BlackRock increasedenhanced the diversification of its product offerings through the MLIM Transaction.products, offering a broad range of fixed income, equity and balanced, cash management and alternative investment products to institutional and retail clients worldwide. At December 31, 2006,2007, fixed income products represented 41%approximately 38%, equity and balanced products 35%approximately 34%, cash management products 20%approximately 23% and alternative investment products 4%approximately 5% of BlackRock’s total AUM. Similarly, BlackRock achieved greater balance in its client base through the MLIM Transaction. At year-end 2006,2007, approximately 69% of AUMassets were managed for institutions and approximately 31% for retail and high net worth investors. The Company’s global scope also was enhanced by the MLIM Transaction. At December 31, 2006, 66%2007, approximately 64% of BlackRock assets wereBlackRock’s AUM was managed for U.S. investors and 34%approximately 36% for international clients. In addition, the Company continued to expand itsBlackRock Solutions®products and related services, which achieved aggregateyear-over-year revenue growth of 20%approximately 34% in 2006.2007.

While BlackRock operates in a global marketplace characterized by market volatility and economic uncertainty, management believes the following factors position the Company to seek solid relative returns for stockholders over time:

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

- 1 -2

Overview (continued)

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

Selected GAAP Financial Results

See additional information in Item 6, Selected Financial Data.

While BlackRock reports its financial results using accounting principles generally accepted in the United States of America (“GAAP”), 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 the Company’s ongoing operations, and for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Certain prior year non-GAAP data has been restated to conform to current year presentation.

- 2 -3

Overview (continued)

Non-GAAP Operating Income Adjustments:

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

Operating income, as adjusted (a non-GAAP measure), excludes the portion of the LTIP expense associated with awards met by the distribution to participants of shares of BlackRock common stock previously held by PNC because, exclusive of the impact related to LTIP participants’ put options, these charges havedo not impactedimpact BlackRock’s book value. A detailed discussion of the LTIP is included in Note 1312 to the consolidated financial statements beginning on page F-1 of this Form 10-K. MLIM, TransactionQuellos and SSR acquisitionintegration costs consist principally of certain professional fees and compensation costs related to those transactions. Also included in MLIM Transaction costs are rebranding costs.marketing costs associated with rebranding. MLIM, TransactionQuellos and SSR acquisitionintegration 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. The 2006 fee sharing paymentexpense 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 Closed-end fund launch costs and commissions have been excluded from operating income, as adjusted, because it represents a non-recurring payment pursuant tosuch costs fluctuate considerably and revenues associated with the SSR acquisition agreement, which, while impacting BlackRock’s book value, isexpenditure of such costs will not representative of BlackRock’s core business.fully impact the Company’s results until future periods. Compensation expense associated with the appreciation / (depreciation) of assets related to certain of BlackRock’s deferred compensation plans has been excluded from operating income, as adjusted, becauseas investment returns on these assets are reported in non-operating income, net of the related impact on compensation expense, resultand results in a nominal impact on net income. Compensation charges to be reimbursed by Merrill Lynch have been excluded from operating income, as adjusted, because these charges are not expected to impact BlackRock’s book value. Bonus expense related to the Company’s sale of its equity interest in Trepp, LLC has been deemed to be non-recurring by management and has been excluded from operating income, as adjusted, in 2004 to help ensure the comparability of this information to subsequent reporting periods.

Non-GAAP Net Income Adjustments:

GAAP reported net income and GAAP diluted earnings per share include certain charges and gains, the after-tax impact of which management considers non-recurring and, therefore, excludesare excluded in assessing ongoing profitability. calculating net income, as adjusted.

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

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

- 3 -4

ProductsProducts*

BlackRock offers a wide variety of fixed income, equity and balanced, cash management and alternative investment products. Revenue from these products primarily consists of advisory fees, typically structured as a percentage of AUM and, in some instances, performance fees expressed as a percentage of returns realized in excess of agreed-uponagreed targets. BlackRock also offers risk management, investment system outsourcing, financial advisory and transition management services to institutional investors under theBlackRock Solutions brand name.

