures About Segments of an Enterprise and Related Information.

The following table illustrates investment advisory and administration base and performance fee revenue by asset class for the three and six months ended June 30, 2008 and 2007, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,
Investment advisory and administration fees	2008		2007		2008		2007
Fixed income	$	234,542	$	223,041	$	457,267	$	442,659
Equity and balanced		630,805		535,986		1,271,443		1,015,525
Cash management		183,505		120,189		358,059		234,786
Alternative investments		169,584		97,114		306,088		179,286

Total investment advisory and administration fees	$	1,218,436	$	976,330	$	2,392,857	$	1,872,256

In addition, distribution and other revenue, which includesBlackRock Solutions, totaled $168,515 and $294,232 for the three and six months ended June 30, 2008, as compared to $120,693 and $230,141 for the three and six months ended June 30, 2007.

The following table illustrates the Company’s total revenue by geographic region for the three and six months ended June 30, 2008 and 2007. These amounts are aggregated on a legal entity jurisdiction basis and do not necessarily reflect where the customer is sourced.


	Three Months Ended June 30,
Revenue	2008		% of total		2007		% of total
North America	$	915,093	66.0	%	$	716,099	65.3	%
Europe		389,113	28.1	%		340,354	31.0	%
Asia-Pacific		82,745	5.9	%		40,570	3.7	%

Total revenue	$	1,386,951	100.0	%	$	1,097,023	100.0	%


	Six Months Ended June 30,
Revenue	2008		% of total		2007		% of total
North America	$	1,744,277	64.9	%	$	1,372,961	65.3	%
Europe		806,166	30.0	%		652,542	31.0	%
Asia-Pacific		136,646	5.1	%		76,894	3.7	%

Total revenue	$	2,687,089	100.0	%	$	2,102,397	100.0	%

- 25 -

PART I - FINANCIAL INFORMATION (continued)

Item 1.

Financial Statements (continued)

12.	Segment Information (continued)

The following table illustrates the Company’s long-lived assets, including goodwill and property and equipment at June 30, 2008 and December 31, 2007 by geographic region. These amounts are aggregated on a legal entity jurisdiction basis.


Long-lived Assets	June 30, 2008				December 31, 2007
North America	$	5,707,511	98.4	%	$	5,695,172	98.4	%
Europe		38,597	0.7	%		34,584	0.6	%
Asia-Pacific		54,466	0.9	%		56,418	1.0	%

Total long-lived assets	$	5,800,574	100.0	%	$	5,786,174	100.0	%

Revenue and long-lived assets in North America are primarily comprised of the United States, while Europe is primarily comprised of the United Kingdom and Asia-Pacific is primarily comprised of Australia and Japan.

13.	Subsequent Events

Material Definitive Agreements

In July 2008, the Company entered into an Amended and Restated Stockholder Agreement (“Stockholder Agreement”) and an Amended and Restated Global Distribution Agreement (“Global Distribution Agreement”) with Merrill Lynch.

The changes in the Stockholder Agreement in relation to the prior agreement, among other things, (i) provide Merrill Lynch with some additional flexibility to form or acquire asset managers substantially all of the business of which is devoted to nontraditional investment management strategies such as short selling, leverage, arbitrage, specialty finance and quantitatively-driven structured trades; (ii) expand the definition of change in control of Merrill Lynch to include the disposition of two-thirds or more of its Global Private Client business; (iii) extend the general termination date to the later of July 16, 2013 or the date Merrill Lynch’s beneficial ownership of BlackRock falls below 20%; and (iv) clarify certain other provisions in the agreement.

The changes in the Global Distribution Agreement in relation to the prior agreement, among other things, (i) provide for an extension to September 29, 2013, an additional 5-year extension after the date of a change in control of Merrill Lynch and one automatic 3-year extension if certain conditions are satisfied; (ii) strengthen the obligations of Merrill Lynch to achieve revenue neutrality across the range of BlackRock products distributed by Merrill Lynch if the pricing or structure of particular products is required to be changed; (iii) obligate Merrill Lynch to seek to obtain distribution arrangements for BlackRock products from buyers of any portion of its distribution business on the same terms as the Global Distribution Agreement for a period of at least 3 years; and (iv) restrict the manner in which products managed by alternative asset managers in which Merrill Lynch has an interest may be distributed by Merrill Lynch.

Acquisition of Impact Investing

On August 1, 2008, the Company acquired Impact Investing, a Sydney, Australia based software development company specializing in equity portfolio management and analytical software tools. The total consideration to be paid in the acquisition is not expected to be material to the Company’s condensed consolidated financial statements.

- 26 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

This report, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

BlackRock cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to risk factors previously disclosed in BlackRock’s SEC reports and those identified elsewhere in this report the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of capital improvement projects; (6) the impact of future acquisitions or divestitures; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share repurchases; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock, Merrill Lynch or PNC; (11) terrorist activities and international hostilities, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries, ~~and~~or BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in the carrying value of BlackRock’s investments; (14) fluctuations in foreign currency exchange rates, which may adversely affect the value of investment advisory and administration fees earned by BlackRock ~~and~~or the carrying value of certain ~~investments~~assets and liabilities denominated in foreign currencies; (15) the impact of changes to tax legislation and, generally, the tax position of the Company; (16) BlackRock’s ability to successfully integrate the MLIM and Quellos ~~businesses~~Businesses with its existing business; (17) the ability of BlackRock to effectively manage the former MLIM and Quellos assets along with its historical assets under management; ~~and~~ (18) BlackRock’s success in maintaining the distribution of its ~~products.~~products; and (19) the impact of BlackRock electing to provide support to its products from time to time.

- 2127 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is one of the largest publicly traded investment management firms in the United States with ~~$1.3~~$1.428 trillion of assets under management (“AUM”) at ~~September~~June 30, ~~2007.~~2008. BlackRock manages assets on behalf of institutional and individual investors worldwide through a variety of fixed income, cash management, equity and balanced and alternative investment separate accounts and funds. In addition, BlackRock provides risk management, financial markets advisory and enterprise investment system ~~outsourcing and financial~~services to a broad base of clients. Financial markets advisory services ~~to institutional investors.~~include valuation of illiquid securities, dispositions and workouts, risk management and strategic planning and execution.

On September 29, 2006, BlackRock and Merrill Lynch & Co., Inc. (“Merrill Lynch”) closed a transaction pursuant to which Merrill Lynch contributed its investment management business, Merrill Lynch Investment Managers (“MLIM”), to BlackRock in exchange for an aggregate of 65 million shares of newly issued BlackRock common and non-voting participating preferred stock (the “MLIM Transaction”). On October 1, 2007, BlackRock acquired certain assets and assumed certain liabilities of the fund of funds business of Quellos Group, LLC (“Quellos”) for up to $1.719 billion in a combination of cash and common stock (the “Quellos Transaction”). At ~~September~~June 30, ~~2007,~~2008, Merrill Lynch owned approximately ~~45.4%~~44.8% of the Company’s voting common stock and approximately ~~49.6%~~48.7% of the ~~total~~Company’s capital stock on a fully diluted basis ~~of the Company~~ and The PNC Financial Services Group, Inc. (“PNC”) owned approximately ~~33.7%~~33.3% of the capital stock.

- 2228 -

PART I ~~— FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~BlackRock, Inc.~~

~~Financial Highlights~~

~~(Dollar amounts in thousands, except per share data)~~

The following table summarizes BlackRock’s operating performance for each of the three months ended September 30, 2007, June 30, 2007 and September 30, 2006 and the nine months ended September 30, 2007 and September 30, 2006. Certain prior period amounts have been reclassified to conform to the current presentation.

   Three months ended Variance vs.
   September 30, June 30, September 30, 2006 June 30, 2007
   2007 2006 2007 Amount    % Amount %
Total revenue
   $ 1,298,079 $ 323,058 $ 1,097,023 $ 975,021    301.8 % $ 201,056 18.3 %
Total expenses
   $ 1,026,361 $ 294,050 $ 815,022 $ 732,311    249.0 % $ 211,339 25.9 %
Operating income
   $ 271,718 $ 29,008 $ 282,001 $ 242,710    NM $ (10,283 ) (3.6 )%
Operating income, as adjusted^(a)
   $ 423,656 $ 115,266 $ 335,644 $ 308,390    267.5 % $ 88,012 26.2 %
Net income
   $ 255,200 $ 18,914 $ 222,244 $ 236,286    NM $ 32,956 14.8 %
Net income, as adjusted^(b)
   $ 300,079 $ 71,519 $ 236,626 $ 228,560    319.6 % $ 63,453 26.8 %
Diluted earnings per share^(c)
   $ 1.94 $ 0.28 $ 1.69 $ 1.66    NM $ 0.25 14.8 %
Diluted earnings per share, as adjusted^(b) (c)
   $ 2.29 $ 1.06 $ 1.80 $ 1.23    116.0 % $ 0.49 27.2 %
Average diluted shares outstanding^(c)
   131,316,455 67,477,536 131,383,470 63,838,919    94.6 % (67,015 ) (0.1 )%
Operating margin, GAAP basis
   20.9 % 9.0 % 25.7 %
Operating margin, as adjusted^(a)
   37.7 % 38.5 % 36.1 %
Assets under management ($ in millions)
   $ 1,299,556 $ 1,075,016 $ 1,230,086 $ 224,540    20.9 % $ 69,470 5.6 %

   Nine months ended
September 30, Variance
   2007 2006 Amount    %
Total revenue
   $ 3,400,476 $ 1,079,451 $ 2,321,025    215.0 %
Total expenses
   $ 2,574,528 $ 853,734 $ 1,720,794    201.6 %
Operating income
   $ 825,948 $ 225,717 $ 600,231    265.9 %
Operating income, as adjusted^(a)
   $ 1,070,209 $ 361,653 $ 708,556    195.9 %
Net income
   $ 672,832 $ 153,179 $ 519,653    339.2 %
Net income, as adjusted^(b)
   $ 745,945 $ 232,969 $ 512,976    220.2 %
Diluted earnings per share^(c)
   $ 5.12 $ 2.29 $ 2.83    123.6 %
Diluted earnings per share, as adjusted^(b) (c)
   $ 5.67 $ 3.48 $ 2.19    62.9 %
Average diluted shares outstanding^(c)
   131,534,188 66,903,553 64,630,635    96.6 %
Operating margin, GAAP basis
   24.3 % 20.9 %
Operating margin, as adjusted^(a)
   36.9 % 35.9 %
Assets under management ($ in millions)
   $ 1,299,556 $ 1,075,016 $ 224,540    20.9 %

~~NM – Not Meaningful~~

- ~~23 -~~

~~PART I —~~ FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(Dollar amounts in thousands, except per share data)

(unaudited)

The following table summarizes BlackRock’s operating performance for each of the three months ended June 30, 2008, March 31, 2008 and June 30, 2007 and the six months ended June 30, 2008 and 2007. Certain prior year amounts have been reclassified to conform to the 2008 presentation.


	Three Months Ended									Variance vs.
	June 30,						March 31,			June 30, 2007				March 31, 2008
	2008			2007			2008			Amount		%		Amount		%
Total revenue	$	1,386,951		$	1,097,023		$	1,300,138		$	289,928	26.4	%	$	86,813	6.7	%
Total expenses	$	981,961		$	815,022		$	904,448		$	166,939	20.5	%	$	77,513	8.6	%
Operating income	$	404,990		$	282,001		$	395,690		$	122,989	43.6	%	$	9,300	2.4	%
Net income	$	274,058		$	222,244		$	241,671		$	51,814	23.3	%	$	32,387	13.4	%
Net income, as adjusted^(b)	$	285,271		$	236,626		$	253,060		$	48,645	20.6	%	$	32,211	12.7	%
Diluted earnings per share^(c)	$	2.05		$	1.69		$	1.82		$	0.36	21.3	%	$	0.23	12.6	%
Diluted earnings per share, as adjusted ^(b) (c)	$	2.14		$	1.80		$	1.90		$	0.34	18.9	%	$	0.24	12.6	%
Weighted average diluted shares outstanding^(c)		133,526,713			131,383,470			132,876,553			2,143,243	1.6	%		650,160	0.5	%
Operating margin, GAAP basis		29.2	%		25.7	%		30.4	%
Operating margin, as adjusted^(a)		37.9	%		36.1	%		37.6	%

Assets under management ($ in millions)	$	1,427,543		$	1,230,086		$	1,364,436		$	197,457	16.1	%	$	63,107	4.6	%


	Six Months Ended June 30,						Variance
	2008			2007			Amount		%
Total revenue	$	2,687,089		$	2,102,397		$	584,692	27.8	%
Total expenses	$	1,886,409		$	1,548,165		$	338,244	21.8	%
Operating income	$	800,680		$	554,232		$	246,448	44.5	%
Net income	$	515,729		$	417,632		$	98,097	23.5	%
Net income, as adjusted^(b)	$	538,331		$	445,866		$	92,465	20.7	%
Diluted earnings per share^(c)	$	3.87		$	3.17		$	0.70	22.1	%
Diluted earnings per share, as adjusted^(b) (c)	$	4.04		$	3.39		$	0.65	19.2	%
Weighted average diluted shares outstanding^(c)		133,189,957			131,580,121			1,609,836	1.2	%
Operating margin, GAAP basis		29.8	%		26.4	%
Operating margin, as adjusted^(a)		37.8	%		36.4	%

Assets under management ($ in millions)	$	1,427,543		$	1,230,086		$	197,457	16.1	%

- 29 -

PART I - FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(a) BlackRock reports its financial results on a GAAP ~~basis,~~basis; however, management believes that evaluating the Company’s ongoing operating results may not be as useful if investors are limited to reviewing only GAAP financial measures. Management reviews non-GAAP financial measures to assess 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.

Operating margin, as adjusted, equals operating income ~~as adjusted,~~used for operating margin measurement, divided by revenue used for operating margin measurement, as indicated in the table below. As a result of recent changes in BlackRock’s business, management has altered the way it views its operating margin, as adjusted. As such, the calculation of operating income, as adjusted, and operating margin, as adjusted, were modified in the second quarter 2007 primarily to adjust for costs associated with closed-end fund issuances and amortization of deferred sales costs, as shown below. Revenue used for operating margin, as adjusted, for all periods presented includes affiliated and unaffiliated portfolio administration and servicing costs. Certain prior period non-GAAP data has been reclassified to conform to the current presentation. Computations for all periods are derived from the Company’s condensed consolidated statements of income as follows:


	Three months ended									Nine months ended September 30,						Three Months Ended									Six Months Ended June 30,
	September 30,						June 30,			Nine months ended September 30,						June 30,						March 31,			Six Months Ended June 30,
	2007			2006			2007			2007			2006			2008			2007			2008			2008			2007
Operating income, GAAP basis	$	271,718		$	29,008		$	282,001		$	825,948		$	225,717		$	404,990		$	282,001		$	395,690		$	800,680		$	554,232
Non-GAAP adjustments:
Termination of closed-end fund administration and servicing arrangements		128,114			—			—			128,114			—
PNC LTIP funding obligation		13,613			12,045			13,933			39,589			36,068			14,751			13,933			15,021			29,772			25,976
Merrill Lynch compensation contribution		2,500			—			2,500			7,500			—			2,500			2,500			2,500			5,000			5,000
MLIM integration costs		6,139			71,456			6,039			19,278			90,580			—			6,039			—			—			13,139
Quellos integration costs		140			—			—			140			—
Closed-end fund launch costs		1,875			4,933			19,801			34,828			5,464			5,388			19,801			3,739			9,127			32,953
Closed-end fund launch commissions		264			973			4,297			5,958			1,387
Appreciation (depreciation) related to deferred compensation plans		(707	)		(3,149	)		7,073			8,854			2,437
Closed-end fund commissions																	—			4,297			164			164			5,694
Compensation expense related to (depreciation) appreciation on deferred compensation plans																	24,925			7,073			(795	)		24,129			9,559

Operating income, as adjusted	$	423,656		$	115,266		$	335,644		$	1,070,209		$	361,653
Operating income used for operating margin measurement																$	452,554		$	335,644		$	416,319		$	868,872		$	646,553

Revenue, GAAP basis	$	1,298,079		$	323,058		$	1,097,023		$	3,400,476		$	1,079,451		$	1,386,951		$	1,097,023		$	1,300,138		$	2,687,089		$	2,102,397
Non-GAAP adjustments:
Portfolio administration and servicing costs		(138,850	)		(16,382	)		(131,077	)		(401,014	)		(48,529	)		(153,618	)		(131,077	)		(155,739	)		(309,357	)		(262,163	)
Amortization of deferred sales costs		(28,763	)		(1,341	)		(28,713	)		(79,034	)		(4,645	)
Amortization of deferred mutual fund sales commissions																	(33,422	)		(28,713	)		(30,208	)		(63,630	)		(50,271	)
Reimbursable property management compensation		(7,218	)		(6,219	)		(6,664	)		(20,525	)		(17,696	)		(6,341	)		(6,664	)		(6,119	)		(12,460	)		(13,306	)

Revenue used for operating margin measurement, as adjusted	$	1,123,248		$	299,116		$	930,569		$	2,899,903		$	1,008,581
Revenue used for operating margin measurement																$	1,193,570		$	930,569		$	1,108,072		$	2,301,642		$	1,776,657

Operating margin, GAAP basis		20.9	%		9.0	%		25.7	%		24.3	%		20.9	%		29.2	%		25.7	%		30.4	%		29.8	%		26.4	%

Operating margin, as adjusted		37.7	%		38.5	%		36.1	%		36.9	%		35.9	%		37.9	%		36.1	%		37.6	%		37.8	%		36.4	%

Management believes that operating margin, as adjusted, is an effective indicator of management’s ability to effectively employ BlackRock’s resources. As such, management believes that operating margin, as adjusted, provides useful disclosure to investors.

- 2430 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(a) (continued)

~~Management believes that~~Non-GAAP operating income ~~as adjusted, and~~adjustments used for operating margin, as adjusted, are effective indicators of management’s ability to effectively employ BlackRock’s resources. As such, management believes that operating income, as adjusted, and operating margin, as adjusted, provide useful disclosure to investors.

~~Non-GAAP Operating Income Adjustments~~adjusted::

The expense related to the termination of the closed-end fund administration and servicing arrangements with Merrill Lynch has been excluded from operating income, as adjusted, as the termination of the arrangements is deemed non-recurring by management. The portion of ~~the Long-Term Incentive Plan (“LTIP”)~~ expense associated with ~~awards~~certain Long-Term Incentive Plans (“LTIP”) that will be funded through the distribution to participants of shares of BlackRock common stock 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 do not impact BlackRock’s book value. MLIM ~~and Quellos~~ integration costs consist principally of certain professional fees, rebranding costs and compensation costs ~~related to~~incurred in conjunction with the integration which were reflected in GAAP ~~net~~operating income. Integration costs have been deemed non-recurring by management and have been excluded from operating income, as adjusted, to help ensure the comparability of this information to prior periods. Closed-end fund launch costs and commissions have been excluded from operating income, as adjusted, because such costs can fluctuate considerably and revenues associated with the expenditure of such costs will not fully impact the Company’s results until future periods. As such, management believes that operating margins exclusive of these costs are more representative of the operating performance for the ~~given period.~~respective periods. Compensation expense associated with appreciation (depreciation) on assets related to certain ~~BlackRock’s~~BlackRock deferred compensation plans has been excluded ~~because investment~~as returns on investments set aside for these ~~assets~~plans are reported in non-operating income.

Non-GAAP ~~Revenue Adjustments~~revenue adjustments used for operating margin, as adjusted::

Portfolio administration and servicing costs, paid to related parties and to other third parties, have been excluded from revenue used for operating margin, as adjusted, because the Company receives offsetting revenue and expense for these services. Amortization of deferred mutual fund sales ~~costs~~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 represents compensation and benefits paid to ~~certain~~personnel of Metric Property Management, Inc. (“Metric”) a subsidiary of BlackRock Realty Advisors, Inc. (“Realty”) ~~personnel.~~. These employees are retained on ~~Realty’s~~Metric’s payroll when certain properties are acquired by Realty’s clients. The related compensation and benefits are fully reimbursed by Realty’s clients and have been excluded from revenue used for operating margin, as adjusted, because they bear no economic cost to BlackRock.

~~- 25 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Overview (continued)~~

~~BlackRock, Inc.~~

~~Financial Highlights~~

~~(continued)~~

(b) BlackRock reports its financial results on a GAAP ~~basis,~~basis; however, management believes that evaluating the Company’s ongoing operating results may not be as useful if investors are limited to reviewing only GAAP-basis financial measures. Management reviews non-GAAP financial measures to assess 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.

   Three months ended    Nine months ended
   September 30,    June 31,    September 30,
   2007 2006    2007    2007 2006
Net income, GAAP basis
   $ 255,200 $ 18,914    $ 222,244    $ 672,832 $ 153,179
Non-GAAP adjustments, net of tax

Termination of closed-end fund administration and servicing arrangements
   81,993 —      —      81,993 —
PNC LTIP funding obligation
   8,712 7,588    8,917    25,337 22,723
Merrill Lynch compensation contribution
   1,600 —      1,600    4,800 —
MLIM integration costs
   3,929 45,017    3,865    12,338 57,067
Quellos integration costs
   90 —      —      90 —
Corporate income tax reductions
   (51,445 ) —      —      (51,445 ) —

Net income, as adjusted
   $ 300,079 $ 71,519    $ 236,626    $ 745,945 $ 232,969

Diluted weighted average shares outstanding
   131,316,455 67,477,536    131,383,470    131,534,188 66,903,553

Diluted earnings per share, GAAP basis
   $ 1.94 $ 0.28    $ 1.69    $ 5.12 $ 2.29

Diluted earnings per share, as adjusted
   $ 2.29 $ 1.06    $ 1.80    $ 5.67 $ 3.48


	Three Months Ended						Six Months Ended
	June 30,				March 31,		June 30,
	2008		2007		2008		2008		2007
Net income, GAAP basis	$	274,058	$	222,244	$	241,671	$	515,729	$	417,632
Non-GAAP adjustments, net of tax:
PNC LTIP funding obligation		9,588		8,917		9,764		19,352		16,625
Merrill Lynch compensation contribution		1,625		1,600		1,625		3,250		3,200
MLIM integration costs		—		3,865		—		—		8,409

Net income, as adjusted	$	285,271	$	236,626	$	253,060	$	538,331	$	445,866

Diluted weighted average shares outstanding^(c)		133,526,713		131,383,470		132,876,553		133,189,957		131,580,121

Diluted earnings per share, GAAP basis^(c)	$	2.05	$	1.69	$	1.82	$	3.87	$	3.17

Diluted earnings per share, as adjusted^(c)	$	2.14	$	1.80	$	1.90	$	4.04	$	3.39

Management believes that net income, as adjusted, and diluted earnings per share, as adjusted, are effective measurements of BlackRock’s profitability and financial performance. The termination of the closed-end fund administration and servicing arrangements with Merrill Lynch has been excluded from net income, as adjusted, as the termination of the arrangements is deemed non-recurring by management. The portion of the LTIP expense associated with awards that will be funded through the distribution to participants of shares of BlackRock common stock held by PNC and the anticipated Merrill Lynch compensation contribution have been excluded from net income, as adjusted, and diluted earnings per share, as adjusted, 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 do not impact BlackRock’s book value. MLIM ~~and Quellos~~ integration costs reflected in GAAP net income have been deemed non-recurring by management and have been excluded from net income, as adjusted, and diluted earnings per share, as adjusted, to help ensure the comparability of this information to prior reporting periods. Integration costs consist principally of ~~compensation costs,~~certain professional fees, rebranding costs and ~~rebranding~~compensation costs incurred in conjunction with the integrations. The United Kingdom and Germany, during third quarter 2007, enacted legislation reducing corporate income taxes, effective in April and January of 2008, respectively, which resulted in a revaluation of certain deferred tax liabilities. Currently, BlackRock does not anticipate a significant change to its overall tax rate in 2008. The resulting decrease in income taxes has been excluded from net income, as adjusted, as it is non-recurring and to ensure comparability to prior reporting periods.integration.

~~(c) Series A non-voting participating preferred stock is considered to be common stock for purposes of earnings per share calculations.~~

(c)	Series A non-voting participating preferred stock is considered to be common stock for purposes of earnings per share calculations.

- 2631 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview (continued)

BlackRock has portfolio managers located around the world, including the United States, the United Kingdom, ~~the~~The Netherlands, Japan, ~~Australia~~Hong Kong and ~~Hong Kong.~~Australia. The Company provides a wide array of taxable and tax-exempt fixed income, ~~cash management,~~ equity and balanced mutual funds and separate accounts, as well as a wide assortment of index-based equity and alternative investment products to a diverse global clientele. ~~In addition,~~ BlackRock provides global advisory services for mutual funds and other non-U.S. equivalent retail products. The Company’s non-U.S. mutual funds are based in a number of domiciles and cover a range of asset classes, including cash management, fixed income and equities. The primary retail fund group offered outside the United States is the BlackRock Global Funds (“BGF”), which was formerly the Merrill Lynch International Investment Funds (“MLIIF”)~~, which~~ and was rebranded in April 2008. BGF is authorized for distribution in more than 3035 jurisdictions worldwide. In the United States, the primary retail offerings include ~~a variety of~~various open-end and closed-end ~~funds, including the BlackRock Funds and the BlackRock Liquidity Funds.~~funds. Additional fund offerings include structured products, real estate funds, hedge funds, ~~and~~hedge funds of funds, private equity ~~fund~~funds and funds of funds, managed futures funds and exchange funds. These products are sold to both U.S. and non-U.S. high net worth, retail and institutional investors in a wide variety of active and passive ~~strategies.~~strategies covering both equity and fixed income assets.

BlackRock’s client base consists of financial institutions and other corporate clients, pension funds, high net worth individuals and retail investors around the world. BlackRock maintains a significant sales and marketing ~~force globally~~presence both inside and outside the United States that is focused on ~~acquiring~~establishing and maintaining ~~institutional~~retail and ~~retail~~institutional investment management relationships by marketing its services to ~~institutional~~retail and ~~retail~~institutional investors directly and through financial professionals, pension consultants and establishing third-party distribution relationships. BlackRock also distributes ~~certain~~a significant amount of its products and services through ~~broker-dealer subsidiaries of~~ Merrill Lynch under a Global Distribution Agreement, which was amended and restated in ~~addition~~July 2008, to among other ~~distributors.~~things provide for an extension which runs through September 29, 2013. See Note 13, Subsequent Events, to the Company’s condensed consolidated financial statements contained in Part I, Item 1 of this filing for further discussion.

BlackRock derives a substantial portion of its revenue from investment advisory and administration base fees, which are recognized as the services are performed. Such fees are primarily based on pre-determined percentages of the market value of AUM, percentages of committed capital during investment periods of certain products, or, in the case of certain real estate equity separate accounts, net operating income generated by the underlying properties, and are affected by changes in AUM, including market appreciation or depreciation, foreign exchange gains or losses and net subscriptions or redemptions. Net subscriptions or redemptions represent the sum of new client assets, additional fundings from existing clients (including dividend reinvestment), withdrawals of assets from, and termination of, client accounts and purchases and redemptions of mutual fund shares. Market appreciation or depreciation includes current income earned on, and changes in the fair value of, securities held in client accounts.

Investment advisory agreements for certain separate accounts and BlackRock’s alternative investment products ~~may~~ provide for performance fees ~~or carried interest allocations~~ in addition to fees based on AUM. ~~Performance~~Investment advisory performance fees ~~and carried interest allocations~~ generally are earned after a given period of time or when investment performance exceeds acertain contractual ~~threshold.~~thresholds. As such, the timing of recognition of ~~carried interest and~~ performance fees may increase the volatility of BlackRock’s revenue and earnings.

~~The Company also receives distribution fees and contingent deferred sales commissions from certain sponsored mutual funds sold without~~BlackRock provides a ~~front-end sales charge (“back-end load shares”). Such fees and commissions are shown on the condensed consolidated statements~~variety of ~~income as distribution fees.~~

~~Through~~~~BlackRock Solutions~~^®~~, the firm provides~~ risk management, ~~systems outsourcing,~~ investment ~~accounting~~analytic, investment system and financial markets advisory services ~~advisory and transition management services that combine capital markets expertise with proprietary systems and technology.~~ ~~BlackRock Solutions~~ ~~clients consist of~~to financial institutions, pension funds, asset managers, foundations, consultants, mutual fund sponsors, real estate investment trusts and government agencies. These services are provided under the brand nameBlackRock Solutions^® and include a wide array of risk management services, valuation of illiquid securities, disposition and workouts, strategic planning and execution, and enterprise investment system outsourcing for clients. Fees earned forBlackRock Solutions services, which include financial market advisory services, are ~~typically~~ based on some, or all, of the following methods: (i) fixed fees, (ii) percentages of ~~the market value~~various attributes of advisory assets ~~subject to the services~~under management and ~~the number of individual investment accounts, or on fixed~~(iii) performance fees ~~based on project scope and complexity. Fees earned on risk management, system outsourcing, investment accounting services, advisory and transition management services~~if contractual thresholds are met.BlackRock Solutions fees are recorded as other revenue in the condensed consolidated statements of income.

- 2732 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview (continued)

Operating expenses ~~primarily consist of~~reflect employee compensation and benefits, portfolio administration and servicing costs, amortization of deferred mutual fund sales commissions, general and administration expense and amortization of ~~finite-lived~~ intangible assets. Employee compensation and benefits expense ~~includes~~reflects salaries, deferred and incentive compensation, ~~long-term retention and incentive plans~~stock-based compensation and related benefit costs. Portfolio administration and servicing costs reflect payments made to Merrill Lynch-affiliated entities under the Global Distribution Agreement and to PNC-affiliated entities, as well as third parties, primarily associated with the administration and servicing of client investments in certain BlackRock products.

Assets Under Management

BlackRock, Inc.

Assets Under Management Summary

(Dollar amounts in millions)

            Variance
   September 30,    June 30,    September 30,¹    Quarter to Year to
   2007    2006    Quarter Year
Fixed income
   $ 509,750    $ 492,287    $ 443,594    3.5 % 14.9 %
Equity and balanced
   454,162    435,873    358,145    4.2 % 26.8 %
Cash management
   290,748    259,840    229,416    11.9 % 26.7 %
Alternative investments products
   44,896    42,086    43,861    6.7 % 2.4 %

Total
   $ 1,299,556    $ 1,230,086    $ 1,075,016    5.6 % 20.9 %


	June 30,		March 31,		June 30, 2007		Variance
	June 30,		March 31,				Quarter to Quarter		Year to Year
	2008						Quarter to Quarter		Year to Year
Fixed income	$	527,186	$	514,673	$	492,287	2.4	%	7.1	%
Equity and balanced		435,676		426,935		435,873	2.0	%	0.0	%
Cash management		344,944		349,208		259,840	(1.2	)%	32.8	%
Alternative investments products		76,103		73,620		42,086	3.4	%	80.8	%

Sub Total		1,383,909		1,364,436		1,230,086	1.4	%	12.5	%
Advisory¹		43,634		—		—	NM		NM

Total	$	1,427,543	$	1,364,436	$	1,230,086	4.6	%	16.1	%

~~September 30, 2006~~Advisory AUM reflects a reclassification of certain MLIM acquired assets. Approximately $7.9 billion was reclassified from fixed income to cash management, relative to the AUM as reported in BlackRock’s third quarter 2006 Form 10-Q.represents long-term portfolio liquidation assignments.

AUM increased approximately $69.5 billion, or 5.6%, to $1.3 trillion at September 30, 2007, compared to $1.230 trillion at June 30, 2007. The growth in AUM was attributable to $41.0 billion in net subscriptions, $20.3 billion in market appreciation and $8.2 billion in foreign exchange gains. Net subscriptions of $41.0 billion for the three months ended September 30, 2007 were the result of net new business of $30.2 billion in cash management products, $5.6 billion in fixed income products, $3.2 billion in equity and balanced products and $2.1 billion in alternative products. Market appreciation of $20.3 billion primarily reflected appreciation in equity and balanced assets of $9.9 billion, as equity markets ended positive for the three months ended September 30, 2007 and by market appreciation on fixed income products of $9.4 billion due to changes in market interest rates. Foreign exchange gains of $8.2 billion consisted primarily of $5.2 billion in equity and balanced assets and $2.5 billion in fixed income assets.

AUM increased approximately $224.5 billion, or 20.9%, to $1.3 trillion at September 30, 2007, compared with $1.075 trillion at September 30, 2006. Net subscriptions of $124.0 billion for the twelve months ended September 30, 2007 were primarily the result of net new business of $59.2 billion in cash management products, $31.6 billion in fixed income products, $22.0 billion in equity and balanced products and $11.3 billion in alternative investment products. Market appreciation of $84.9 billion largely reflected appreciation in equity and balanced assets of $63.4 billion, as equity markets improved during the period ended September 30, 2007 and market appreciation on fixed income products of $15.5 billion due to current income and changes in market interest rates. Foreign exchange gains of $19.0 billion consisted primarily of $12.7 billion in equity and balanced assets and $5.1 billion in fixed income assets.NM – Not Meaningful

- 2833 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Assets Under Management (continued)

AUM increased approximately $63.1 billion, or 4.6%, to $1.428 trillion at June 30, 2008, compared to $1.364 trillion at March 31, 2008. The growth in AUM was attributable to $63.2 billion in net subscriptions and $1.5 billion in net market appreciation, partially offset by $1.7 billion in foreign exchange losses. Net subscriptions of $63.2 billion for the three months ended June 30, 2008 was the result of net new business of $43.6 billion in advisory assignments, $16.7 billion in fixed income products primarily related to targeted duration products, $6.0 billion in equity and balanced products primarily related to global allocation products and $1.5 billion in alternative products, partially offset by net redemptions of $4.6 billion in cash management products at quarter-end. Net market appreciation of $1.5 billion included $3.7 billion of appreciation in equity and balanced assets primarily in sector funds, including natural resources funds. Foreign exchange losses of $1.7 billion consisted primarily of $0.9 billion in equity and balanced assets, $0.6 billion in fixed income assets and $0.1 billion in alternative products.

AUM increased approximately $197.5 billion, or 16.1%, to $1.428 trillion at June 30, 2008, compared with $1.230 trillion at June 30, 2007. The growth in AUM was attributable to $170.2 billion in net subscriptions, of which $21.9 billion was acquired in the Quellos Transaction and $16.9 billion represents foreign exchange gains, partially offset by $11.5 billion in net market depreciation. Net subscriptions of $170.2 billion for the twelve months ended June 30, 2008 were attributable to net new business of $82.9 billion in cash management products, $43.6 billion in advisory assets, $19.7 billion in equity and balanced products, $13.4 billion in fixed income products and $10.6 billion in alternative investment products. Foreign exchange gains of $16.9 billion consisted primarily of $10.4 billion in equity and balanced assets and $5.3 billion in fixed income assets. Market depreciation of $11.5 billion was more than explained by the depreciation in equity and balanced assets of $30.2 billion, as equity markets declined during the twelve months ended June 30, 2008, partially offset by appreciation on fixed income products of $16.1 billion due to current income and changes in market interest rates.

The following table presents the component changes in BlackRock’s AUM for the three months ended ~~September~~June 30, ~~2007.~~2008.

BlackRock, Inc.

Component Changes in Assets Under Management

For the Quarter Ended ~~September~~June 30, ~~2007~~2008

(Dollar amounts in millions)

   June 30,
2007    Net
subscriptions
(redemptions)    Foreign
exchange²    Market
appreciation
(depreciation)    September 30,
2007
Fixed income
   $ 492,287    $ 5,592    $ 2,504    $ 9,367    $ 509,750
Equity and balanced
   435,873    3,194    5,204    9,891    454,162
Cash management
   259,840    30,190    234    484    290,748
Alternative investment products
   42,086    2,066    219    525    44,896

Total
   $ 1,230,086    $ 41,042    $ 8,161    $ 20,267    $ 1,299,556

~~The following table presents the component changes in BlackRock’s AUM for the nine months ended September 30, 2007.~~

~~BlackRock, Inc.~~

~~Component Changes in Assets Under Management~~

~~For the Nine Months Ended September 30, 2007~~

~~(Dollar amounts in millions)~~


	March 31, 2008		Net subscriptions (redemptions)			Market appreciation (depreciation)			Foreign exchange ¹			June 30, 2008
	March 31, 2008		Net subscriptions (redemptions)			Market appreciation (depreciation)			Foreign exchange ¹			June 30, 2008
Fixed income	$	514,673	$	16,732		$	(3,610	)	$	(609	)	$	527,186
Equity and balanced		426,935		5,963			3,701			(923	)		435,676
Cash management		349,208		(4,601	)		338			(1	)		344,944
Alternative investment products		73,620		1,508			1,095			(120	)		76,103

Sub Total		1,364,436		19,602			1,524			(1,653	)		1,383,909
Advisory²		—		43,634			—			—			43,634

Total	$	1,364,436	$	63,236		$	1,524		$	(1,653	)	$	1,427,543

   December 31,
2006    Net
subscriptions
(redemptions)    Acquisitions/
reclassifications ¹ Foreign
exchange²    Market
appreciation
(depreciation)    September 30,
2007
Fixed income
   $ 448,012    $ 33,174    $ 14,037 $ 3,479    $ 11,048    $ 509,750
Equity and balanced
   392,708    12,674    —   8,018    40,762    454,162
Cash management
   235,768    53,090    —   342    1,548    290,748
Alternative investment products
   48,139    7,975    (14,037 ) 387    2,432    44,896

Total
   $ 1,124,627    $ 106,913    $ —   $ 12,226    $ 55,790    $ 1,299,556

¹	~~Data reflects the reclassification of $14.0 billion of fixed income-oriented absolute return and structured products from alternative investment products to fixed income.~~

²	Foreign exchange reflects the impact of converting non-dollar denominated AUM into USU.S. dollars for ~~reporting purposes.~~reporting.

²	Advisory AUM represents long-term portfolio liquidation assignments.

- 2934 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Assets Under Management (continued)

The following table presents the component changes in BlackRock’s AUM for the six months ended June 30, 2008.

BlackRock, Inc.

Component Changes in Assets Under Management

For the Six Months Ended June 30, 2008

(Dollar amounts in millions)


	December 31, 2007		Net subscriptions (redemptions)		Market appreciation (depreciation)			Foreign exchange ¹		June 30, 2008
	December 31, 2007		Net subscriptions (redemptions)		Market appreciation (depreciation)			Foreign exchange ¹		June 30, 2008
Fixed income	$	513,020	$	13,797	$	(2,264	)	$	2,633	$	527,186
Equity and balanced		459,182		5,644		(34,353	)		5,203		435,676
Cash management		313,338		30,543		762			301		344,944
Alternative investment products		71,104		4,830		(236	)		405		76,103

Sub Total		1,356,644		54,814		(36,091	)		8,542		1,383,909
Advisory²		—		43,634		—			—		43,634

Total	$	1,356,644	$	98,448	$	(36,091	)	$	8,542	$	1,427,543

¹	Foreign exchange reflects the impact of converting non-dollar denominated AUM into U.S. dollars for reporting.

²	Advisory AUM represents long-term portfolio liquidation assignments.

The following table presents the component changes in BlackRock’s AUM for the twelve months ended ~~September~~June 30, ~~2007.~~2008.

BlackRock, Inc.

Component Changes in Assets Under Management

For the Twelve Months Ended ~~September~~June 30, ~~2007~~2008

(Dollar amounts in millions)

   September 30,¹
2006    Net
subscriptions
(redemptions)    Acquisitions/
reclassifications ^2,3 Foreign
exchange ⁴    Market
appreciation
(depreciation)    September 30,
2007
Fixed income
   $ 443,594    $ 31,601    $ 13,940 $ 5,119    $ 15,496    $ 509,750
Equity and balanced
   358,145    21,968    (2,028 ) 12,701    63,376    454,162
Cash management
   229,416    59,184    (1,260 ) 508    2,900    290,748
Alternative investment products
   43,861    11,281    (14,037 ) 646    3,145    44,896

Total
   $ 1,075,016    $ 124,034    $ (3,385 ) $ 18,974    $ 84,917    $ 1,299,556


	June 30, 2007		Net subscriptions (redemptions)		Acquisition ¹		Market appreciation (depreciation)			Foreign exchange ²		June 30, 2008
	June 30, 2007		Net subscriptions (redemptions)		Acquisition ¹		Market appreciation (depreciation)			Foreign exchange ²		June 30, 2008
Fixed income	$	492,287	$	13,411	$	—	$	16,147		$	5,341	$	527,186
Equity and balanced		435,873		19,653		—		(30,209	)		10,359		435,676
Cash management		259,840		82,914		—		1,632			558		344,944
Alternative investment products		42,086		10,603		21,868		949			597		76,103

Sub Total		1,230,086		126,581		21,868		(11,481	)		16,855		1,383,909
Advisory³		—		43,634		—		—			—		43,634

Total	$	1,230,086	$	170,215	$	21,868	$	(11,481	)	$	16,855	$	1,427,543

¹	September 30, 2006 AUM reflects a reclassification of certain MLIM acquired assets. Approximately $7.9 billion was reclassified from fixed income to cash management, relative to the AUM as reported in BlackRock’s third quarter 2006 Form 10-Q.