The MLIM Transaction increased BlackRock’s product offerings. The Company now offers bond portfolios are denominated in many currencies including U.S. dollars, pounds sterling, euros, yen and Australian dollars. MLIM’sThe Company’s equity capabilities were substantially broader than BlackRock’s, and the combined platform spans global markets, styles and capitalization ranges. BlackRock also expanded itsBlackRock’s alternative investment capabilities addinginclude private equity, private equity funds of funds, real estate expertise in Australiaequity and the U.K., single strategy hedge funds and private equity anddebt, hedge funds of funds, single-strategy hedge funds, long-only absolute return strategies, commodities and structured products. The Company also manages sector-specific mandates across asset classes as well as deeper capabilities in portable alpha strategies, liability driven investing and multi-asset class solutions.strategies.

Fixed Income

BlackRock offers a wide rangean array of fixed income products across various bond markets and sectors as well as various maturities along the yield curve. BlackRock designstailors client portfolios to meetreflect specific client riskinvestment guidelines and return profiles.objectives with respect to interest rate exposure, sector allocation and credit quality. In 2007, BlackRock’s fixed income AUM grew 50%increased 15% year-over-year to $455.9$513.0 billion including $132.8 billion of assets acquired in the MLIM Transaction.at year-end.

BlackRock applies a consistent style to all fixed income strategies, emphasizing controlled duration and active sector rotation. All bond portfolios are managed by BlackRock’s fixed income team, which is comprised of regional and sector specialists as well as credit and quantitative analysts, all of whom work closely together to share information, formulate investment themes and implement specific strategies in accordance with each portfolio’s investment objectives and guidelines. They are supported by extensive analytical tools and a shared research database that includes reports from both equity and credit analysts throughout the Company. Investment operations are facilitated by Aladdin^®

Net new business in fixed income totaled $27.2 billion in 2007, with flows representative of the trend toward more customized solutions and a broader array of investment strategies. Inflows demonstrated continued allocation of capital to global fixed income ($9.6 billion into global portfolios), BlackRock’s proprietary enterprise investment system, which integrates risk analyticsthe growth of target date and information processing capabilitiestarget return funds ($19.1 billion net new business in targeted duration portfolios), and the redefinition of “traditional” fixed income strategies to support efficient workflow,include a range of absolute return and by an experienced teamstructured products ($10.4 billion net inflows into CDOs and the reclassification of operations, administration$14.0 billion of alternative assets to fixed income to better align with the evolution of the business). Along with moderate inflows in municipal bonds, the strong net inflows offset outflows in core, sector-specialty and compliance professionals.equity plus mandates.

During 2007, BlackRock further diversified its fixed income client base geographically with 79% of net new business, or $21.5 billion, from non-U.S. investors. At December 31, 2007, 35% of fixed income AUM was managed for non-U.S. investors, up from 31% at year-end 2006. Inflows were positive across all regions, with net new business of $5.7 billion and $21.5 billion from U.S. and international clients, respectively.

The fixed income business remains largely institutional, with 83% of total bond AUM and 93%, or $25.3 billion, of net new business from institutional clients during the year. At December 31, 2007, 44% of fixed income AUM was from tax-exempt clients, with 79%, or $21.6 billion, of net new fixed income business from tax-exempt institutions in 2007. Inflows through the retail and high net worth channels increased from a slight net outflow in 2006 to net inflows of $1.9 billion in 2007.

5

Products (continued)

Fixed Income (continued)

BlackRock’s fixed income portfolio management team seeks competitive investment performance by consistently employing a disciplined process designed to add incremental returns in excess of benchmarks. While competitive performance is key, ensuring that portfolio risks are consistent with client objectives is paramount. Approximately 92% percent of BlackRock’s institutional composites outperformed their benchmarks forFor the one-year period, and 100% for theone-, three- and five-year periods ended December 31, 2006.*

- 4 -

Products (continued)2007, 58%, 74% and 64% of bond fund assets ranked in the top two quartiles of their peer groups.

Fixed Income (continued)

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

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

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

EquitiesEquity and Balanced

BlackRock manages a range of equity strategies that span the risk/return spectrum, along with several targeted opportunities in specific market sectors. BlackRock closed 20062007 with equity and balanced AUM of $392.7 billion. The MLIM Transaction dramatically changed BlackRock’s equity platform. In addition to U.S., international and emerging market offerings, the combined Company manages equity portfolios with strategies specific to the United Kingdom, Europe, Japan and Australia. BlackRock’s equity professionals serve global investors from offices in New York, London, Boston, Edinburgh, Hong Kong, Melbourne, Philadelphia, Princeton, Singapore and Tokyo. The growth in BlackRock’s equity AUM was the result of $10.7$459.2 billion, of net new business, $314.4 billion of assets acquired in the MLIM Transaction and favorable equity markets over the course of the year.up 17% year-over-year.