²	Data reflects net assets acquired in the ~~reclassification of $14.0 billion of fixed income-oriented absolute return and structured products from alternative investment products to fixed income.~~Quellos Transaction on October 1, 2007.

³²	~~Data reflects corrections to AUM records as of closing of the MLIM Transaction.~~

⁴	Foreign exchange reflects the impact of converting non-dollar denominated AUM into USU.S. dollars for ~~reporting purposes.~~reporting.

³	Advisory AUM represents long-term portfolio liquidation assignments.

- 3035 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended ~~September~~June 30, ~~2006.~~2007.

Operating results for the three months ended September 30, 2007 reflect the impact of the MLIM Transaction, which closed on September 29, 2006. The magnitude of the acquired business is the primary driver of most line item variances in the analysis below. Certain prior year amounts have been reclassified to conform to the current presentation.

Revenue

   Three months ended
September 30,    Variance
(Dollar amounts in thousands)    2007    2006    Amount    %
Investment advisory and administration fees:

Equity and balanced
   $ 580,302    $ 58,737    $ 521,565    NM
Fixed income
   230,373    125,102    105,271    84.1 %
Cash management
   128,381    32,110    96,271    299.8 %
Alternative investment products
   87,374    40,740    46,634    114.5 %

Investment advisory and administration base fees
   1,026,430    256,689    769,741    299.9 %
Investment advisory performance fees
   149,382    17,817    131,565    NM %

Total investment advisory and administration fees
   1,175,812    274,506    901,306    328.3 %

Distribution fees
   32,310    2,263    30,047    NM
Other revenue:

BlackRock Solutions
   47,683    33,807    13,876    41.0 %
Other revenue
   42,274    12,482    29,792    238.7 %

Total other revenue
   89,957    46,289    43,668    94.3 %

Total revenue
   $ 1,298,079    $ 323,058    $ 975,021    301.8 %


	Three Months Ended June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount			%
Investment advisory and administration fees:
Fixed income	$	234,048	$	221,931	$	12,117		5.5	%
Equity and balanced		601,311		529,046		72,265		13.7	%
Cash management		183,505		120,189		63,316		52.7	%
Alternative investment products		142,493		79,444		63,049		79.4	%

Investment advisory and administration base fees		1,161,357		950,610		210,747		22.2	%
Fixed income		494		1,110		(616	)	(55.5	)%
Equity and balanced		29,494		6,940		22,554		325.0	%
Alternative investment products		27,091		17,670		9,421		53.3	%

Investment advisory performance fees		57,079		25,720		31,359		121.9	%

Total investment advisory and administration fees		1,218,436		976,330		242,106		24.8	%

Distribution fees		33,683		32,867		816		2.5	%

Other revenue:
BlackRock Solutions		99,701		46,296		53,405		115.4	%
Other revenue		35,131		41,530		(6,399	)	(15.4	)%

Total other revenue		134,832		87,826		47,006		53.5	%

Total revenue	$	1,386,951	$	1,097,023	$	289,928		26.4	%

~~NM – Not Meaningful~~

Total revenue for the three months ended ~~September~~June 30, ~~2007~~2008 increased ~~$975.0~~$289.9 million, or ~~301.8%~~26.4%, to ~~$1,298.1~~$1,387.0 million, compared with ~~$323.1~~$1,097.0 million for the three months ended ~~September~~June 30, ~~2006. Total investment advisory and administration fees increased $901.3~~2007. The $289.9 million ~~or 328.3~~%,~~to $1,175.8~~increase was primarily the result of a $242.1 million for the three months ended September 30, 2007 compared with $274.5 million for the three months ended September 30, 2006. Distribution fees increased by $30.0 million to $32.3 million for the three months ended September 30, 2007 compared with $2.3 million for the three months ended September 30, 2006. Other revenue increased by $43.7 million, or 94.3%, to $90.0 million for the three months ended September 30, 2007 compared with $46.3 million for the three months ended September 30, 2006.

~~- 31 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~Revenue (continued)~~

~~Investment Advisory and Administration Fees~~

~~The~~ increase in investment advisory and administration fees ~~of $901.3 million, or 328.3%, was the result of an increase in investment advisory~~ and administration base fees of $769.7 million, or 299.9%, to $1,026.4 million for the three months ended September 30, 2007 compared with $256.7 million for the three months ended September 30, 2006 and an increase of $131.6 million in performance fees. Investment advisory and administration base fees increased for the three months ended September 30, 2007 primarily due to the MLIM Transaction which added $589.2 billion in AUM on September 29, 2006 and increased AUM of $224.5 billion over the past twelve months.

The increase in base investment advisory and administration fees of $769.7 million for the three months ended September 30, 2007 compared with the three months ended September 30, 2006 consisted of increases of $521.6 million in equity and balanced products, $105.3 million in fixed income products, $96.3 million in cash management products and $46.6 million in alternative investment products. The increase in investment advisory and administration fees for equity and balanced, fixed income, cash management and alternative investment products was driven by AUM acquired in the MLIM Transaction on September 29, 2006, as well as increases in AUM of $96.0 billion, $66.2 billion, $61.3 billion and $1.0 billion, respectively, over the past twelve months.

Performance fees increased by $131.6 million to $149.4 million for the three months ended September 30, 2007 compared to $17.8 million for the three months ended September 30, 2006 primarily due to higher performance fees on equity and fixed income hedge funds, as well as real estate equity products.

~~Distribution Fees~~

Distribution fees increased by $30.0 million to $32.3 million for the three months ended September 30, 2007 as compared to $2.3 million for the three months ended September 30, 2006. The increase in distribution fees is primarily the result of the assumption of distribution financing arrangements from the MLIM Transaction in the third quarter 2006 and from PNC in the second quarter 2007.

~~Other Revenue~~

~~Other revenue of $90.0 million for the quarter ended September 30, 2007 increased $43.7 million, or 94.3%, compared with the quarter ended September 30, 2006 and primarily represents fees earned on~~~~BlackRock Solutions~~ products and services of $47.7 million, other advisory service fees of $13.6 million, property management fees of $10.0 million earned on real estate properties (which primarily represents direct reimbursement of the salaries of certain employees of Metric Properties Management, Inc., “Metric”) and $6.0 million of fees earned related to securities lending.

~~The $43.7~~a $47.0 million increase in total other ~~revenue for the three months ended September 30, 2007 as compared to the three months ended September 30, 2006 was primarily the result of an increase of $13.9 million from~~~~BlackRock Solutions~~ ~~products and services primarily driven by new assignments, $13.6 million related to other advisory services and $6.0 million on fees earned related to securities lending.~~

~~- 32 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~Expenses~~

   Three months ended
September 30,
Variance

(Dollar amounts in thousands)    2007    2006    Amount    %
Expenses:

Employee compensation and benefits
   $ 505,107    $ 198,099    $ 307,008    155.0 %
Portfolio administration and servicing costs
   138,850    16,382    122,468    NM
Amortization of deferred sales commissions
   28,763    1,341    27,422    NM
General and administration
   194,442    75,834    118,608    156.4 %
Termination of closed-end fund administration and servicing arrangements
   128,114    —      128,114    NM
Amortization of intangible assets
   31,085    2,394    28,691    NM

Total expenses
   $ 1,026,361    $ 294,050    $ 732,311    249.0 %

~~NM – Not Meaningful~~

Total expenses, which reflect the impact of the MLIM Transaction since September 29, 2006, increased $732.3 million, or 249.0%, to $1,026.4 million for the three months ended September 30, 2007 compared with $294.1 million for the three months ended September 30, 2006. Total expenses included integration charges related to the MLIM Transaction of $6.1 million and $71.5 million in the third quarters 2007 and 2006, respectively. The third quarter of 2007 included $6.1 million of MLIM integration charges in general and administration expenses compared to $28.4 million and $43.1 of integration charges in general and administration and employee compensation and benefits, respectively, in the third quarter 2006.

~~Employee Compensation and Benefits~~

Employee compensation and benefits expense increased by $307.0 million, or 155.0%, to $505.1 million, at September 30, 2007, compared to $198.1 million for the three months ended September 30, 2006. The increase in employee compensation and benefits expense was primarily attributable to increases in incentive compensation, salaries and benefits and stock-based compensation of $162.8 million, $119.7 million and $18.9 million, respectively. The $162.8 million, or 188.9%, increase in incentive compensation was primarily attributable to higher operating income and higher incentive compensation associated with greater performance fees earned on the Company’s alternative investment products, offset by integration costs incurred in 2006. The increase of $119.7 million, or 129.3%, in salaries and benefits was primarily attributable to higher staffing levels associated with the MLIM Transaction and business growth. Employees (excluding employees of Metric) at September 30, 2007 totaled 5,125, as compared to 4,565 at September 30, 2006.

~~Portfolio Administration and Servicing Costs~~

Portfolio administration and servicing costs increased $122.5 million to $138.9 million for the three months ended September 30, 2007, compared to $16.4 million for the three months ended September 30, 2006. These costs include payments to third parties, including Merrill Lynch and PNC, primarily associated with the administration and servicing of client investments in certain BlackRock products.

~~- 33 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~Expenses (continued)~~

~~Amortization of Deferred Sales Commissions~~

Amortization of deferred sales commissions increased by $27.4 million to $28.8 million for the three months ended September 30, 2007, as compared to $1.3 million for the three months ended September 30, 2006. The increase in amortization of deferred sales commissions is primarily the result of the assumption of distribution financing arrangements from MLIM at the end of third quarter 2006 and from PNC in second quarter 2007.

~~General and Administration Expense~~

   Three months ended
September 30,
Variance

(Dollar amounts in thousands)    2007    2006    Amount %
General and administration expense:

Portfolio services
   $ 43,844    $ 5,218    $ 38,626 NM
Marketing and promotional
   35,146    20,203    14,943 74.0 %
Occupancy
   34,506    12,794    21,712 169.7 %
Technology
   28,547    15,731    12,816 81.5 %
Closed-end fund launch costs
   1,875    4,933    (3,058 ) (62.0 )%
Other general and administration
   50,524    16,955    33,569 198.0 %

Total general and administration expense
   $ 194,442    $ 75,834    $ 118,608 156.4 %

~~NM – Not Meaningful~~

General and administration expense increased $118.6 million, or 156.4%, for the three months ended September 30, 2007 to $194.4 million, compared to $75.8 million for the three months ended September 30, 2006. The increase in general and administration expense was due to increases in portfolio services expense of $38.6 million, occupancy expense of $21.7 million, marketing and promotional expense of $14.9 million, technology expense of $12.8 million and other general and administration expense of $33.6 million, partially offset by a reduction in closed-end fund launch costs of $3.1 million. MLIM and Quellos integration expenses recorded in general and administration expense for the three months ended September 2007 and 2006 were $6.3 million and $28.4 million, respectively.

~~- 34 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~General and Administration Expense (continued)~~

Portfolio services costs increased by $38.6 million to $43.8 million, compared to $5.2 million for the three months ended September 30, 2006, due to supporting higher AUM levels and market data services. Occupancy costs for the three months ended September 30, 2007 totaled $34.5 million, representing a $21.7 million, or 169.7%, increase from $12.8 million for the three months ended September 30, 2006. The increase in occupancy costs primarily reflects costs related to the expansion of corporate facilities as a result of the MLIM Transaction and business growth. Marketing and promotional expense increased $14.9 million to $35.1 million for the three months ended September 30, 2007, compared to $20.2 million for the three months ended September 30, 2006 primarily due to increased marketing activities, including $21.5 million related to domestic and international marketing efforts, partially offset by $6.5 million related to BlackRock’s advertising and rebranding campaign. Technology expenses increased $12.8 million, or 81.5%, to $28.5 million, compared to $15.7 million for the three months ended September 30, 2006 primarily as a result of a $5.1 million increase in software licensing and maintenance costs and a $4.8 million increase in depreciation expense. Other general and administration costs increased by $33.6 million to $50.5 million from $17.0 million, including higher subadvisory fees of $10.6 million and $6.0 million in capital contributions to sponsored investment funds. Closed-end fund launch costs decreased $3.1 million to $1.9 million for the three months ended September 30, 2007 relating to one new closed-end fund launched during the quarter, generating $235 million in AUM compared with one new closed-end fund launched during the three months ended September 30, 2006 generating $765 million in AUM.

~~Termination of Closed-end Fund Administration and Servicing Arrangements~~

For the three months ended September 30, 2007, BlackRock recorded a one-time expense of $128.1 million related to the termination of administration and servicing arrangements with Merrill Lynch on 40 closed-end funds with original terms of 30-40 years.

~~Amortization of Intangible Assets~~

The $28.7 million increase in amortization of intangible assets to $31.1 million for the three months ended September 30, 2007 compared to $2.4 million for the three months ended September 30, 2006 primarily reflects the amortization of finite-lived intangible assets acquired in the MLIM Transaction.

~~Non-Operating Income, Net of Non-Controlling Interest~~

~~Non-operating income, net of non-controlling interest, for the three months ended September 30, 2007 and 2006 was as follows:~~

   Three months ended
September 30,
Variance
(Dollar amounts in thousands)    2007 2006 Amount %
Total non-operating income
   $ 128,189 $ 1,909 $ 126,280 NM
Non-controlling interest
   (81,539 ) (895 ) (80,644 ) NM

Total non-operating income, net of non-controlling interest
   $ 46,650 $ 1,014 $ 45,636 NM

~~NM – Not Meaningful~~

~~- 35 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~Non-Operating Income, Net of Non-Controlling Interest (continued)~~

~~The components of non-operating income, net of non-controlling interest, for the three months ended September 30, 2007 and 2006 were as follows:~~

   Three months ended
September 30, Variance
(Dollar amounts in thousands)    2007 2006 Amount %
Non-operating income, net of non-controlling interest:

Net gain (loss) on investments, net of non-controlling interest:

Private equity¹
   $ 12,413 $ —   $ 12,413 NM
Real estate
   26,915 (69 ) 26,984 NM
Other alternative products
   (4,940 ) (4,248 ) (692 ) (16.3 )%
Other²
   1,968 1,685 283 16.8 %

Total net gain on investments, net of non-controlling interest
   36,356 (2,632 ) 38,988 NM
Interest and dividend income
   20,109 5,668 14,441 254.8 %
Interest expense
   (9,815 ) (2,022 ) (7,793 ) 385.4 %

Total non-operating income, net of non-controlling interest
   $ 46,650 $ 1,014 $ 45,636 NM

~~NM – Not Meaningful~~

¹	~~Includes earnings on BlackRock’s limited partnership investments in private equity funds.~~

²	~~Includes investments related to equity, fixed income, CDOs, deferred compensation arrangements and BlackRock’s seed capital hedging program.~~

Non-operating income, net of non-controlling interest, increased $45.6 million to $46.7 million for the quarter ended September 30, 2007, as compared to $1.0 million for the quarter ended September 30, 2006 as a result of a $39.0 million increase in net gain on investments, net of non-controlling interest, and a $14.4 million increase in interest and dividend income, partially offset by an $7.8 million increase in interest expense primarily related to borrowings under BlackRock’s revolving credit agreement. The increase in the net gain on investments, net of non-controlling interest, was primarily due to investment gains on private equity and real estate investments.

~~Income Taxes~~

Income tax expense was $63.2 million and $11.1 million for the quarters ended September 30, 2007 and 2006, respectively, representing effective tax rates of 19.8% and 37.0%, respectively. The reduction in the tax rate was primarily the result of a one-time tax benefit of $51.4 million recognized due to recent tax legislation changes enacted in the third quarter 2007 in the United Kingdom and Germany, which resulted in a revaluation of certain deferred tax liabilities.revenue.

- 36 -

PART I ~~— FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended September 30, 2006. (continued)~~

~~Net Income~~

Net income totaled $255.2 million, or $1.94 per diluted share, for the three months ended September 30, 2007 an increase of $236.3 million, or $1.66 per diluted share, as compared to the three months ended September 30, 2006. Net income for the quarter ended September 30, 2007 includes the after-tax impacts of the termination of closed-end fund servicing and administration arrangements, the portion of certain LTIP awards to be funded through a capital contribution of BlackRock common stock held by PNC, integration costs primarily related to the MLIM Transaction and Quellos acquisition and an expected contribution by Merrill Lynch to fund certain compensation of former MLIM employees, of $82.0 million, $8.7 million, $4.0 million and $1.6 million, respectively. In addition, the United Kingdom and Germany enacted legislation reducing corporate income tax rates resulting in a one-time decrease of $51.4 million in income tax expense in the three months ended September 30, 2007. Integration costs primarily consist of compensation costs, professional fees and rebranding costs. Net income of $18.9 million during the three months ended September 30, 2006 included the after-tax impacts of the portion of LTIP awards funded in January 2007 by a capital contribution of BlackRock stock held by PNC of $7.6 million and MLIM integration costs of $45.0 million. Exclusive of these items, fully diluted earnings per share, as adjusted, for the three months ended September 30, 2007 increased $1.23, or 116.0%, compared to the three months ended September 30, 2006.

~~Operating Margin~~

The Company’s operating margin was 20.9% for the three months ended September 30, 2007, compared to 9.0% for the three months ended September 30, 2006. Operating margin for the three months ended September 30, 2007 includes the impacts of $128.1 million for the termination of closed-end fund administration and servicing arrangements and $6.3 million of integration costs. Operating margin for the three months ended September 30, 2006 includes the impact of $71.5 million of integration costs. The increase in margin primarily is due to the reduction of integration costs and well as operating leverage associated with the growth in revenue.

Operating margin, as adjusted, was 37.7% and 38.5% for the three months ended September 30, 2007 and 2006, respectively. Operating margin, as adjusted, is described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

- ~~37 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006.~~

Operating results for the nine months ended September 30, 2007 reflect the impact of the MLIM Transaction, which closed on September 29, 2006. The magnitude of the acquired business is the primary driver of most line item variances in the analysis below. Certain prior year amounts have been reclassified to conform to the current presentation.

~~Revenue~~

   Nine months ended
September 30,    Variance
(Dollar amounts in thousands)    2007    2006    Amount %
Investment advisory and administration fees:

Equity and balanced
   $ 1,579,562    $ 168,758    $ 1,410,804 NM
Fixed income
   670,652    364,751    305,901 83.9 %
Cash management
   363,152    92,104    271,048 294.3 %
Alternative investment products
   237,184    110,162    127,022 115.3 %

Investment advisory and administration base fees
   2,850,550    735,775    2,114,775 287.4 %
Investment advisory performance fees
   197,518    202,368    (4,850 ) (2.4 )%

Total investment advisory and administration fees
   3,048,068    938,143    2,109,925 224.9 %

Distribution fees
   89,997    7,177    82,820 NM
Other revenue:

BlackRock Solutions
   136,293    102,514    33,779 33.0 %
Other revenue
   126,118    31,617    94,501 298.9 %

Total other revenue
   262,411    134,131    128,280 95.6 %

Total revenue
   $ 3,400,476    $ 1,079,451    $ 2,321,025 215.0 %

~~NM – Not Meaningful~~

Total revenue for the nine months ended September 30, 2007 increased $2,321.0 million, or 215.0%, to $3,400.5 million, compared with $1,079.5 million for the nine months ended September 30, 2006. Investment advisory and administration fees increased $2,109.9 million, or 224.9%,to $3,048.1 million for the nine months ended September 30, 2007, compared with $938.1 million for the nine months ended September 30, 2006. Distribution fees increased by $82.8 million to $90.0 million for the nine months ended September 30, 2007, compared with $7.2 million for the nine months ended September 30, 2006. Other revenue increased by $128.3 million, or 95.6%, to $262.4 million for the nine months ended September 30, 2007, compared with $134.1 million for the nine months ended September 30, 2006.