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

- 5 -

Products (continued)

EquitiesDespite market volatility in the latter half of 2007, net new business in the equity platform totaled $23.5 billion in 2007. Concerns about the market drove investors to investments with more embedded advice and Balanced (continued)a broader global allocation, as evidenced by $13.9 billion of net inflows into balanced and asset allocation funds over the year. The equity platform has also had strong inflows into U.S. equity, quantitative/enhanced index and sector funds, particularly natural resources, offsetting outflows from regional/country funds.

BlackRock’s diversified equity platform is reflected indiversified across its clientclients and channel mix, as well as its product mix.channels. At December 31, 2006, 48%2007, 46% of the Company’s total equity and balanced AUM, or $187.8$211.1 billion, werewas managed for U.S. investors and 52%54%, or $204.9$248.1 billion, werewas managed for non-U.S. investors. In addition, BlackRock’sWe continue to benefit from our global reach, expanding our presence in Asia and opening an investment center in Hong Kong in 2007. While net inflows in 2007 were heavily weighted from retail and high net worth investors (97% of net new business or $22.7 billion), the channel mix wasat year-end remained well balanced with 45%42% of assets managed on behalf of institutions and 55%58% managed on behalf of retail and high net worth investors. Notwithstanding the MLIM Transaction, most of

BlackRock’s equity investment teams sustained strong performance track records. Approximately 66%records, with 84%, 90% and 90% of the Company’s equity mutual fund assets ranked in the top two quartiles of their peer group quartilesgroups for the one-year period ended December 31, 2006* and over 70% ranked in the top two peer group quartiles for theone-, three- and five-year periods ended December 31, 2006.*2007.

Cash Management

BlackRock cash management products cover the short end of the duration spectrum and reflect a firm focus on credit quality and risk management. BlackRock is a leading provider of cash management products with $227.8$313.3 billion in global cash management AUM at December 31, 2006,2007, including a variety of money market funds and customized portfolios. AUM in these strategies increased $141.7$77.6 billion, or 165%33%, during 2006, including $127.7 billion of assets added in the MLIM Transaction.2007. Net new business totaled $12.4$75.3 billion during the year across a varietyyear.

6

Products (continued)

Cash Management (continued)

Net inflows of products.

In addition to the MLIM Transaction, a number of factors contributed to BlackRock’s growth in cash management assets during 2006. A continued neutral stance by the Federal Reserve Bank and a flat U.S. yield curve contributed to favorable flows in institutional liquidity products. Competitive performance and an abiding focus on client service were also vital to ongoing new business efforts. For the year ended December 31, 2006, 89% of BlackRock’s U.S. institutional money market fund assets ranked in the top two Lipper peer group quartiles.* Finally, the Company’s expanded product set, which includes enhanced yield strategies and a suite of non-U.S.$52.4 billion into cash management products that were added in the MLIM Transaction, helpedthird and fourth quarters highlight the industry-wide reallocation of funds out of higher risk strategies and into money market funds in response to bolster BlackRock’s already strong cash management platform.credit market concerns and reaction to Federal Reserve rate cuts. Although inflows had continued in early 2008, we anticipate outflows when overnight rates stabilize and investors return to more typical asset allocation strategies.

BlackRock’s cash management activities are primarily conducted on behalf of U.S. clients, although there is increasing demand among international clients for similar products. At December 31, 2006,2007, cash management AUM for U.S. investors reached $213.5$286.4 billion and assets fromfor international investors were $14.3$26.9 billion. For 2006,2007, net inflows from U.S. investors totaled $10.4$71.0 billion and $2.0$4.3 billion was raised from international investors. Institutional clients represent the largest percentage of BlackRock’s cash management platform with $174.5$248.4 billion of assets at December 31, 2006.2007. Retail and high net worth client cash management assets have grown from $3.1 billion at year-end 2005 to $53.3$53.6 billion at year-end 2006 largely as a resultto $64.9 billion at year-end 2007.

For the one-, three- and five-year periods ended December 31, 2007, 100% of the MLIM Transaction.BlackRock’s U.S. institutional money market fund assets outperformed their benchmarks.

Alternative Investment Products

BlackRock’s alternative investment strategiesproducts capitalize on evolving capital market opportunities that benefit from the Company’s resources in risk management, product development, client service and operational support. Strategies are designed to provide enhanced returns with the same or less risks as the broad equity and bond markets or returns with low correlations to the broad equity and bond markets and, in many cases, employ actual or structural leverage in an effort to enhance returns. The Company’s offeringsmarkets. BlackRock’s capabilities include private equity, private equity funds of funds, real estate products, structuredequity and debt, products, fixed income and equity hedge funds, hedge funds of funds, private equitysingle-strategy hedge funds, long-only absolute return strategies, commodities and funds of funds, and multi-asset classstructured products. The MLIM Transaction significantly increased the global profile of the Company’s alternatives business, both in terms of products and distribution, positioning BlackRock as a leading worldwide provider of alternative investment products. During 2006, totalTotal assets managed in alternative investments increased by $22.8$23.0 billion to $48.1$71.1 billion at December 31, 2006.2007. The MLIM Transaction added $14.2increase accounts for $21.9 billion of alternatives AUM asassets acquired in the Quellos Transaction and a reclassification of $14.0 billion of structured products and absolute return products to fixed income earlier in the year.

In 2007, BlackRock launched BlackRock Alternative Advisors (“BAA”), created by the merger of the Quellos Business with our existing absolute return and private equity fund of funds business. BAA will continue to manage assets across absolute return, private capital and hybrid strategies, with emphasis on the Company’s long-standing investment philosophy and process. AUM in these strategies totaled $29.5 billion at year-end. We have already begun to realize the power of the combined businesses, with $1.4 billion of net new business in the quarter since closing date.the transaction.

BlackRock real estate investments span a wide range of strategies, including core, value-add and opportunistic equity and high-yield debt for institutional and private investors. AUM on the real estate platform grew to $29.4 billion at year-end, including $7.3 billion of net new business in 2007. Notable accomplishments this year include the launch of the Company’s first opportunity funds (Global Opportunity Fund and Retail Opportunity Fund), completion of funding for the Peter Cooper Village and Stuyvesant Town partnerships, and initiation of a broader global expansion.

- 6 -7

Products (continued)

Alternative Investment Products (continued)

BlackRock’s real estate platform continued to expand, growing to $20.6 billion at year-end 2006. Growth was led by $5.7

BlackRock launched distressed credit and mortgage funds in 2007, leveraging market dislocations on behalf of the Company’s clients and bringing $1.1 billion of net inflows and $4.2new business in 2007, with additional commitments to follow in 2008. BlackRock’s portable alpha business nearly doubled in 2007, with year-end assets under management of $1.3 billion, including $549 million of assets acquired in the MLIM Transaction. Growth was driven in part by acquisition activity during the year. Notably in the fourth quarter of 2006, BlackRock and Tishman-Speyer formed a joint venture to acquire Peter Cooper Village and Stuyvesant Town, the largest apartment complex in New York City, from MetLife, Inc. (“MetLife”) for $5.4 billion. The MLIM Transaction added non-U.S. property products managed by teams in Australia and the United Kingdom, key additions to BlackRock’s growing global real estate platform.

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

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

BlackRock Solutions^®

Since its formation, BlackRock has developed and maintained proprietary investment systems to support its business. These capabilities are offered under the brand name,BlackRock Solutions. In 2006,2007BlackRock Solutions’ revenues from system outsourcing, risk management, advisory, transition and investment services increased by 20%34% in the aggregate to $148.0$198.3 million. During the year, 17six net new assignments were added. By year-end 2006,2007,BlackRock Solutions had completed threesix system implementations and had threefour implementations in process. BlackRock’s Aladdin^® platform was selected by two official institutions, a validation of efforts to expand the Company’s global business forBlackRock Solutions. In addition, the advisory team added 1721 and completed 18 short-term assignments. In 2006,Importantly, these increases inBlackRock Solutions surpassedbusiness occurred concurrently with the milestone of having over 100 distinct assignments for more than 90 clients, while at the same time being extensively involved incontinuing and extensive efforts to complete the conversion of MLIM’s global fixed income and U.S. equity portfolios to the Aladdin platform.