~~- 38 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~Revenue (continued)~~

~~Investment Advisory and Administration Fees~~

The increase in investment advisory and administration fees of $2,109.9 million, or 224.9%, was the result of an increase in investment advisory and administration base fees of $2,114.8 million, or 287.4%, to $2,850.6 million for the nine months ended September 30, 2007, compared with $735.8 million for the nine months ended September 30, 2006, partially offset by a reduction in performance fees of $4.9 million. Investment advisory and administration base fees increased for the nine months ended September 30, 2007 primarily due to the MLIM Transaction which added $589.2 billion in AUM on September 29, 2006, and increased AUM of $224.5 billion over the past twelve months.

The increase in base investment advisory and administration fees of $2,114.8 million for the nine months ended September 30, 2007, compared with the nine months ended September 30, 2006 consisted of increases of $1,410.8 million in equity and balanced products, $305.9 million in fixed income products, $271.0 million in cash management products and $127.0 million in alternative investment products. The increase in investment advisory and administration fees for equity and balanced, fixed income, cash management and alternative investment products was driven by AUM acquired in the MLIM Transaction on September 29, 2006, as well as increases in AUM of $96.0 billion, $66.2 billion, $61.3 billion and $1.0 billion, respectively, over the past twelve months.

Performance fees decreased by $4.9 million, or 2.4%, to $197.5 million for the nine months ended September 30, 2007, compared with $202.4 million for the nine months ended September 30, 2006 primarily due to a decline in performance fees earned on a large institutional real estate equity client account and energy hedge funds in 2006, offset by higher performance fees earned on equity and fixed income hedge funds in 2007.

~~Distribution Fees~~

Distribution fees increased by $82.8 million to $90.0 million for the nine months ended September 30, 2007 as compared to $7.2 million for the nine months ended September 30, 2006. The increase in distribution fees is primarily the result of the assumption of distribution financing arrangements from the MLIM Transaction in the third quarter 2006 and from PNC in the second quarter 2007.

~~Other Revenue~~

~~Other revenue of $262.4 million for the nine months ended September 30, 2007 increased $128.3 million compared with the nine months ended September 30, 2006 and primarily represents fees earned on~~~~BlackRock Solutions~~ products and services of $136.3 million, property management fees of $29.1 million earned on real estate properties (which primarily represents direct reimbursement of the salaries of certain Metric employees), fees for fund accounting services of $24.1 million, fees related to securities lending of $22.6 million and $13.6 million for other advisory service fees.

The increase in other revenue of $128.3 million, or 95.6%, for the nine months ended September 30, 2007 as compared to $134.1 million for the nine months ended September 30, 2006 was primarily the result of an increase of $33.8 million from~~BlackRock Solutions~~ products and services primarily driven by new assignments, and increases of $24.1 million in fund accounting services, $22.6 million in fees earned related to securities lending and $13.6 million for other advisory service fees.

~~- 39 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~Expenses~~

   Nine months ended
September 30,    Variance
(Dollar amounts in thousands)    2007    2006    Amount %
Expenses:

Employee compensation and benefits
   $ 1,270,883    $ 566,993    $ 703,890 124.1 %
Portfolio administration and servicing costs
   401,014    48,529    352,485 NM
Amortization of deferred sales commissions
   79,034    4,645    74,389 NM
General and administration
   602,290    192,666    409,624 212.6 %
Termination of closed-end fund administration and servicing arrangements
   128,114    —      128,114 NM
Fee sharing payment
   —      34,450    (34,450 ) (100.0 )%
Amortization of intangible assets
   93,193    6,451    86,742 NM

Total expenses
   $ 2,574,528    $ 853,734    $ 1,720,794 201.6 %

~~NM – Not Meaningful~~

Total expenses, which reflect the impact of the MLIM Transaction since September 29, 2006, increased $1,720.8 million, or 201.6%, to $2,574.5 million for the nine months ended September 30, 2007, compared with $853.7 million for the nine months ended September 30, 2006. Total expense included integration charges related to the MLIM Transaction of $19.3 million and $90.6 million in the first nine months of 2007 and 2006, respectively. The nine months ended September 30, 2007 included $19.0 million and $0.3 million of MLIM integration charges in general and administration and employee compensation and benefits, respectively, compared to $43.1 million and $47.5 million of integration charges in general and administration and employee compensation and benefits, respectively in the nine months ended September 30, 2006.

~~Employee Compensation and Benefits~~

Employee compensation and benefits expense increased by $703.9 million, or 124.1%, to $1,270.9 million, at September 30, 2007 compared to $567.0 million for the nine months ended September 30, 2006. The increase in employee compensation and benefits expense was primarily attributable to increases in salaries and benefits, incentive compensation and stock-based compensation of $366.7 million, $276.3 million and $51.3 million, respectively. The increase of $366.7 million, or 151.2%, in salaries and benefits was primarily attributable to higher staffing levels associated with the MLIM Transaction and business growth. Employees (excluding employees of Metric) at September 30, 2007 totaled 5,125 as compared to 4,565 at September 30, 2006. The $276.3 million increase in incentive compensation was primarily attributable to higher advisory fees and operating income.

~~Portfolio Administration and Servicing Costs~~

Portfolio administration and servicing costs increased $352.5 million to $401.0 million for the nine months ended September 30, 2007, compared to $48.5 million for the nine months ended September 30, 2006. These costs include payments to third parties, including Merrill Lynch and PNC, primarily associated with the administration and servicing of client investments in certain BlackRock products.

~~- 40 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~Expenses (continued)~~

~~Amortization of Deferred Sales Commissions~~

Amortization of deferred sales commissions increased by $74.4 million to $79.0 million for the nine months ended September 30, 2007 as compared to $4.6 million for the nine months ended September 30, 2006. The increase in amortization of deferred sales commissions is primarily the result of the assumption of distribution financing arrangements from MLIM at the end of third quarter 2006 and from PNC in second quarter 2007.

~~General and Administration Expense~~

   Nine months ended
September 30,    Variance
(Dollar amounts in thousands)    2007    2006    Amount    %
General and administration expense:

Portfolio services
   $ 119,567    $ 15,797    $ 103,770    NM
Marketing and promotional
   118,340    44,170    74,170    167.9 %
Occupancy
   96,175    34,414    61,761    179.5 %
Technology
   90,189    29,404    60,785    206.7 %
Closed-end fund launch costs
   34,828    5,464    29,364    NM
Other general and administration
   143,191    63,417    79,774    125.8 %

Total general and administration expense
   $ 602,290    $ 192,666    $ 409,624    212.6 %

~~NM – Not Meaningful~~

General and administration expense increased $409.6 million, or 212.6%, for the nine months ended September 30, 2007 to $602.3 million compared to $192.7 million for the nine months ended September 30, 2006. The increase in general and administration expense was due to increases in portfolio services expense of $103.8 million, marketing and promotional expense of $74.2 million, occupancy expense of $61.8 million, technology expense of $60.8 million, closed-end fund launch costs of $29.4 million and other general and administration expense of $79.8 million.

~~- 41 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~General and Administration Expense (continued)~~

Portfolio services increased by $103.8 million to $119.6 million, relating to supporting higher AUM levels and increased trading activities. Marketing and promotional expense increased $74.2 million, or 167.9%, to $118.3 million for the nine months ended September 30, 2007, compared to $44.2 million for the nine months ended September 30, 2006 primarily due to increased marketing activities, including $68.2 million related to domestic and international marketing efforts and $6.0 million related to BlackRock’s advertising and rebranding campaign. Occupancy costs for the nine months ended September 30, 2007 totaled $96.2 million, representing a $61.8 million, or 179.5%, increase from $34.4 million for the nine months ended September 30, 2006. The increase in occupancy costs primarily reflects costs related to the expansion of corporate facilities as a result of the MLIM transaction and business growth. Technology expenses increased $60.8 million, or 206.7%, to $90.2 million compared to $29.4 million for the nine months ended September 30, 2006 primarily result of a $19.1 million increase in technology consulting expenses associated with operating growth, a $15.8 million increase in depreciation expense and a $14.3 million increase in software licensing and maintenance costs. Closed-end fund launch costs totaled $34.8 million for the nine months ended September 30, 2007 relating to three new closed-end funds launched during the period, generating approximately $3.0 billion in AUM. Closed-end fund launch costs for the nine months ended September 30, 2006 totaled $5.5 million relating to one new closed-end fund launched during the period, generating $765 million in AUM. Other general and administration costs increased by $79.8 million to $143.2 million from $63.4 million, including a $23.4 million and $20.0 million increase in professional fees and office related expenses, respectively, and a $6 million capital contribution to sponsored investment funds.

~~Termination of Closed-end Fund Administration and Servicing Arrangements~~

For the nine months ended September 30, 2007, BlackRock recorded a one-time expense of $128.1 million, related to the termination of administration and servicing arrangements with Merrill Lynch on 40 closed-end funds with original terms of 30-40 years.

~~Fee Sharing Payment~~

For the nine months ended September 30, 2006, BlackRock recorded a one-time fee sharing expense of $34.5 million, representing a payment related to a large institutional real estate equity client account acquired in the SSRM Holdings, Inc. acquisition in January 2005.

~~Amortization of Intangible Assets~~

The $86.7 million increase in amortization of intangible assets to $93.2 million for the nine months ended September 30, 2007 compared to $6.5 million for the nine months ended September 30, 2006 primarily reflects the amortization of finite-lived intangible assets acquired in the MLIM Transaction.

~~- 42 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~Non-Operating Income, Net of Non-Controlling Interest~~

~~Non-operating income, net of non-controlling interest, for the nine months ended September 30, 2007 and 2006 was as follows:~~

   Nine months ended
September 30, Variance
(Dollar amounts in thousands)    2007 2006 Amount %
Total non-operating income
   $ 499,639 $ 19,819 $ 479,820 NM
Non-controlling interest
   (354,669 ) (2,394 ) (352,275 ) NM

Total non-operating income, net of non-controlling interest
   $ 144,970 $ 17,425 $ 127,545 NM

~~NM – Not Meaningful~~

~~The components of non-operating income, net of non-controlling interest, for the nine months ended September 30, 2007 and 2006 were as follows:~~

   Nine months ended
September 30, Variance
(Dollar amounts in thousands)    2007 2006 Amount %
Non-operating income, net of non-controlling interest:

Net gain (loss) on investments, net of non-controlling interest:

Private equity¹
   $ 55,315 $ —   $ 55,315 NM
Real estate
   29,372 434 28,938 NM
Other alternative products
   17,639 2,184 15,455 NM
Other²
   21,463 4,152 17,311 416.9 %

Total net gain on investments, net of non-controlling interest
   123,789 6,770 117,019 NM
Interest and dividend income
   52,204 16,676 35,528 213.0 %
Interest expense
   (31,023 ) (6,021 ) (25,002 ) 415.2 %

Total non-operating income, net of non-controlling interest
   $ 144,970 $ 17,425 $ 127,545 NM

~~NM – Not Meaningful~~

¹	~~Includes earnings on BlackRock’s limited partnership investments in private equity funds.~~

²	~~Includes investments related to equity, fixed income, CDOs, deferred compensation arrangements and BlackRock’s seed capital hedging program.~~

Non-operating income, net of non-controlling interest, increased $127.5 million to $145.0 million for the nine months ended September 30, 2007 compared to $17.4 million for the nine months ended September 30, 2006 as a result of a $117.0 million increase in net gain on investments, net of non-controlling interest, and a $35.5 million increase in interest and dividend income, partially offset by a $25.0 million increase in interest expense primarily related to borrowings under BlackRock’s revolving credit agreement. The increase in the net gain on investments, net of non-controlling interest, was primarily due to an increase in net investment gains on all investments due to market conditions and significant growth of the Company’s investments in sponsored investment products.

~~- 43 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the nine months ended September 30, 2007 as compared with the nine months ended September 30, 2006. (continued)~~

~~Income Taxes~~

Income tax expense was $298.1 million and $90.0 million for the nine months ended September 30, 2007 and 2006, respectively, representing effective tax rates of 30.7% and 37.0%, respectively. The reduction in the tax rate is primarily the result of a one-time tax benefit of $51.4 million, recognized in the third quarter of 2007, due to tax legislation changes enacted in third quarter 2007 in the United Kingdom and Germany, which resulted in a revaluation of certain deferred tax liabilities.

~~Net Income~~

Net income totaled $672.8 million, or $5.12 per diluted share, for the nine months ended September 30, 2007 an increase of $519.7 million, or $2.83 per diluted share, compared to the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2007 includes the after-tax impacts of the termination of closed-end fund administration and servicing arrangements, the portion of certain LTIP awards to be funded through a capital contribution of BlackRock common stock held by PNC, integration costs related to the MLIM Transaction and Quellos acquisition and an expected contribution by Merrill Lynch to fund certain compensation of former MLIM employees, of $82.0 million, $25.3 million, $12.4 million and $4.8 million, respectively. In addition, the United Kingdom and Germany enacted legislation reducing corporate income tax rates resulting in a one-time decrease of $51.4 million in income tax expense which is included in net income. MLIM and Quellos integration costs primarily include compensation costs, professional fees and rebranding costs. Net income of $153.2 million during the nine months ended September 30, 2006 included the after-tax impacts of the portion of LTIP awards funded by a capital contribution of BlackRock stock held by PNC of $22.7 million and MLIM integration costs of $57.1 million. Exclusive of these items, fully diluted earnings per share, as adjusted, for the nine months ended September 30, 2007 increased $2.19, or 62.9%, compared to the nine months ended September 30, 2006.

~~Operating Margin~~

The Company’s operating margin was 24.3% for the nine months ended September 30, 2007 compared to 20.9% for the nine months ended September 30, 2006. Operating margin for the nine months ended September 30, 2007 includes the impacts of $128.1 million for the termination of closed-end fund administration and servicing arrangements, $40.8 million of closed-end fund launch costs and commissions and $19.4 million of integration costs. Operating margin for the nine months ended September 30, 2006 includes the impact of $6.9 million of closed-end fund launch costs and commission and $90.6 million of integration costs. The increase in operating margin is primarily due to the reduction of integration costs as well as operating leverage associated with the growth in revenue.

Operating margin, as adjusted, was 36.9% and 35.9% for the nine months ended September 30, 2007 and the nine months ended September 30, 2006, respectively. Operating margin, as adjusted, is described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~- 44 -~~

~~PART I —~~ FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended June 30, 2007. (continued)

Revenue (continued)

   Three months ended
   September 30,    June 30,    Variance
(Dollar amounts in thousands)
   2007    Amount %
Investment advisory and administration fees:

Equity and balanced
   $ 580,302    $ 527,800    $ 52,502 9.9 %
Fixed income
   230,373    222,506    7,867 3.5 %
Cash management
   128,381    120,859    7,522 6.2 %
Alternative investment products
   87,374    79,445    7,929 10.0 %

Investment advisory and administration base fees
   1,026,430    950,610    75,820 8.0 %
Investment advisory performance fees
   149,382    25,720    123,662 480.8 %

Total investment advisory and administration fees
   1,175,812    976,330    199,482 20.4 %

Distribution fees
   32,310    32,867    (557 ) (1.7 )%

Other revenue:

BlackRock Solutions
   47,683    46,296    1,387 3.0 %
Other revenue
   42,274    41,530    744 1.8 %

Total other revenue
   89,957    87,826    2,131 2.4 %

Total revenue
   $ 1,298,079    $ 1,097,023    $ 201,056 18.3 %

Total revenue for the three months ended September 30, 2007 increased $201.1 million, or 18.3%, to $1,298.1 million, compared with $1,097.0 million for the three months ended June 30, 2007. Investment advisory and administration base fees increased $75.8 million, or 8.0%,to $1,026.4 million for the three months ended September 30, 2007, compared with $950.6 million for the three months ended June 30, 2007. Performance fees increased $123.7 million, to $149.4 million, compared with $25.7 million for the three months ended June 30, 2007. Other revenue increased by $2.1 million, or 2.4%, to $90.0 million for the three months ended September 30, 2007, compared with $87.8 million for the three months ended June 30, 2007.

Investment Advisory and Administration Fees

The increase in investment advisory and administration fees of ~~$199.5~~$242.1 million, ~~or 20.4%,~~ was the result of an increase in investment advisory and administration base fees of ~~$75.8~~$210.7 million, or ~~8.0%~~22.2%, to ~~$1,026.4~~$1,161.4 million for the three months ended ~~September~~June 30, ~~2007~~2008, compared with $950.6 million for the three months ended June 30, 2007, and an increase of $31.4 million in performance ~~fees of $123.7 million, to $149.4 million for the three months ended September 30, 2007 compared with $25.7 million for the three months ended June 30, 2007.~~fees. Investment advisory and administration base fees increased for the three months ended ~~September~~June 30, ~~2007~~2008 primarily ~~due to~~as a result of increased average AUM of $69.5 billion during third quarter 2007 resulting from net new business of $41.0 billion, market appreciation of $20.3 billion and foreign exchange gains of $8.2 billion, as well as one additional revenue day.across all asset types over the past twelve months.

The increase in ~~base~~ investment advisory and administration base fees of ~~$75.8~~$210.7 million for the three months ended ~~September~~June 30, ~~2007~~2008, compared with the three months ended June 30, 2007 consisted of increases of ~~$52.5~~$72.3 million in equity and balanced products, ~~$7.9~~$63.3 million in ~~fixed income~~cash management products, ~~$7.9~~$63.0 million in alternative investment products and ~~$7.5~~$12.1 million in ~~cash management~~fixed income products. The ~~increases~~increase in investment advisory and administration base fees ~~for equity and balanced products, fixed income products, alternative investment products and cash management products were~~was driven by increases in average AUM in each asset class, which includes the impact of the AUM acquired in the Quellos Transaction, for the three months ended June 30, 2008 as compared to the three months ended June 30, 2007.

Investment advisory performance fees increased by $31.4 million, or 121.9%, to $57.1 million for the three months ended June 30, 2008, compared to $25.7 million for the three months ended June 30, 2007, primarily as a result of higher investment advisory performance fees in international equity separate accounts and other investment products including equity hedge funds and real estate debt funds.

Other Revenue

Total other revenue of $134.8 million for the quarter ended June 30, 2008 increased $47.0 million, or 53.5%, compared with the quarter ended June 30, 2007. Total other revenue primarily represents fees earned onBlackRock Solutions products and services of $99.7 million, net interest related to securities lending of $10.5 million, property management fees of $9.1 million earned on real estate products (primarily related to reimbursement of the salaries and benefits of certain Metric employees from certain real estate products) and unit trust sales commissions of $6.7 million.

The increase in other revenue of $47.0 million for the three months ended June 30, 2008, as compared to the three months ended June 30, 2007, was primarily the result of an increase of $53.4 million fromBlackRock Solutions products and services driven by additional advisory and Aladdin^® assignments, partially offset by a decrease in fees earned for fund accounting of $6.5 million. A portion of the revenue earned on advisory assignments was comprised of both ongoing fees based on AUM of ~~$18.3 billion, $17.5 billion, $2.8 billion~~the respective portfolio assignments and ~~$30.9 billion, respectively.~~one-time advisory and portfolio structuring fees.

- 4537 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended June 30, 2007. (continued)

~~Investment Advisory and Administration Fees (continued)~~Expenses


	Three Months Ended June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount			%
Expenses:
Employee compensation and benefits	$	551,954	$	408,773	$	143,181		35.0	%
Portfolio administration and servicing costs		153,618		131,077		22,541		17.2	%
Amortization of deferred mutual fund sales commissions		33,422		28,713		4,709		16.4	%
General and administration		206,395		215,384		(8,989	)	(4.2	)%
Amortization of intangible assets		36,572		31,075		5,497		17.7	%

Total expenses	$	981,961	$	815,022	$	166,939		20.5	%

~~Performance fees~~Total expenses increased ~~by $123.7~~$166.9 million, or 20.5%, to ~~$149.4 million for the three months ended September 30, 2007 compared to $25.7~~$982.0 million for the three months ended June 30, ~~2007 primarily as a result of the timing of the completion of the measurement periods for various alternative products, including equity and fixed income hedge funds and real estate products.~~

~~Other Revenue~~

Other revenue of $90.0 million for the three months ended September 30, 2007 increased $2.1 million compared with the three months ended June 30, 2007. The increase in other revenue was primarily the result of a $13.6 million increase in advisory service fees and~~BlackRock Solutions~~ ~~products and services, partially offset by a decline in fees for fund accounting services of $6.8 million and fees related to securities lending of $4.2 million.~~

~~Expenses~~

   Three months ended
   September 30,    June 30,    Variance
(Dollar amounts in thousands)    2007    Amount %
Expenses:

Employee compensation and benefits
   $ 505,107    $ 413,377    $ 91,730 22.2 %
Portfolio administration and servicing costs
   138,850    131,077    7,773 5.9 %
Amortization of deferred sales commissions
   28,763    28,713    50 0.2 %
General and administration
   194,442    210,780    (16,338 ) (7.8 )%
Termination of closed-end fund administration and servicing arrangements
   128,114    —      128,114 NM
Amortization of intangible assets
   31,085    31,075    10 NM

Total expenses
   $ 1,026,361    $ 815,022    $ 211,339 25.9 %

NM	~~– Not Meaningful~~

~~Total expenses increased $211.3 million, or 25.9%, to $1,026.4 million for the three months ended September 30, 2007,~~2008, compared with $815.0 million for the three months ended June 30, 2007. ~~Integration~~The increase was attributable to increases in employee compensation and benefits, portfolio and administration and servicing costs, amortization of finite-lived intangible assets and amortization of deferred mutual fund sales commissions, partially offset by a decrease in general and administration expenses. The three months ended June 30, 2007 included $6.0 million of integration charges related to the MLIM Transaction, ~~of $6.1 million and $6.0 million~~which were primarily recorded in general and administration ~~expense for the three months ended September 30, 2007 and June 30, 2007, respectively.~~

~~- 46 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Operating results for the three months ended September 30, 2007 as compared with the three months ended June 30, 2007. (continued)~~

~~Expense (continued)~~

expense.

Employee Compensation and Benefits

Employee compensation and benefits expense increased by ~~$91.7~~$143.2 million, or ~~22.2%~~35.0%, to ~~$505.1~~$552.0 million ~~at September~~for the three months ended June 30, ~~2007~~2008, compared to ~~$413.4~~$408.8 million for the three months ended June 30, 2007. The increase in employee compensation and benefits expense was ~~primarily~~ attributable to increases in incentive compensation, ~~and~~ salaries and benefits, deferred compensation and stock-based compensation of ~~$84.9~~$68.4 million, $38.4 million, $23.1 million and ~~$9.8~~$13.3 million, respectively. The ~~$84.9~~$68.4 million increase in incentive compensation was primarily attributable to higher operating income and direct incentives associated with higher performance fees earned on the Company’s alternative investment products. The increase of ~~$9.8~~$38.4 million ~~or 4.8%,~~ in salaries and benefits was primarily ~~attributable~~due to ~~increased payroll tax accruals on higher incentive compensation and~~ higher staffing levels associated with business ~~growth. Employees (excluding~~growth and the Quellos Transaction. Full time employees (including employees of Metric) at ~~September~~June 30, ~~2007~~2008 totaled ~~5,125~~6,069 as compared to ~~4,837~~5,315 at June 30, 2007. Deferred compensation increased $23.1 million primarily due to appreciation on assets related to certain deferred compensation plans, which is substantially offset by gains on certain investments included in non-operating income. Stock-based compensation increased $13.3 million primarily due to additional grants of stock awards in the first quarter 2008.

~~Amortization of Deferred Sales Commissions~~Portfolio Administration and Servicing Costs

~~Amortization of deferred sales commissions was relatively unchanged~~Portfolio administration and servicing costs increased $22.5 million to $153.6 million for the three months ended ~~September~~June 30, ~~2007~~2008, compared to $131.1 million for the three months ended June 30, 2007. These costs include payments to Merrill Lynch under the Global Distribution Agreement, and payments to PNC as well as other third parties, primarily associated with the administration and servicing of client investments in certain BlackRock products. The $22.5 million increase relates primarily to higher levels of average AUM in open-end funds, cash management products, as well as alternative products. Portfolio administration and servicing costs for the three months ended June 30, 2008 included $118.1 million of costs attributable to Merrill Lynch and affiliates and $8.6 million of costs attributable to PNC and affiliates as compared to $107.7 million and $6.9 million, respectively, in the three months ended June 30, 2007.

~~General and Administration Expense~~

   Three months ended
   September 30,    June 30,    Variance
(Dollar amounts in thousands)    2007    Amount %
General and administration expense:

Portfolio services
   $ 43,844    $ 37,994    $ 5,850 15.4 %
Marketing and promotional
   35,146    42,324    (7,178 ) (17.0 )%
Occupancy
   34,506    28,438    6,068 21.3
Technology
   28,547    33,205    (4,658 ) (14.0 )%
Closed-end fund launch costs
   1,875    19,801    (17,926 ) (90.5 )%
Other general and administration
   50,524    49,018    1,506 3.1 %

Total general and administration expense
   $ 194,442    $ 210,780    $ (16,338 ) (7.8 )%

- 4738 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended June 30, 2007. (continued)

~~General and Administration Expense~~Expenses (continued)

~~General and administration expense, which included MLIM integration costs~~Amortization of ~~$6.0~~Deferred Mutual Fund Sales Commissions

Amortization of deferred mutual fund sales commissions increased by $4.7 million ~~and $6.1~~to $33.4 million ~~in the second and third quarters of 2007, respectively, decreased $16.3 million, or 7.8%,~~ for the three months ended ~~September~~June 30, ~~2007 to $194.4 million,~~2008, as compared to ~~$210.8~~$28.7 million for the three months ended June 30, 2007. The ~~decrease~~increase in ~~general~~amortization of deferred mutual fund sales commissions was primarily the result of higher sales of certain share classes of open-ended funds.

General and Administration Expense


	Three Months Ended June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount			%
General and administration expense:
Marketing and promotional	$	45,053	$	42,324	$	2,729		6.4	%
Portfolio services		46,323		37,994		8,329		21.9	%
Occupancy		34,425		28,438		5,987		21.1	%
Technology		30,266		33,205		(2,939	)	(8.9	)%
Professional services		18,469		21,944		(3,475	)	(15.8	)%
Closed-end fund launch costs		5,388		19,801		(14,413	)	(72.8	)%
Other general and administration		26,471		31,678		(5,207	)	(16.4	)%

Total general and administration expense	$	206,395	$	215,384	$	(8,989	)	(4.2	)%

General and administration ~~expense was primarily due to decreases in closed-end fund launch costs of $17.9~~expenses decreased $9.0 million ~~and marketing and promotional expense of $7.2 million, partially offset by increases in occupancy of $6.1 million and portfolio services of $5.9 million.~~

~~Closed-end fund launch costs totaled $1.9 million and $19.8 million~~or 4.2% for the three months ended ~~September 30, 2007 and~~ June 30, ~~2007, respectively. The decrease in closed-end fund launch costs for~~2008 compared with the three months ended ~~September~~June 30, ~~2007~~2007. Closed-end fund launch costs decreased $14.4 million as compared to the three months ended June 30, 2007 ~~was the result of the larger size of the~~due to a closed-end fund ~~which was~~ launched induring the second ~~quarter. Marketing and promotional expense decreased $7.2 million~~quarter 2007, which generated $2.0 billion in AUM as compared to ~~$35.1 million for~~one alternative asset fund launched on the London Stock Exchange in the three months ended ~~September~~June 30, ~~2007~~2008, which generated approximately $300 million in AUM. Other general and administration expense decreased $5.2 million, or 16.4%, to $26.5 million, primarily ~~due~~related to a ~~$4.4~~$6.4 million decline ~~related~~in foreign currency remeasurement losses. Professional services decreased $3.5 million, or 15.8%, to ~~BlackRock’s advertising and rebranding campaign and a $2.8~~$18.5 million ~~decline related~~compared to ~~domestic and international marketing efforts. Occupancy costs increased $6.1~~$21.9 million for ~~the three months ended September 30, 2007, as compared to~~ the three months ended June 30, 2007 primarily due to decreased consulting costs related to the ~~expansion of corporate facilities as a result of business growth.~~MLIM integration in 2007. Portfolio services costs increased by ~~$5.9~~$8.3 million, or 21.9%, to ~~$43.8~~$46.3 million primarily as a result of the Company incurring additional portfolio service expenses related to ~~supporting~~certain funds. The increase in this fund-related expense is more than offset by higher ~~AUM levels and~~administration fee revenue earned on the funds. Occupancy expenses increased ~~trading activities.~~

~~Termination~~by $6.0 million, or 21.1%, to $34.4 million, as a result of ~~Closed-end Fund Administration and Servicing Arrangements~~

~~For~~an increase of offices worldwide, including the ~~three months ended September 30, 2007, BlackRock recorded a one-time expense~~impact of ~~$128.1 million, related to~~ the ~~termination of administration and servicing arrangements with Merrill Lynch on 40 closed-end funds with original terms of 30-40 years.~~Quellos Transaction.

~~Non-Operating Income, Net of Non-Controlling Interest~~

~~Non-operating income, net of non-controlling interest, for the three months ended September 30, 2007 and June 30, 2007 was as follows:~~

   Three months ended
   September 30, June 30, Variance
(Dollar amounts in thousands)    2007 Amount %
Total non-operating income
   $ 128,189 $ 213,718 $ (85,529 ) (40.0 )%
Non-controlling interest
   (81,539 ) (148,463 ) 66,924 45.1 %

Total non-operating income, net of non-controlling interest
   $ 46,650 $ 65,255 $ (18,605 ) (28.5 )%

- 4839 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended June 30, 2007. (continued)

Amortization of Intangible Assets

The $5.5 million increase in amortization of intangible assets to $36.6 million for the three months ended June 30, 2008, compared to $31.1 million for the three months ended June 30, 2007, primarily reflects amortization of finite-lived intangible assets acquired in the Quellos Transaction.

Non-Operating Income, Net of Non-Controlling ~~Interest (continued)~~Interests

Non-operating income, net of non-controlling interests, for the three months ended June 30, 2008 and 2007 was as follows:


	Three Months Ended June 30,						Variance
*(Dollar amounts in thousands)*	2008			2007			Amount			%
Total non-operating income	$	(3,263	)	$	213,718		$	(216,981	)	(101.5	)%
Non-controlling interests		19,900			(148,463	)		168,363		113.4	%

Total non-operating income, net of non-controlling interests	$	16,637		$	65,255		$	(48,618	)	(74.5	)%

The components of non-operating income, net of non-controlling ~~interest,~~interests, for the three months ended ~~September~~June 30, ~~2007~~2008 and ~~June 30,~~ 2007 were as follows:

   Three months ended
   September 30, June 30, Variance
(Dollar amounts in thousands)    2007 Amount %
Non-operating income, net of non-controlling interest:

Net gain (loss) on investments, net of non-controlling interest:

Private equity¹
   $ 12,413 $ 32,636 $ (20,223 ) (62.0 )%
Real estate
   26,915 3,621 23,294 NM
Other alternative products
   (4,940 ) 13,929 (18,869 ) (135.5 )%
Other²
   1,968 11,554 (9,586 ) (83.0 )%

Total net gain on investments, net of non-controlling interest
   36,356 61,740 (25,384 ) (41.1 )%
Interest and dividend income
   20,109 13,738 6,371 46.4 %
Interest expense
   (9,815 ) (10,223 ) 408 4.0 %

Total non-operating income, net of non-controlling interest
   $ 46,650 $ 65,255 $ (18,605 ) (28.5 )%

NM	~~– Not Meaningful~~


	Three Months Ended June 30,						Variance
*(Dollar amounts in thousands)*	2008			2007			Amount			%
Non-operating income, net of non-controlling interests:
Net gain (loss) on investments, net of non-controlling interests:
Private equity	$	1,696		$	32,636		$	(30,940	)	(94.8	)%
Real estate		(8,455	)		3,621			(12,076	)	(333.5	)%
Hedge funds/funds of hedge funds		11,664			8,785			2,879		32.8	%
Other investments¹		15,190			16,698			(1,508	)	(9.0	)%

Total net gain on investments, net of non-controlling interests		20,095			61,740			(41,645	)	(67.5	)%
Other non-controlling interest²		(662	)		—			(662	)	NM
Interest and dividend income		13,924			13,738			186		1.4	%
Interest expense		(16,720	)		(10,223	)		(6,497	)	63.6	%

Total non-operating income, net of non-controlling interests	$	16,637		$	65,255		$	(48,618	)	(74.5	)%

NM – Not Meaningful

¹	Includes ~~earnings on BlackRock’s limited partnership investments in private equity funds.~~

²	~~Includes investments~~investment income related to equity and fixed income ~~CDOs,~~investments, collateralized debt obligations (“CDOs”), deferred compensation arrangements and BlackRock’s seed capital hedging program.

²	Includes non-controlling interest related to operating entities (non-investment activities).

Non-operating income, net of non-controlling interest, decreased $18.6 million to $46.7 million for the quarter ended September 30, 2007 as compared to $65.3 million for the quarter ended June 30, 2007 primarily as a result of a $25.4 million decrease in net gains on investments, net of non-controlling interest, partially offset by a $6.4 million increase in interest and dividend income. The decrease in net gain on investments in third quarter 2007 was primarily due to a decline in net investment gains on private equity investments and other alternative products, offset by an increase in real estate products.

- 4940 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended ~~September~~June 30, ~~2007~~2008, as compared with the three months ended June 30, 2007. (continued)

Non-Operating Income, Net of Non-Controlling Interests (continued)

Non-operating income, net of non-controlling interests, decreased $48.6 million to $16.6 million for the quarter ended June 30, 2008, compared to $65.3 million for the quarter ended June 30, 2007. The decrease in net non-operating income of $48.6 million primarily reflects a $30.9 million decline in net investment gains from co-investments in private equity products and $12.1 million related to declines in valuations on co-investments in real estate products. In addition, net interest expense increased $6.3 million compared to second quarter 2007 due primarily to the issuance of long-term debt in September 2007.

Income Taxes

Income tax expense was ~~$63.2~~$147.6 million and $125.0 million for the ~~quarters~~three months ended ~~September 30, 2007 and~~ June 30, ~~2007, respectively, representing effective tax rates of 19.8%~~2008 and ~~36.0%,~~2007, respectively. The ~~reduction in the~~effective income tax rate iswas 35.0% for the three months ended June 30, 2008 as compared to 36.0% for the three months ended June 30, 2007. The decrease was primarily due to the ~~result~~mix of ~~a one-time~~pre-tax income and tax ~~benefit of $51.4 million recorded~~legislation changes enacted in the third quarter of 2007 ~~due to recent tax legislation changes~~ in the United Kingdom ~~and Germany, which resulted~~that reduced corporate income tax rates in ~~a revaluation of certain deferred tax liabilities.~~2008.

Net Income

Net income totaled ~~$255.2~~$274.1 million, or $2.05 per diluted share, for the three months ended ~~September~~June 30, ~~2007~~2008, which was an increase of ~~$33.0~~$51.8 million, or ~~14.8%, as~~$0.36 per diluted share, compared to the three months ended June 30, 2007. Net income for the quarter ended ~~September~~June 30, ~~2007~~2008 includes the after-tax ~~impacts~~impact of ~~the termination of closed-end fund administration and servicing arrangements,~~ the portion of ~~certain~~ LTIP awards tothat will be funded through a capital contribution of BlackRock common stock held by PNC ~~integration costs related to the MLIM Transaction and Quellos acquisition~~ and an expected contribution by Merrill Lynch to fund certain compensation of former MLIM employees of ~~$82.0 million, $8.7 million and $4.0~~$9.6 million and $1.6 million, respectively. In addition, net income for the three months ended September 30, 2007, includes a $51.4 million one-time reduction in corporate income taxes as a result of enacted legislation in the United Kingdom and Germany.

~~MLIM and Quellos integration costs primarily consist of compensation costs, professional fees and rebranding costs.~~ Net income of $222.2 million ~~during~~for the ~~three months~~quarter ended June 30, 2007 ~~includes~~included the after-tax impacts related to the portion of certain LTIP awards towhich will be funded through a capital contribution of BlackRock common stock held by PNC ~~and integration expenses related to the MLIM Transaction~~ of $8.9 million, ~~and~~MLIM integration costs of $3.9 million ~~respectively.~~and an expected contribution by Merrill Lynch of $1.6 million to fund certain compensation of former MLIM employees. MLIM integration costs primarily include professional fees and marketing and promotional expenses. Exclusive of these ~~items, net income,~~GAAP expenses in both periods, fully diluted earnings per share, as adjusted, for the three months ended ~~September~~June 30, ~~2007~~2008 increased ~~$63.5 million,~~$0.34, or ~~26.8%~~18.9%, to $2.14 compared to the three months ended June 30, 2007.

- 41 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the three months ended June 30, 2008, as compared with the three months ended June 30, 2007. (continued)

Operating Margin

The Company’s operating margin was ~~20.9%~~29.2% for the three months ended ~~September~~June 30, ~~2007~~2008, compared to 25.7% for the three months ended June 30, 2007. Operating margin for the three months ended ~~September~~June 30, 2008 and 2007 ~~includes~~included the ~~impacts~~impact of ~~$128.1~~$5.4 million ~~for the termination~~and $24.1 million, respectively, of closed-end fund ~~administration~~launch costs and ~~servicing arrangements and $6.2 million of integration costs. Operating~~commissions. In addition, operating margin for the three months ended June 30, 2007 ~~includes~~included the impact of ~~$24.1~~$6.0 million of MLIM integration costs. Operating margin improved 13.6% primarily due to operating leverage associated with the growth in revenue, an $18.7 million reduction in closed-end fund launch costs and commissions and ~~$6.0~~the reduction of MLIM integration costs partially offset by a $17.8 million increase in compensation expense related to appreciation on certain deferred compensation plans and a $5.5 million increase in amortization of ~~integration costs. The decline in operating margin is primarily due to~~finite-lived intangible assets associated with the ~~impact of the termination of closed-end fund administration and servicing arrangements.~~Quellos Transaction.

Operating margin, as adjusted, which excludes from operating income the impact of certain GAAP operating expenses and adjusts GAAP operating revenue was ~~37.7%~~37.9% and 36.1% for the three months ended ~~September 30, 2007 and the three months ended~~ June 30, 2008 and 2007, respectively. The improvement in margin primarily reflects operating leverage associated with growth in revenue. Operating margin, as adjusted, is described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

- 5042 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Revenue


	Six Months Ended June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount			%
Investment advisory and administration fees:
Fixed income	$	455,551	$	440,038	$	15,513		3.5	%
Equity and balanced		1,203,938		999,484		204,454		20.5	%
Cash management		358,059		234,786		123,273		52.5	%
Alternative investment products		276,687		149,810		126,877		84.7	%

Investment advisory and administration base fees		2,294,235		1,824,118		470,117		25.8	%
Fixed income		1,716		2,621		(905	)	(34.5	)%
Equity and balanced		67,505		16,041		51,464		320.8	%
Alternative investment products		29,401		29,476		(75	)	(0.3	)%

Investment advisory performance fees		98,622		48,138		50,484		104.9	%

Total investment advisory and administration fees		2,392,857		1,872,256		520,601		27.8	%

Distribution Fees		69,002		57,687		11,315		19.6	%

Other revenue:
BlackRock Solutions		159,366		88,610		70,756		79.9	%
Other revenue		65,864		83,844		(17,980	)	(21.4	)%

Total other revenue		225,230		172,454		52,776		30.6	%

Total revenue	$	2,687,089	$	2,102,397	$	584,692		27.8	%

Total revenue for the six months ended June 30, 2008 increased $584.7 million, or 27.8%, to $2,687.1 million, compared with $2,102.4 million for the six months ended June 30, 2007. The $584.7 million increase was primarily the result of a $520.6 million increase in total investment advisory and administration fees and a $52.8 million increase in total other revenue.

- 43 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Revenue (continued)

Investment Advisory and Administration Fees

The increase in investment advisory and administration fees of $520.6 million, or 27.8%, was the result of an increase in investment advisory and administration base fees of $470.1 million, or 25.8%, to $2,294.2 million for the six months ended June 30, 2008, compared with $1,824.1 million for the six months ended June 30, 2007 and an increase of $50.4 million in investment advisory performance fees.

The increase in investment advisory and administration base fees of $470.1 million for the six months ended June 30, 2008, compared with the six months ended June 30, 2007, consisted of increases of $204.5 million in equity and balanced products, $126.9 million in alternative investment products, $123.3 million in cash management products and $15.5 million in fixed income products. The increase in investment advisory and administration fees for all asset types was driven by increased average AUM across all asset types, which includes the impact of the AUM acquired in the Quellos Transaction, for the six months ended June 30, 2008 as compared to the six months ended June 30, 2007.

Investment advisory performance fees increased by $50.5 million, or 104.9%, to $98.6 million for the six months ended June 30, 2008, as compared to $48.1 million for the six months ended June 30, 2007, primarily as a result of higher investment advisory performance fees in international equity separate accounts.

Distribution Fees

Distribution fees increased by $11.3 million to $69.0 million for the six months ended June 30, 2008, as compared to $57.7 million for the six months ended June 30, 2007. The increase in distribution fees is primarily the result of the acquisition of distribution financing arrangements from PNC in second quarter 2007.

Other Revenue

Total other revenue of $225.2 million for the six months ended June 30, 2008 increased $52.8 million, or 30.6%, compared with the six months ended June 30, 2007. Total other revenue primarily represents fees earned onBlackRock Solutions products and services of $159.4 million, net interest related to securities lending of $17.6 million, property management fees of $18.2 million earned on real estate products (primarily related to reimbursement of the salaries and benefits of certain Metric employees from certain real estate products), and unit trust sales commissions of $13.9 million.

The increase in other revenue of $52.8 million for the six months ended June 30, 2008, as compared to $172.5 million for the six months ended June 30, 2007, was primarily the result of an increase of $70.8 million fromBlackRock Solutions products and services driven by additional advisory and Aladdin^® assignments, partially offset by a decrease in fees earned for fund accounting services of $15.5 million and $4.9 million earned on unit trust sales commissions. A portion of the revenue earned on advisory assignments was comprised of both ongoing fees based on AUM of the respective portfolio assignments and one-time advisory and portfolio structuring fees.

- 44 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Expenses


	Six Months Ended
	June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount		%
Expenses:
Employee compensation and benefits	$	1,020,903	$	756,075	$	264,828	35.0	%
Portfolio administration and servicing costs		309,357		262,163		47,194	18.0	%
Amortization of deferred mutual fund sales commissions		63,630		50,271		13,359	26.6	%
General and administration		419,378		417,549		1,829	0.4	%
Amortization of intangible assets		73,141		62,107		11,034	17.8	%

Total expenses	$	1,886,409	$	1,548,165	$	338,244	21.8	%

Total expenses increased $338.2 million, or 21.8%, to $1,886.4 million for the six months ended June 30, 2008, compared with $1,548.2 million for the six months ended June 30, 2007. The increase was attributable to increases in employee compensation and benefits, portfolio administration and servicing costs, amortization of deferred mutual fund sales commissions, amortization of intangible assets and general and administration expenses. The six months ended June 30, 2007, included $13.1 million of integration charges related to the MLIM Transaction, which were primarily recorded in general and administration expense.

Employee Compensation and Benefits

Employee compensation and benefits expense increased by $264.8 million, or 35.0%, to $1,020.9 million, at June 30, 2008, compared to $756.1 million for the six months ended June 30, 2007. The increase in employee compensation and benefits expense was attributable to increases in incentive compensation, salaries and benefits, stock-based compensation and deferred compensation of $126.4 million, $77.3 million, $41.3 million and $19.8 million, respectively. The $126.4 million increase in incentive compensation was primarily attributable to higher operating income and direct incentives associated with higher base and performance fees. The increase of $77.3 million, or 20.9%, in salaries and benefits was primarily due to higher staffing levels associated with business growth and the Quellos Transaction. Full time employees (including employees of Metric) at June 30, 2008 totaled 6,069 as compared to 5,315 at June 30, 2007. Stock-based compensation increased $41.3 million, or 45.6%, primarily due to additional grants of stock awards in the six months ended June 30, 2008. Deferred compensation increased $19.8 million primarily due to appreciation on assets related to certain deferred compensation plans, which is primarily offset by gains on certain investments included in non-operating income.

Portfolio Administration and Servicing Costs

Portfolio administration and servicing costs increased $47.2 million, or 18.0%, to $309.4 million for the six months ended June 30, 2008, compared to $262.2 million for the six months ended June 30, 2007. These costs include payments to Merrill Lynch under the Global Distribution Agreement, and payments to PNC as well as other third parties, primarily associated with the administration and servicing of client investments in certain BlackRock products. The $47.2 million increase related primarily to higher levels of average AUM in open-end funds, cash management products, as well as alternative products. Portfolio administration and servicing costs for the six months ended June 30, 2008 included $240.0 million of costs attributable to Merrill Lynch and affiliates and $16.8 million of costs attributable to PNC and affiliates as compared to $217.2 million and $14.1 million, respectively, in the six months ended June 30, 2007.

- 45 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Expenses (continued)

Amortization of Deferred Mutual Fund Sales Commissions

Amortization of deferred mutual fund sales commissions increased by $13.3 million to $63.6 million for the three months ended June 30, 2008, as compared to $50.3 million for the three months ended June 30, 2007. The increase in amortization of deferred mutual fund sales commissions was primarily the result of the acquisition of distribution financing arrangements from PNC in second quarter 2007 as well as higher sales in certain share classes of open-ended funds.

General and Administration Expense


	Six Months Ended
	June 30,				Variance
*(Dollar amounts in thousands)*	2008		2007		Amount			%
General and administration expense:
Marketing and promotional	$	86,508	$	83,194	$	3,314		4.0	%
Portfolio services		87,498		75,723		11,775		15.6	%
Occupancy		67,733		61,670		6,063		9.8	%
Technology		61,154		61,642		(488	)	(0.8	)%
Professional services		40,870		45,471		(4,601	)	(10.1	)%
Closed-end fund launch costs		9,127		32,953		(23,826	)	(72.3	)%
Other general and administration		66,488		56,896		9,592		16.9	%

Total general and administration expense	$	419,378	$	417,549	$	1,829		0.4	%

General and administration expenses increased $1.8 million, or 0.4%, for the six months ended June 30, 2008 compared with the six months ended June 30, 2007. Portfolio services costs increased by $11.8 million to $87.5 million, or 15.6%, primarily as a result of the Company incurring additional portfolio service expenses related to certain funds. The increase in this fund-related expense is more than offset by higher administration fee revenue earned on the funds. Other general and administration costs increased by $9.6 million, or 16.9%, to $66.5 million from $56.9 million, primarily related to an increase in foreign currency remeasurement expenses of $4.0 million and $3.3 million of incremental communication costs. Occupancy expenses increased $6.1 million, or 9.8%, to $67.7 million compared to $61.7 million for the six months ended June 30, 2007 as a result of expansion of offices worldwide (including the impact of the Quellos Transaction). Closed-end funds launch costs decreased $23.8 million as compared to the six months ended June 30, 2007 due to two closed-end funds launched during the six months ended June 30, 2007, which generated $2.8 billion in AUM as compared to two funds launched in the six months ended June 30, 2008 which generated $402.4 million in AUM. Professional services decreased $4.6 million, or 10.1%, to $40.9 million compared to $45.5 million for the six months ended June 30, 2007 primarily due to decreased consulting and legal costs related to the MLIM integration in 2007.

- 46 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Amortization of Intangible Assets

The $11.0 million increase in amortization of intangible assets to $73.1 million for the six months ended June 30, 2008, compared to $62.1 million for the six months ended June 30, 2007, primarily reflects amortization of finite-lived intangible assets acquired in the Quellos Transaction.

Non-Operating Income, Net of Non-Controlling Interests

Non-operating income, net of non-controlling interests, for the six months ended June 30, 2008 and 2007 was as follows:


	Six Months Ended
	June 30,						Variance
*(Dollar amounts in thousands)*	2008			2007			Amount			%
Total non-operating income	$	(21,791	)	$	371,449		$	(393,240	)	(105.9	)%
Non-controlling interests		14,540			(273,131	)		287,671		105.3	%

Total non-operating income, net of non-controlling interests	$	(7,251	)	$	98,318		$	(105,569	)	(107.4	)%

The components of non-operating income, net of non-controlling interests, for the six months ended June 30, 2008 and 2007 were as follows:


	Six Months Ended
	June 30,						Variance
*(Dollar amounts in thousands)*	2008			2007			Amount			%
Non-operating income, net of non-controlling interests:
Net gain (loss) on investments, net of non-controlling interests:
Private equity	$	9,757		$	42,903		$	(33,146	)	(77.3	)%
Real estate		(22,391	)		2,457			(24,848	)	NM
Hedge funds/hedge funds of funds		(3,922	)		16,720			(20,642	)	(123.5	)%
Other investments¹		11,802			25,352			(13,550	)	(53.4	)%

Total net gain (loss) on investments, net of non-controlling interests		(4,754	)		87,432			(92,186	)	(105.4	)%
Other non-controlling interest²		(662	)		—			(662	)	NM
Interest and dividend income		32,263			32,095			168		0.5	%
Interest expense		(34,098	)		(21,209	)		(12,889	)	60.8	%

Total non-operating income, net of non-controlling interests	$	(7,251	)	$	98,318		$	(105,569	)	(107.4	)%

NM – Not Meaningful

¹	Includes investment income related to equity and fixed income investments, CDOs, deferred compensation arrangements and BlackRock’s seed capital hedging program.

²	Includes non-controlling interest related to operating entities (non-investment activities).

- 47 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Non-Operating Income, Net of Non-Controlling Interests (continued)

Non-operating income, net of non-controlling interests, decreased $105.6 million to a loss of $7.3 million for the six months ended June 30, 2008, as compared to income of $98.3 million for the six months ended June 30, 2007. The decrease was primarily the result of a $4.8 million net loss on investments compared with a net gain on investments in the six months ended June 30, 2007 and a $12.9 million increase in interest expense related to the issuance of long-term debt in September 2007. The net loss on investments, net of non-controlling interests, in 2008 was primarily due to a decline in valuations from seed investments and co-investments in real estate equity products and hedge funds/funds of hedge funds offset by net gains in private equity and other investments.

Income Taxes

Income tax expense was $277.7 million and $234.9 million for the six months ended June 30, 2008 and 2007, respectively. The effective income tax rate for the six months ended June 30, 2008 was 35.0%, as compared to 36.0% for the six months ended June 30, 2007. The decrease was primarily due to the mix of pre-tax income and tax legislation changes enacted in the third quarter 2007 in the United Kingdom that reduced corporate income tax rates in 2008.

Net Income

Net income totaled $515.7 million, or $3.87 per diluted share, for the six months ended June 30, 2008, which was an increase of $98.1 million, or $0.70 per diluted share, compared to the six months ended June 30, 2007. Net income for the six months ended June 30, 2008 includes the after-tax impact of the portion of LTIP awards which will be funded through a capital contribution of BlackRock common stock held by PNC and an expected contribution by Merrill Lynch to fund certain compensation of former MLIM employees of $19.4 million and $3.3 million, respectively.

Net income of $417.6 million for the six months ended June 30, 2007 included the after-tax impacts related to the portion of certain LTIP awards which will be funded through a capital contribution of BlackRock common stock held by PNC of $16.6 million, MLIM integration costs of $8.4 million and an expected contribution by Merrill Lynch of $3.2 million to fund certain compensation of former MLIM employees. MLIM integration costs primarily include professional fees and marketing and promotional expenses. Exclusive of these GAAP expenses in both periods, fully diluted earnings per share, as adjusted, for the six months ended June 30, 2008 increased $0.65, or 19.2%, to $4.04 compared to the six months ended June 30, 2007.

- 48 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Operating results for the six months ended June 30, 2008, as compared with the six months ended June 30, 2007. (continued)

Operating Margin

The Company’s operating margin was 29.8% for the six months ended June 30, 2008, compared to 26.4% for the six months ended June 30, 2007. Operating margin for the six months ended June 30, 2008 and 2007 included the impact of $9.3 million and $38.6 million, respectively, of closed-end fund launch costs and commissions. In addition, operating margin for the six months ended June 30, 2007 included the impact of $13.1 million of MLIM integration costs. Operating margin improved 12.9% primarily due to operating leverage associated with the growth in revenue, a $29.4 million reduction of closed-end fund launch costs and commissions and the reduction of MLIM integration costs partially offset by a $14.6 million increase in compensation expense related to appreciation on certain deferred compensation plans and a $11.0 million increase in amortization of intangible assets associated with the Quellos Transaction.

Operating margin, as adjusted, which excludes from operating income the impact of certain GAAP operating expenses and adjusts GAAP operating revenue, was 37.8% and 36.4% for the six months ended June 30, 2008 and 2007, respectively. The six months ended June 30, 2008 operating margin, as adjusted, which included the impact of an $11 million increase in amortization of intangible assets primarily associated with the Quellos Transaction, rose 1.4% to 37.8%. Operating margin, as adjusted, is described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

- 49 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources

BlackRock Cash Flows Excluding the Impact of Consolidated Sponsored Investment Funds

In accordance with GAAP, certain BlackRock sponsored investment funds are consolidated into the condensed consolidated financial statements of BlackRock, notwithstanding the fact that BlackRock may only have a minority economic interest in these funds. As a result, BlackRock’s condensed consolidated statements of cash flows include the cash flows of consolidated sponsored investment funds. The Company uses an adjusted cash flow, which excludes the impact of consolidated sponsored investment funds, as a supplemental non-GAAP measure to assess liquidity and capital requirements. The Company believes that its cash flows, excluding the impact of the consolidated sponsored investment funds, provide investors with useful information on the cash flows of BlackRock relating to our ability to fund additional operating, investing and financing activities. BlackRock’s management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, its cash flows presented in accordance with GAAP.

The following table presents a reconciliation of the Company’s condensed consolidated statements of cash flows presented on a GAAP basis to the Company’s condensed consolidated statements of cash flows excluding the impact on cash flows of consolidated sponsored investment funds:


	Six Months Ended
*(Dollar amounts in millions)*	June 30, 2008
	GAAP Basis			Impact on Cash Flows of Consolidated Sponsored Investment Funds			Cash Flows Excluding Impact of Consolidated Sponsored Investment Funds
Cash flows from operating activities	$	481		$	206		$	275
Cash flows from investing activities		(318	)		(5	)		(313	)
Cash flows from financing activities		(397	)		(212	)		(185	)
Effect of exchange rate changes on cash and cash equivalents		6			—			6

Net change in cash and cash equivalents		(228	)		(11	)		(217	)
Cash and cash equivalents, beginning of period		1,656			67			1,589

Cash and cash equivalents, end of period	$	1,428		$	56		$	1,372

- 50 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources (continued)

Operating Activities

Sources of BlackRock’s operating cash include investment advisory and administration fees, revenues fromBlackRock Solutions’ products and services, property management fees, mutual fund distribution fees and realized earnings and distributions on the Company’s investments. BlackRock primarily uses its cash to pay compensation and benefits, portfolio administration and servicing costs, general and administration expenses, interest on the Company’s borrowings, purchases of investments, capital expenditures, income taxes and dividends on BlackRock’s capital stock.

Cash flows from operating activities in the six months ended June 30, 2008 included cash payments related to year end incentive compensation.

Capital Resources

The Company manages its consolidated financial condition and funding to maintain appropriate liquidity for the business. At ~~September~~June 30, ~~2007,~~2008, the Company had total cash and cash equivalents on its condensed consolidated ~~statement~~statements of financial condition of ~~$2,320.6~~$1,427.5 million. This total was prior to the Company’s $562.5 million payment to Quellos on October 1, 2007, its $128.1 million payment to Merrill Lynch on October 31, 2007 (recorded as an expense in the third quarter) and its $27 million payment on October 1, 2007 to purchase the 20% interest in a fund of hedge funds manager. Cash and cash equivalents, net of amounts in consolidated sponsored investment funds ~~($191.5 million)~~of $56.3 million and net of regulatory capital requirements ~~($215.7~~of $203.8 million ~~not necessarily all~~(partially met with cash ~~requirements)~~and cash equivalents), was ~~$1,913.4~~$1,167.4 million. In addition, ~~as of September~~at June 30, ~~2007,~~2008, the Company had committed access to ~~$2,050~~$2,100.0 million of undrawn cash (net of outstanding letters of credit totaling $100 million) via its 2007 five-year credit facility, resulting in cash, net of ~~the~~ cash ~~held by~~in consolidated sponsored investment funds and regulatory capital requirements, plus credit capacity of ~~$3,963.4~~$3,267.4 million.

~~Sources~~Approximately $56.3 million in cash and cash equivalents and $792.2 million in investments included in the Company’s condensed consolidated statement of ~~BlackRock’s~~financial condition at June 30, 2008 are held by sponsored investment funds that are consolidated by BlackRock in accordance with GAAP. The Company may not be able to access such cash or investments to use in its operating ~~cash include~~activities.

Investment/Loan Commitments

At June 30, 2008, the Company had $487.8 million of various capital commitments to fund sponsored investment ~~advisory~~funds and ~~administration fees, revenues from~~~~BlackRock Solutions~~~~products and services, property management fees, mutual fund distribution fees and realized earnings on certain~~unfunded commitments related to one private equity warehouse facility. Generally, the timing of the ~~Company’s investments. BlackRock primarily uses~~funding of capital commitments is uncertain and such commitments could expire before funding. The Company intends to make additional capital commitments from time to time to fund additional investment products for, and with, its operating cash to pay employee compensation and benefits, portfolio administration and servicing costs, general and administration expenses, interest on the Company’s debt, purchases of investments, capital expenditures and dividends on BlackRock’s stock.clients.

~~In December 2006,~~At June 30, 2008, the Company ~~entered into an unsecured revolving credit facility with~~had loaned approximately $97.2 million to a ~~syndicate~~warehouse entity established for certain private equity funds of ~~banking institutions. This facility, as amended in February 2007 (the “2006 facility”), permitted~~funds. At June 30, 2008, the Company had committed to ~~borrow~~make additional loans of approximately $144.5 million under the agreement. The Company anticipates making additional commitments under this facility from time to time, but is not obligated to do so.

On February 29, 2008, the Company committed to provide financing, if needed, of up to ~~$800,000.~~$60.0 million to Anthracite Capital, Inc. (“Anthracite”), a specialty commercial real estate finance company that is managed by a subsidiary of BlackRock. Financing is collateralized by Anthracite pledging its ownership interest in an investment fund which is also managed by a subsidiary of BlackRock. Borrowings of $52.5 million, which were outstanding at March 31, 2008, were repaid in April 2008. Subsequent to June 30, 2008, Anthracite borrowed $30.0 million at an interest rate of 5.295%.

- 51 -

PART I - FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources (continued)

Borrowings

In August 2007, the Company ~~terminated the 2006 facility and~~ entered into a ~~new five year~~five-year $2.5 billion unsecured revolving credit facility (the “2007 ~~facility”~~Facility”), which permits the Company to request an additional $500 million of borrowing capacity, subject to lender credit approval, up to a maximum of $3$3.0 billion. The 2007 ~~facility~~Facility requires the Company not to exceed a maximum leverage ratio (ratio of net debt to EBITDA, where net debt equals total debt less domestic unrestricted cash) of 3 to 1, which was satisfied at ~~September~~June 30, ~~2007.~~2008.

~~The 2007 facility was used to refinance the 2006 facility and will provide back-up liquidity, fund ongoing working capital for general corporate purposes and fund various investment opportunities.~~ At ~~September~~June 30, ~~2007,~~2008, the Company had ~~$450~~$300.0 million outstanding under the 2007 ~~facility~~Facility with interest rates between ~~5.105%~~2.655% to ~~5.845%~~5.105% and maturity dates between ~~October 2007~~July 2008 and September 2008. During July 2008, the Company repaid $100.0 million of the balance outstanding.

In ~~September~~addition, in December 2007, in order to support two enhanced cash funds that BlackRock manages, BlackRock elected to procure two letters of credit under the existing 2007 Facility totaling in aggregate $100 million.

In June 2008, BlackRock Japan Co., Ltd., a wholly owned subsidiary of the Company, ~~issued $700 million in aggregate principal amount of 6.25% senior unsecured notes maturing on September 15, 2017~~entered into a five billion Japanese yen commitment-line agreement with a banking institution (the ~~“Notes”~~“Japan Commitment-line”). The ~~Notes~~term of the Japan Commitment-line is one year and interest will accrue at the applicable Japanese short-term prime rate. The Japan Commitment-line is intended to provide liquidity flexibility for operating requirements in Japan. At June 30, 2008, the Company had no borrowings outstanding on the Japan Commitment-line.

At June 30, 2008, long-term borrowings were ~~issued~~$946.6 million. Debt service and repayment requirements, assuming the convertible debentures are repaid at BlackRock’s option in 2010, are $25.2 million for the remainder of 2008, $51.0 million in 2009, $297.7 million in 2010 and $43.8 million in each of 2011 and 2012.

Support of Two Enhanced Cash Funds

During 2007, BlackRock made investments in two enhanced cash funds to enhance liquidity of the funds and to facilitate redemptions. At June 30, 2008, BlackRock’s total net investment in these two funds was approximately $88.5 million.

In December 2007, BlackRock entered into capital support agreements with the two funds. These credit support agreements are backed by letters of credit drawn under BlackRock’s existing credit facility. Pursuant to the capital support agreements, BlackRock has agreed to make subsequent capital contributions to the funds to cover realized losses, up to $100 million, related to specified securities held by the funds. BlackRock provided approximately $1 million of capital contributions to these two funds for the six months ended June 30, 2008 under the capital support agreements.

At June 30, 2008 and December 31, 2007, in applying the provisions of FASB Interpretation No. 46(R),Consolidation of Variable Interest Entities(“FIN 46(R)”), BlackRock concluded that it is not the primary beneficiary of either fund.

Exposure to Collateralized Debt Obligations

In the normal course of business, BlackRock act as a ~~discount~~collateral manager to various CDOs. A CDO is a managed investment vehicle that purchases a portfolio of ~~$5.6 million,~~assets or enters into swaps. A CDO funds its activities through the issuance of several tranches of debt and equity, the repayment and return of which ~~is being amortized over~~are linked to the ~~ten-year term. A~~performance of the assets in the CDO. The Company also may invest in a portion of the ~~net proceeds~~debt or equity issued. These entities meet the definition of ~~the Notes was used to fund the initial cash payment for the acquisition of the fund of funds business of Quellos and the remainder will be used for general corporate purposes.~~

~~In June 2007, the Company announced~~a variable interest entity under FIN 46(R). BlackRock has concluded that it ~~had entered into an asset purchase agreement under which~~is not the primary beneficiary of these CDOs, and as a result it ~~would acquire certain assets of the fund of funds business of Quellos for up to $1.7 billion. This transaction closed~~does not consolidate these CDOs on ~~October 1, 2007,~~its condensed consolidated financial statements.

At June 30, 2008 and BlackRock paid Quellos $562.5 million in cash and $187.5 million in BlackRock common stock. The common stock will be held in escrow for up to three years and is available to satisfy certain indemnification obligations of Quellos under the asset purchase agreement. In addition, Quellos may receive up to an additional $970 million in cash and stock over three and a half years contingent upon certain operating measures.

~~On October~~December 31, 2007, ~~BlackRock made a $128.1 million one-time payment to Merrill Lynch~~BlackRock’s maximum risk of loss related to ~~the termination of 40 closed-end fund administration~~CDOs was approximately $25.5 million and ~~servicing arrangements.~~$32.1 million, respectively.

- 5152 -

PART I —- FINANCIAL INFORMATION (continued)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources (continued)

Approximately $191.5 million in cash and cash equivalents and $1,872.8 million in investments included in the Company’s condensed consolidated statement of financial condition at September 30, 2007 are held by sponsored investment funds that are consolidated by BlackRock in accordance with GAAP. The Company may not be able to access such cash or investments to use in its operating activities. In addition, a significant portion of the Company’s equity method and cost method investments, as well as its portion of consolidated sponsored investment fund investments are illiquid in nature and, as such, are not readily convertible to cash.

At September 30, 2007, long-term debt, including current maturities, was $946.9 million. Debt service and repayment requirements are $51.3 million in 2008, $51.3 million in 2009 and $298.0 million in 2010.

At September 30, 2007, the Company had $676.3 million of various capital commitments to fund sponsored investment funds and unfunded commitments related to two private equity warehouse facilities. Generally, the timing of the funding of capital commitments is uncertain and such commitments could expire before funding. The Company intends to make additional capital commitments from time to time.

On August 2, 2006, BlackRock announced that its board of directors had authorized a new share repurchase program to purchase an additional 2.1 million shares. Pursuant to this repurchase program, BlackRock may make repurchases from time to time, as market conditions warrant, in the open market or in privately negotiated transactions at the discretion of management. The Company repurchased 1,348,600 shares under the program in open market transactions for approximately $200.9 million through September 30, 2007. As a result, the Company is currently authorized to repurchase an additional 751,400 shares under its share repurchase program.Net Capital Requirements

The Company is required to maintain net capital in certain ~~international~~ jurisdictions, which is met in part by retaining cash and cash equivalent investments in those jurisdictions. As a result, the Company may be restricted in its ability to transfer cash between different jurisdictions. Additionally, transfer of cash between international jurisdictions, including repatriation to the United States, may have adverse tax consequences that could discourage such transfers. At ~~September~~June 30, ~~2007,~~2008, the Company was required to maintain approximately ~~$215.7~~$203.8 million in net capital at these subsidiaries and is in compliance with all applicable regulatory minimum net capital requirements.

Critical Accounting Policies

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. In addition to Fair Value Measurements, discussed below, see Note 2 and the Company’s Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations in BlackRock’s 2007 Annual Report on Form 10-K filed with the SEC on February 28, 2008 for details on Significant Accounting Policies.

Fair Value Measurements

BlackRock adopted the Statement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurements (“SFAS No. 157”), as of January 1, 2008. See Note 1, Significant Accounting Policies to the Company’s condensed consolidated financial statements contained in Part I, Item 1 of this filing.

BlackRock reports its investments on a GAAP basis, which includes investment balances which are owned by sponsored investment funds that are deemed to be controlled by BlackRock in accordance with GAAP and therefore are consolidated even though BlackRock may not own a majority of such funds. As a result, management reviews its investments on an “economic” basis, which eliminates the portion of investments that do not impact BlackRock’s book value. BlackRock’s management does not advocate that investors consider such non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

The following table represents investments measured at fair value on a recurring basis at June 30, 2008:


*(Dollar amounts in millions)*	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Other Investments Not Held at Fair Value ⁽³⁾		Investments at June 30, 2008
Total investments, GAAP	$	312		$	205		$	1,386		$	39	$	1,942
Net assets for which the Company does not bear “economic” exposure⁽¹⁾		(6	)		(36	)		(454	)		—		(496	)

Net “economic” investment exposure⁽²⁾	$	306		$	169		$	932		$	39	$	1,446

⁽¹⁾	Consists of net assets attributable to non-controlling investors of consolidated sponsored investment funds.

⁽²⁾	Includes BlackRock’s portion of cash and cash equivalents, other assets, accounts payable and accrued liabilities, and other liabilities that are consolidated from sponsored investment funds.

⁽³⁾	Includes investments in equity method investees which are not accounted for under a fair value measure in accordance with GAAP as well as investments held at cost.

- 5253 -

PART I —- FINANCIAL INFORMATION (continued)

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Contractual Obligations, Commitments and Contingencies~~

~~The following table sets forth contractual obligations, commitments and contingencies by year of payments as of September 30, 2007:~~

   Payments Due In:
(Dollar amounts in thousands)    Remainder
of 2007    2008    2009    2010    2011    Thereafter    Total
Long-term borrowings²

Long-term notes
   $ —      $ 43,750    $ 43,750    $ 43,750    $ 43,750    $ 962,500    $ 1,137,500
Convertible debentures³
   —      6,563    6,563    253,278    —      —      266,404
Acquired management contract
   —      1,000    1,000    1,000    —      —      3,000
Short-term borrowings²
   154,655    309,085    —      —      —      —      463,740
Operating lease commitments
   20,042    69,289    64,248    58,502    55,824    266,751    534,656
Purchase obligations
   96,063    368,605    271,816    3,305    3,300    —      743,089
Investment commitments¹
   2,772    10,795    —      52,449    1,509    608,785    676,310

Total
   $ 273,532    $ 809,087    $ 387,377    $ 412,284    $ 104,383    $ 1,838,036    $ 3,824,699

¹	Generally, the timing of the funding of these commitments is unknown, therefore amounts are shown to be paid upon the expiration date of the commitment. Actual payments could be made at any time prior to such date and, if not called by that date, such commitments would expire.

²	~~Amounts include principal repayments and interest payments.~~

³	The principal balance of the convertible debentures is assumed to be repaid at BlackRock’s option in 2010, and the related interest has been included through the call date. However, beginning in February 2009 the debentures may be converted at the option of the holders.

~~The table above does not include approximately $76 million of uncertain tax positions as the timing of the ultimate outcome is currently unknown.~~

Excluded from the table is the Company’s obligations for the following: (i) a $562.5 million payment related to the acquisition of certain assets of the fund of funds business of Quellos, (ii) a $128.1 million payment to Merrill Lynch related to the termination of 40 closed-end fund administration and servicing arrangements, and (iii) a $27 million payment for the remaining 20% of an investment manager of a fund of hedge funds. Such payments have been made in October 2007.

In addition, excluded from the table are additional contingent payments related to its acquisitions of: (i) SSRM Holdings, Inc., (ii) an investment manager of a fund of hedge funds, and (iii) certain assets of Quellos. As the remaining contingent obligations are primarily dependent upon performance of certain operating measures, the ultimate liabilities are not certain as of September 30, 2007.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As a leading investment management firm, BlackRock devotes significant resources across all of its operations to identifying, measuring, monitoring, managing and analyzing market and operating risks, including the management and oversight of its own investment portfolio. The ~~board~~Board of ~~directors~~Directors of the Company has adopted guidelines for the review of investments to be made by the Company, requiring, among other things, that all investments be reviewed by the Company’s ~~Investment~~Capital Committee, which consists of senior officers of the Company, and that certain investments over prescribed thresholds receive prior approval from the ~~audit committee~~Audit Committee or the ~~board~~Board of ~~directors~~Directors depending on the circumstances.

~~- 53 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk (continued)~~

AUM Market Price Risk

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 realized on AUM. At June 30, 2008, the majority of our investment advisory and administration fees were based on AUM of the applicable mutual funds or separate accounts. Movements in equity market prices, interest rates, foreign exchange rates or all three could cause ~~revenues~~the value of AUM to decline, ~~because of~~which could result in lower investment advisory and administration ~~fees by:~~fees.

~~causing the value of AUM to decrease;~~

~~causing the returns realized on AUM to decrease;~~

~~causing clients to withdraw funds in favor of products in markets that they perceive to offer greater opportunity and that BlackRock does not serve;~~

~~causing clients to rebalance assets away from products that BlackRock manages into products that BlackRock does not manage; and~~

~~causing clients to reallocate assets away from products that earn higher revenues into products that earn lower revenues.~~

Corporate ~~Investments~~Investment Portfolio Risks

In the normal course of its business, BlackRock is exposed to equity market price risk, interest rate risk and foreign exchange rate risk associated with its corporate investments.

BlackRock has investments primarily in sponsored investment products that invest in a variety of asset classes. Investments generally are made to establish a performance track record, for co-investment purposes or to hedge exposure to certain deferred compensation plans. Currently, the Company has a seed capital hedging program in which it enters into total return swaps to hedge exposure to certain equity investments. At ~~September~~June 30, ~~2007,~~2008, the outstanding total return swaps had an aggregate notional value of approximately ~~$82~~$74 million.

At ~~September~~June 30, ~~2007,~~2008, approximately ~~$1,873~~$792 million of BlackRock’s total investments were maintained in sponsored investment funds that are deemed to be controlled by BlackRock in accordance with GAAP and therefore are ~~therefore,~~ consolidated even though BlackRock may not own a majority of such funds. ~~The~~Prior to the impact of the seed capital hedging program, the Company’s net economic exposure to its investment portfolio is as follows:


				June 30,			December 31,
*(Dollar amounts in millions)*	September 30, 2007			2008			2007
Total investments	$	2,681		$	1,942		$	2,000
Consolidated investments		(1,873	)
Consolidated sponsored investments funds					(792	)		(1,054	)
Net exposure to consolidated investment funds		347			296			325

Total net “economic” investments	$	1,155
Total net “economic” investment exposure				$	1,446		$	1,271

Equity Market Price Risk

At ~~September~~June 30, ~~2007,~~2008, the Company’s net exposure to equity price risk is approximately ~~$925~~$945 million (net of ~~$82~~$74 million of certain equity investments that are hedged via total return swaps) of the Company’s net economic ~~investments.~~investment exposure. The Company estimates that a 10% adverse change in equity prices would result in a decrease of approximately ~~$92.5~~$94.5 million in the carrying value of such investments.

- 54 -

PART I - FINANCIAL INFORMATION (continued)

Item 3.

Quantitative and Qualitative Disclosures About Market Risk (continued)

Interest Rate Risk

At ~~September~~June 30, ~~2007,~~2008, the Company was exposed to interest-rate risk as a result of approximately ~~$148~~$427 million of investments in debt securities and sponsored investment products that invest primarily in debt securities. Management considered a hypothetical 100 basis point fluctuation in interest rates and ~~determined~~estimates that the impact of such a fluctuation on these investments, ~~individually and~~ in the aggregate, would ~~not have~~result in a ~~material effect on BlackRock’s financial condition~~decrease, or ~~results~~increase, of ~~operations.~~

~~- 54 -~~

~~PART I — FINANCIAL INFORMATION (continued)~~

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk (continued)~~

approximately $5.6 million in the carrying value of such investments.

Foreign Exchange Rate Risk

As discussed above, the Company invests in sponsored investment products that invest in a variety of asset classes. The carrying value of the net economic ~~investments that are~~investment exposure denominated in foreign currencies, primarily the British pound sterling and the ~~euro,~~Euro, was ~~$109~~$84 million. A 10% adverse change in foreign exchange rates would result in approximately an ~~$10.9~~$8.4 million decline in the ~~investment portfolio.~~carrying value of such investments.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

Under the direction of BlackRock’s Chief Executive Officer and Chief Financial Officer, BlackRock evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) ~~as of September~~at June 30, ~~2007.~~2008. Based on this evaluation, BlackRock’s Chief Executive Officer and Chief Financial Officer have concluded that BlackRock’s disclosure controls and procedures were effective ~~as of September~~at June 30, ~~2007.~~2008.

Internal Control ~~over~~and Financial Reporting

~~Other than system conversion activities related to the transition of support from Merrill Lynch to BlackRock, there~~There have been no changes in internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2007~~2008 that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting. ~~The Company has substantially completed an evaluation of internal control over financial reporting in light of the MLIM Transaction and expects to make additional modifications based upon this review.~~

- 55 -

PART II —- OTHER INFORMATION

Item 1.

Legal Proceedings

See ~~footnote 12,~~Note 9, Commitments and Contingencies, to the Company’s condensed consolidated financial statements contained in Part I, Item 1 of this filing.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

~~(c) During the three months ended September 30, 2007, the Company made the following purchases of its common stock, which are registered pursuant to Section 12(b) of the Exchange Act.~~

(c)

During the three months ended June 30, 2008, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.

Total Number of
Shares
Purchased

Average Price
Paid per Share

Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum
Number of
Shares that May
Yet Be
Purchased
Under the Plans
or Programs¹






July 1, 2007 through July 31, 2007
   1,309 ² $ 169.92    —      1,310,500
August 1, 2007 through August 31, 2007
   559,525 ² $ 148.52    559,100    751,400
September 1, 2007 through September 30, 2007
   —   —      —      751,400

Total
   560,834 $ 148.57    559,100


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans of Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs¹
April 1, 2008 through April 30, 2008	5,270	²	$	204.77	—	751,400
May 1, 2008 through May 31, 2008	9,719	²	$	219.02	—	751,400
June 1, 2008 through June 30, 2008	2,795	²	$	212.09	—	751,400

Total	17,784		$	213.71	—

¹	On August 2, 2006, the Company announced a 2.1 million share repurchase program with no stated expiration date. An additional indeterminable number of shares may be repurchased under the 2002 Long-Term Retention and Incentive Plan (“2002 LTIP”).

~~Includes~~Reflects purchases made by the Company primarily to satisfy income tax withholding obligations ~~with~~of employees related to the vesting of certain ~~employees.~~restricted stock or restricted stock unit awards. All such purchases were made outside of the publicly announced share repurchase program.

- 56 -

PART II —- OTHER INFORMATION ~~(continued)~~( continued)

Item 4.

Submission of Matters to a Vote of Security Holders

The annual meeting of stockholders of BlackRock was held on May 27, 2008, for the purpose of considering and acting upon the following:

(1)Election of Directors. Six Class III directors were elected and the votes cast for or against/withheld were as follows:


	Aggregate Votes
	For	Withheld
Nominees for Class III
Robert C. Doll	113,331,184	1,465,653
Gregory J. Fleming	112,330,984	1,465,853
Murry S. Gerber	113,405,853	390,984
James Grosfeld	112,961,117	835,720
Sir Deryck Maughan	112,961,480	835,357
Linda Gosden Robinson	113,117,594	679,243

As of August 7, 2008 the other continuing directors of BlackRock are Laurence D. Fink, Mathis Cabiallavetta, Dennis D. Dammerman, William S. Demchak, Kenneth B. Dunn, Robert S. Kapito, David H. Komansky, Thomas H. O’Brien, James E. Rohr and John A. Thain.

(2)Ratification of Auditor. The appointment of Deloitte & Touche LLP as BlackRock’s independent registered public accounting firm for the year 2008 was ratified.

There were no broker non-votes for any of the items.

- 57 -

PART II - OTHER INFORMATION ( continued)

Item 6.

~~Exhibits~~

As used in this exhibit list, “BlackRock” refers to BlackRock, Inc. (formerly named New BlackRock, Inc. and previously, New Boise, Inc.) and “Old BlackRock” refers to BlackRock Holdco 2, Inc. (formerly named BlackRock, Inc.), which is the predecessor of BlackRock.


~~Exhibit No.~~		~~Description~~
~~2.1(1)~~		~~Transaction Agreement and Plan of Merger, dated as of February 15, 2006, by and among Merrill Lynch & Co., Inc., BlackRock, Boise Merger Sub, Inc. and Old BlackRock.~~

~~3.1(2)~~		~~Amended and Restated Certificate of Incorporation of BlackRock.~~

~~3.2(2)~~		~~Amended and Restated Bylaws of BlackRock.~~

~~3.3(2)~~		~~Certificate of Designations of Series A Convertible Participating Preferred Stock of BlackRock.~~

~~4.1(3)~~		~~Specimen of Common Stock Certificate.~~

~~4.2(4)~~		Indenture, dated as of February 23, 2005, between Old BlackRock and The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as trustee, relating to the 2.625% Convertible Debentures due 2035.

~~4.3(4)~~		~~Form of 2.625% Convertible Debenture due 2035 (included as Exhibit A in Exhibit 4.2).~~

~~4.4(2)~~		~~First Supplemental Indenture, dated September 29, 2006, relating to the 2.625% Convertible Debentures due 2035.~~

~~4.5(18)~~		~~Indenture, dated September 17, 2007, between BlackRock and The Bank of New York, as trustee, relating to senior debt securities.~~

~~4.6(19)~~		~~Form of 6.25% Notes due 2017.~~

~~10.1(5)~~		~~Tax Disaffiliation Agreement, dated October 6, 1999, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.~~

~~10.2(3)~~		~~BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.3(3)~~		~~Amendment No. 1 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.4(3)~~		~~Amendment No. 2 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.5(3)~~		~~Amendment No. 3 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.6(3)~~		~~Amendment No. 4 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.7(3)~~		~~BlackRock, Inc. 2002 Long-Term Retention and Incentive Program.+~~

~~10.8(3)~~		~~Amendment No. 1 to 2002 Long-Term Retention and Incentive Program.+~~

~~10.9(3)~~		~~Amendment No. 2 to 2002 Long-Term Retention and Incentive Program.+~~

~~10.10(3)~~		~~BlackRock, Inc. Nonemployee Directors Stock Compensation Plan.+~~

~~10.11(3)~~		~~BlackRock, Inc. Voluntary Deferred Compensation Plan.+~~

~~10.12(3)~~		~~BlackRock, Inc. Involuntary Deferred Compensation Plan.+~~

~~10.13(2)~~		~~Form of Stock Option Agreement expected to be used in connection with future grants of Stock Options under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~- 57 -~~

~~PART II — OTHER INFORMATION (continued)~~

~~Item 6.~~

~~Exhibits~~



~~10.14(2)~~		~~Form of Restricted Stock Agreement expected to be used in connection with future grants of Restricted Stock under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.15(2)~~		~~Form of Restricted Stock Unit Agreement expected to be used in connection with future grants of Restricted Stock Units under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.16(2)~~		~~Form of Directors’ Restricted Stock Unit Agreement expected to be used in connection with future grants of Restricted Stock Units under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.17(6)~~		~~BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan.+~~

~~10.18(7)~~		~~Amendment No. 1 to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan.+~~

~~10.19(2)~~		~~Registration Rights Agreement, dated as of September 29, 2006, among BlackRock, Merrill Lynch & Co., Inc. and the PNC Financial Service Group, Inc.~~

~~10.20(8)~~		~~Agreement of Lease, dated May 3, 2000, between 40 East 52nd Street L.P. and Old BlackRock.~~

~~10.21(9)~~		~~Agreement of Lease, dated September 4, 2001, between 40 East 52nd Street L.P. and Old BlackRock.~~

~~10.22(10)~~		~~Share Surrender Agreement, dated October 10, 2002, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc.~~

~~10.23(1)~~		~~First Amendment, dated as of February 15, 2006, to the Share Surrender Agreement, dated as of October 10, 2002, among PNC Bancorp, Inc., The PNC Financial Services Group, Inc. and Old BlackRock.~~

~~10.24(16)~~		~~Second Amendment, dated as of June 11, 2007, to the Share Surrender Agreement, dated October 10, 2002, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc.~~

~~10.25(11)~~		~~Amended and Restated 1999 Annual Incentive Performance Plan. +~~

~~10.26(12)~~		~~Agreement of Lease, dated July 29, 2004, between Park Avenue Plaza Company L.P. and Old BlackRock.~~

~~10.27(12)~~		~~Letter Agreement, dated July 29, 2004, amending the Agreement of Lease between Park Avenue Plaza Company L.P. and Old BlackRock.~~

~~10.28(13)~~		~~Stock Purchase Agreement among MetLife, Inc., Metropolitan Life Insurance Company, SSRM Holdings, Inc. Old BlackRock and BlackRock Financial Management, Inc., dated August 25, 2004.~~

~~10.29(4)~~		Registration Rights Agreement, dated as of February 23, 2005, between Old BlackRock and Morgan Stanley & Co. Incorporated, as representative of the initial purchasers named therein, relating to the 2.625% Convertible Debentures due 2035.

~~- 58 -~~

~~PART II — OTHER INFORMATION (continued)~~

~~Item 6.~~

Exhibits



~~10.30(1)~~ Exhibit No.		~~Implementation and Stockholder Agreement, dated as of February 15, 2006, among The PNC Financial Services Group, Inc., BlackRock and Old BlackRock.~~ Description

~~10.31(1)~~		~~Stockholder Agreement, dated as of February 15, 2006, between Merrill Lynch & Co., Inc. and BlackRock.~~

~~10.32(2)~~10.1(1)+		Letter to ~~Robert C. Doll.+~~

~~10.33(14)~~		~~Global Distribution Agreement, dated as of September 29, 2006, by and between BlackRock and Merrill Lynch & Co., Inc.~~

~~10.34(14)~~		~~Transition Services Agreement, dated as of September 29, 2006, by and between Merrill Lynch & Co., Inc. and BlackRock.~~

~~10.35(17)~~		~~Asset Purchase Agreement, dated as of June 26, 2007, by and among BlackRock, Inc., BAA Holdings, LLC and Quellos Holdings, LLC.~~

~~10.36(20)~~		Five-Year Revolving Credit Agreement, dated as of August 22, 2007, by and among BlackRock, Inc., Wachovia Bank, National Association, as administrative agent, swingline lender and issuing lender, Sumitomo Mitsui Banking Corporation, as Japanese Yen lender, a group of lenders, Wachovia Capital Markets, LLC and Citigroup Global Markets Inc., as joint lead arrangers and joint book managers, Citigroup Global Markets Inc., as syndication agent, and HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., and Morgan Stanley Bank, as documentation agents.Ann Marie Petach.

12.1		Computation of Ratio of Earnings to Fixed Charges.

~~18.1~~		~~Letter re: Change in Accounting Principles.~~

31.1		Section 302 Certification of Chief Executive Officer.

31.2		Section 302 Certification of Chief Financial Officer.

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

(1)	~~Incorporated by Reference to Old BlackRock’s Current Report on Form 8-K (Commission File No. 001-15305) filed on February 22, 2006.~~Filed herewith.

~~(2)~~+

~~Incorporated by Reference to BlackRock’s Current Report on Form 8-K (Commission File No. 001-33099) filed with the Securities and Exchange Commission on October 5, 2006.~~

~~(3)~~

~~Incorporated by Reference to BlackRock’s Registration Statement on Form S-8 (Registration No. 333-137708) filed with the Securities and Exchange Commission on September 29, 2006.~~

~~(4)~~

~~Incorporated by Reference to Old BlackRock’s Annual Report on Form 10-K (Commission File No. 001-15305) for the year ended December 31, 2004.~~

~~(5)~~

Incorporated by Reference to Old BlackRock’s Registration Statement on Form S-1 (Registration No. 333-78367), as amended, originally filed with the Securities and Exchange Commission on May 13, 1999.

~~(6)~~

~~Incorporated by Reference to Old BlackRock’s Registration Statement on Form S-8 (Registration No. 333-32406), originally filed with the Securities and Exchange Commission on March 14, 2000.~~

~~(7)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2000.~~

~~(8)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended March 31, 2000.~~

~~(9)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2001.~~

~~(10)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2002.~~

~~(11)~~

~~Incorporated by Reference to Old BlackRock’s Annual Report on Form 10-K (Commission File No. 001-15305), for the year ended December 31, 2002.~~

~~(12)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended June 30, 2004.~~

~~(13)~~

~~Incorporated by Reference to Old BlackRock’s Current Report on Form 8-K (Commission File No. 001-15305) filed on August 30, 2004.~~

~~(14)~~

~~Incorporated by Reference to BlackRock’s Registration Statement on Form S-4, as amended, originally filed with the Securities and Exchange Commission on June 9, 2006.~~

~~(15)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on December 22, 2006.~~

~~(16)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on June 15, 2007.~~

~~(17)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on July 2, 2007.~~

~~(18)~~

~~Incorporated by reference to BlackRock’s Registration Statement on Form S-3 (Registration No. 333-145976).~~Denotes compensatory arrangement.

- ~~59 -~~

~~PART II — OTHER INFORMATION (continued)~~

~~Item 6.~~

~~Exhibits~~

~~(19)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on September 17, 2007.~~

~~(20)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on August 27, 2007.~~

+	~~Denotes compensatory plans or arrangements.~~

~~- 60~~58 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BLACKROCK, INC.
	(Registrant)

	By:	/s/ ~~Paul L. Audet~~Ann Marie Petach
Date: ~~November~~August 8, ~~2007~~2008		~~Paul L. Audet~~Ann Marie Petach
		Managing Director & ~~Acting~~ Chief Financial Officer

EXHIBIT INDEX

~~Exhibit No. Description~~


Exhibit No.		Description
~~2.1(1)~~		~~Transaction Agreement and Plan of Merger, dated as of February 15, 2006, by and among Merrill Lynch & Co., Inc., BlackRock, Boise Merger Sub, Inc. and Old BlackRock.~~

~~3.1(2)~~		~~Amended and Restated Certificate of Incorporation of BlackRock.~~

~~3.2(2)~~		~~Amended and Restated Bylaws of BlackRock.~~

~~3.3(2)~~		~~Certificate of Designations of Series A Convertible Participating Preferred Stock of BlackRock.~~

~~4.1(3)~~		~~Specimen of Common Stock Certificate.~~

~~4.2(4)~~		Indenture, dated as of February 23, 2005, between Old BlackRock and The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as trustee, relating to the 2.625% Convertible Debentures due 2035.

~~4.3(4)~~		~~Form of 2.625% Convertible Debenture due 2035 (included as Exhibit A in Exhibit 4.2).~~

~~4.4(2)~~		~~First Supplemental Indenture, dated September 29, 2006, relating to the 2.625% Convertible Debentures due 2035.~~

~~4.5(18)~~		~~Indenture, dated September 17, 2007, between BlackRock and The Bank of New York, as trustee, relating to senior debt securities.~~

~~4.6(19)~~		~~Form of 6.25% Notes due 2017.~~

~~10.1(5)~~		~~Tax Disaffiliation Agreement, dated October 6, 1999, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc., formerly PNC Bank Corp.~~

~~10.2(3)~~		~~BlackRock, Inc. 1999 Stock Award and Incentive Plan.~~10.1(1)+

~~10.3(3)~~		~~Amendment No. 1 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.4(3)~~		~~Amendment No. 2 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.5(3)~~		~~Amendment No. 3 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.6(3)~~		~~Amendment No. 4 to the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.7(3)~~		~~BlackRock, Inc. 2002 Long-Term Retention and Incentive Program.+~~

~~10.8(3)~~		~~Amendment No. 1 to 2002 Long-Term Retention and Incentive Program.+~~

~~10.9(3)~~		~~Amendment No. 2 to 2002 Long-Term Retention and Incentive Program.+~~

~~10.10(3)~~		~~BlackRock, Inc. Nonemployee Directors Stock Compensation Plan.+~~

~~10.11(3)~~		~~BlackRock, Inc. Voluntary Deferred Compensation Plan.+~~

~~10.12(3)~~		~~BlackRock, Inc. Involuntary Deferred Compensation Plan.+~~

~~10.13(2)~~		~~Form of Stock Option Agreement expected to be used in connection with future grants of Stock Options under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~EXHIBIT INDEX (continued)~~



~~10.14(2)~~		~~Form of Restricted Stock Agreement expected to be used in connection with future grants of Restricted Stock under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.15(2)~~		~~Form of Restricted Stock Unit Agreement expected to be used in connection with future grants of Restricted Stock Units under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.16(2)~~		~~Form of Directors’ Restricted Stock Unit Agreement expected to be used in connection with future grants of Restricted Stock Units under the BlackRock, Inc. 1999 Stock Award and Incentive Plan.+~~

~~10.17(6)~~		~~BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan.+~~

~~10.18(7)~~		~~Amendment No. 1 to the BlackRock International, Ltd. Amended and Restated Long-Term Deferred Compensation Plan.+~~

~~10.19(2)~~		~~Registration Rights Agreement, dated as of September 29, 2006, among BlackRock, Merrill Lynch & Co., Inc. and the PNC Financial Service Group, Inc.~~

~~10.20(8)~~		~~Agreement of Lease, dated May 3, 2000, between 40 East 52nd Street L.P. and Old BlackRock.~~

~~10.21(9)~~		~~Agreement of Lease, dated September 4, 2001, between 40 East 52nd Street L.P. and Old BlackRock.~~

~~10.22(10)~~		~~Share Surrender Agreement, dated October 10, 2002, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc.~~

~~10.23(1)~~		~~First Amendment, dated as of February 15, 2006, to the Share Surrender Agreement, dated as of October 10, 2002, among PNC Bancorp, Inc., The PNC Financial Services Group, Inc. and Old BlackRock.~~

~~10.24(16)~~		~~Second Amendment, dated as of June 11, 2007, to the Share Surrender Agreement, dated October 10, 2002, among Old BlackRock, PNC Asset Management, Inc. and The PNC Financial Services Group, Inc.~~

~~10.25(11)~~		~~Amended and Restated 1999 Annual Incentive Performance Plan. +~~

~~10.26(12)~~		~~Agreement of Lease, dated July 29, 2004, between Park Avenue Plaza Company L.P. and Old BlackRock.~~

~~10.27(12)~~		~~Letter Agreement, dated July 29, 2004, amending the Agreement of Lease between Park Avenue Plaza Company L.P. and Old BlackRock.~~

~~10.28(13)~~		~~Stock Purchase Agreement among MetLife, Inc., Metropolitan Life Insurance Company, SSRM Holdings, Inc. Old BlackRock and BlackRock Financial Management, Inc., dated August 25, 2004.~~

~~10.29(4)~~		Registration Rights Agreement, dated as of February 23, 2005, between Old BlackRock and Morgan Stanley & Co. Incorporated, as representative of the initial purchasers named therein, relating to the 2.625% Convertible Debentures due 2035.

~~EXHIBIT INDEX (continued)~~



~~10.30(1)~~		~~Implementation and Stockholder Agreement, dated as of February 15, 2006, among The PNC Financial Services Group, Inc., BlackRock and Old BlackRock.~~

~~10.31(1)~~		~~Stockholder Agreement, dated as of February 15, 2006, between Merrill Lynch & Co., Inc. and BlackRock.~~

~~10.32(2)~~		Letter to ~~Robert C. Doll.+~~

~~10.33(14)~~		~~Global Distribution Agreement, dated as of September 29, 2006, by and between BlackRock and Merrill Lynch & Co., Inc.~~

~~10.34(14)~~		~~Transition Services Agreement, dated as of September 29, 2006, by and between Merrill Lynch & Co., Inc. and BlackRock.~~

~~10.35(17)~~		~~Asset Purchase Agreement, dated as of June 26, 2007, by and among BlackRock, Inc., BAA Holdings, LLC and Quellos Holdings, LLC.~~

~~10.36(20)~~		Five-Year Revolving Credit Agreement, dated as of August 22, 2007, by and among BlackRock, Inc., Wachovia Bank, National Association, as administrative agent, swingline lender and issuing lender, Sumitomo Mitsui Banking Corporation, as Japanese Yen lender, a group of lenders, Wachovia Capital Markets, LLC and Citigroup Global Markets Inc., as joint lead arrangers and joint book managers, Citigroup Global Markets Inc., as syndication agent, and HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., and Morgan Stanley Bank, as documentation agents.Ann Marie Petach.

12.1		Computation of Ratio of Earnings to Fixed Charges.

~~18.1~~		~~Letter re: Change in Accounting Principles.~~

31.1		Section 302 Certification of Chief Executive Officer.

31.2		Section 302 Certification of Chief Financial Officer.

32.1		Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

(1)	~~Incorporated by Reference to Old BlackRock’s Current Report on Form 8-K (Commission File No. 001-15305) filed on February 22, 2006.~~

~~(2)~~

~~Incorporated by Reference to BlackRock’s Current Report on Form 8-K (Commission File No. 001-33099) filed with the Securities and Exchange Commission on October 5, 2006.~~

~~(3)~~

~~Incorporated by Reference to BlackRock’s Registration Statement on Form S-8 (Registration No. 333-137708) filed with the Securities and Exchange Commission on September 29, 2006.~~

~~(4)~~

~~Incorporated by Reference to Old BlackRock’s Annual Report on Form 10-K (Commission File No. 001-15305) for the year ended December 31, 2004.~~

~~(5)~~

~~(6)~~

~~Incorporated by Reference to Old BlackRock’s Registration Statement on Form S-8 (Registration No. 333-32406), originally filed with the Securities and Exchange Commission on March 14, 2000.~~

~~(7)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2000.~~

~~(8)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended March 31, 2000.~~

~~(9)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2001.~~

~~(10)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended September 30, 2002.~~

~~(11)~~

~~Incorporated by Reference to Old BlackRock’s Annual Report on Form 10-K (Commission File No. 001-15305), for the year ended December 31, 2002.~~

~~(12)~~

~~Incorporated by Reference to Old BlackRock’s Quarterly Report on Form 10-Q (Commission File No. 001-15305), for the quarter ended June 30, 2004.~~

~~(13)~~

~~Incorporated by Reference to Old BlackRock’s Current Report on Form 8-K (Commission File No. 001-15305) filed on August 30, 2004.~~

~~(14)~~

~~Incorporated by Reference to BlackRock’s Registration Statement on Form S-4, as amended, originally filed with the Securities and Exchange Commission on June 9, 2006.~~

~~(15)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on December 22, 2006.~~

~~(16)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on June 15, 2007.~~

~~(17)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on July 2, 2007.~~

~~(18)~~

~~Incorporated by reference to BlackRock’s Registration Statement on Form S-3 (Registration No. 333- 45976).~~

~~(19)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on September 17, 2007.~~

~~(20)~~

~~Incorporated by reference to BlackRock’s Current Report on Form 8-K filed on August 27, 2007.~~Filed herewith.

+	Denotes compensatory ~~plans or arrangements.~~arrangement.


Outstanding at	Number of Options		Weighted Average Exercise Price
December 31, 2006	4,457,669		$	36.90
Granted	1,545,735		$	167.76
Exercised	(1,192,335	)	$	37.22

September 30, 2007	4,811,069		$	78.86


Exercise Price	$	167.76
Expected Term (years)		7.335
Expected Volatility		24.	5%
Dividend Yield		1.0%-4.4	4%
Risk Free Interest Rate		4.	8%


Outstanding at	Unvested Restricted Stock and Units		Weighted Average Grant Date Fair Value
December 31, 2006	1,516,063		$	133.44
Granted	2,517,718		$	168.12
Forfeited	(80,441	)	$	161.37
Vested	(136,955	)	$	126.45

September 30, 2007	3,816,385		$	155.98


	Three months ended							Nine months ended
	September 30,					June 31,		September 30,
	2007			2006		2007		2007			2006
Net income, GAAP basis	$	255,200		$	18,914	$	222,244	$	672,832		$	153,179
Non-GAAP adjustments, net of tax
Termination of closed-end fund administration and servicing arrangements		81,993			—		—		81,993			—
PNC LTIP funding obligation		8,712			7,588		8,917		25,337			22,723
Merrill Lynch compensation contribution		1,600			—		1,600		4,800			—
MLIM integration costs		3,929			45,017		3,865		12,338			57,067
Quellos integration costs		90			—		—		90			—
Corporate income tax reductions		(51,445	)		—		—		(51,445	)		—

Net income, as adjusted	$	300,079		$	71,519	$	236,626	$	745,945		$	232,969

Diluted weighted average shares outstanding		131,316,455			67,477,536		131,383,470		131,534,188			66,903,553

Diluted earnings per share, GAAP basis	$	1.94		$	0.28	$	1.69	$	5.12		$	2.29

Diluted earnings per share, as adjusted	$	2.29		$	1.06	$	1.80	$	5.67		$	3.48


	June 30, 2007		Net subscriptions (redemptions)		Foreign exchange²		Market appreciation (depreciation)		September 30, 2007
Fixed income	$	492,287	$	5,592	$	2,504	$	9,367	$	509,750
Equity and balanced		435,873		3,194		5,204		9,891		454,162
Cash management		259,840		30,190		234		484		290,748
Alternative investment products		42,086		2,066		219		525		44,896

Total	$	1,230,086	$	41,042	$	8,161	$	20,267	$	1,299,556


	December 31, 2006		Net subscriptions (redemptions)		Acquisitions/ reclassifications ¹			Foreign exchange²		Market appreciation (depreciation)		September 30, 2007
Fixed income	$	448,012	$	33,174	$	14,037		$	3,479	$	11,048	$	509,750
Equity and balanced		392,708		12,674		—			8,018		40,762		454,162
Cash management		235,768		53,090		—			342		1,548		290,748
Alternative investment products		48,139		7,975		(14,037	)		387		2,432		44,896

Total	$	1,124,627	$	106,913	$	—		$	12,226	$	55,790	$	1,299,556


	September 30,¹ 2006		Net subscriptions (redemptions)		Acquisitions/ reclassifications ^2,3			Foreign exchange ⁴		Market appreciation (depreciation)		September 30, 2007
Fixed income	$	443,594	$	31,601	$	13,940		$	5,119	$	15,496	$	509,750
Equity and balanced		358,145		21,968		(2,028	)		12,701		63,376		454,162
Cash management		229,416		59,184		(1,260	)		508		2,900		290,748
Alternative investment products		43,861		11,281		(14,037	)		646		3,145		44,896

Total	$	1,075,016	$	124,034	$	(3,385	)	$	18,974	$	84,917	$	1,299,556


	Payments Due In:
*(Dollar amounts in thousands)*	Remainder of 2007		2008		2009		2010		2011		Thereafter		Total
Long-term borrowings²
Long-term notes	$	—	$	43,750	$	43,750	$	43,750	$	43,750	$	962,500	$	1,137,500
Convertible debentures³		—		6,563		6,563		253,278		—		—		266,404
Acquired management contract		—		1,000		1,000		1,000		—		—		3,000
Short-term borrowings²		154,655		309,085		—		—		—		—		463,740
Operating lease commitments		20,042		69,289		64,248		58,502		55,824		266,751		534,656
Purchase obligations		96,063		368,605		271,816		3,305		3,300		—		743,089
Investment commitments¹		2,772		10,795		—		52,449		1,509		608,785		676,310

Total	$	273,532	$	809,087	$	387,377	$	412,284	$	104,383	$	1,838,036	$	3,824,699

Aggregate Votes

Ratification of Appointment