BlackRock Solutions’core products consist of tools that support the investment process. These include Aladdin and a variety of other proprietary analytical tools for clients that do not require all of the functionality of the enterprise system. In addition,BlackRock Solutions offers a variety of risk management and financial advisory services. In 2006,2007,BlackRock Solutions was retained on sixseven net new Aladdin assignments and sevenone net new long-term risk management and advisory assignments.assignment.BlackRock Solutions also provides investment accounting outsourcing, typically bundled with asset management services, as well as ancillary outsourcing services, such as performance measurement and middle and back office trade support, for clients who wish to extend their relationships.BlackRock Solutionsadded four netone new investment accounting relationshipsrelationship in 2006. Finally, as a result of the MLIM Transaction,2007.BlackRock Solutions nowalso offers transition management services.

At year-end 2006,2007,BlackRock Solutions had been retainedmanaged 115 distinct assignments for numerous services,98 clients, including 2128 Aladdin assignments, 6362 risk management and advisory assignments and 25 outsourcing assignments.BlackRock Solutions provided these services for a well-diversified list of clients including banks, insurance companies, broker dealers,broker-dealers, asset managers, and hedge funds, pensions, endowments, and foundations and other financial institutions.

- 7 -

Product Performance Notes

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

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

8

Clients

BlackRock serves a diverse universeclient base of institutional and retail investors globally. Products are offered both directly and through financial intermediaries. BlackRock seeks to distinguish itself by using its enhanced global perspective and scale to benefit clients and help them creatively solve problems. In 2006, clients turned to BlackRock for a variety of services. At year-end, the Company’s AUM had grown to $1.125$1.357 trillion, up $133.0$232.0 billion over year-end 2005 pro forma combined AUM of $991.6 billion (BlackRock and MLIM). In investment management, the Company was awarded $60.52006, including $21.9 billion of combinedAUM acquired in the Quellos Transaction. In 2007, BlackRock was also retained on six net new business from new and existingBlackRock Solutions assignments, for a total of 115 distinct assignments for 98 clients. Increasingly, clients $27.7 billionare turning to BlackRock for a variety of which was reported as “acquired AUM”services. As of December 31, 2007, over 500 clients turned to BlackRock for investment solutions in connection with the MLIM Transaction. Net inflows were well diversified geographically as well as by client type. more than one asset class or business.

During the year, the Company was also retained on 17 net newBlackRock Solutions assignments.

The international business that MLIM brought to the new organization gave BlackRock a significantly expanded global presence. The MLIM Transaction added $238.4 billion of AUM managed on behalf of non-U.S. investors bringing total assets managed for international clients to $383.3 billion at December 31, 2006. During the year, BlackRock was awarded $15.5$37.5 billion of net new business from non-U.S. clientsinvestors in over 50 countries.36 countries, bringing the total managed for international clients to $483.3 billion at December 31, 2007. New business efforts encompass direct calling oncontact with institutional investors and their consultants, as well as wholesale distribution of funds and unit trusts through broker dealersbroker-dealers and other financial intermediaries. International clients are served by employeesoffices in over 25 offices across29 cities outside the globe.U.S.

BlackRock also serves a large and growing base of U.S. investors. In 2006,2007, net new business from U.S. clients totaled $17.3$100.1 billion across a wide range of products, increasing total assets managed for U.S. investors to $741.3$873.3 billion at year-end. Client channels served include pension and other tax exempt clients, insurance and other taxable investors, institutional cash management and institutional and retail fund investors. The professionals serving these clients are primarily based in the Company’s New York, Boston, Princeton (New Jersey), Florham Park (New Jersey), San Francisco and Wilmington (Delaware) offices.

BlackRock’s asset base is also diversified by the types of clients served. At December 31, 2006,2007, BlackRock managed $772.1$935.6 billion, or 69% of total AUM, on behalf of institutional investors and $352.5$421.0 billion, or 31% of total AUM, on behalf of retail and high net worth clients globally. During the year, institutional investor AUM grew $363.5$168.6 billion with $23.5$100.4 billion coming from net new business across client segments, and $305.9including $9.4 billion of assets contributed from the MLIM Transaction.a single client. Institutional clients served include tax-exempt, taxable, institutional cash managementpension funds, official institutions, foundations, endowments and institutional fund investors.

- 8 -

Clients (continued)charities, insurance companies, banks, sub-advisory relationships and private banks in more than 60 countries.

Assets managed for tax-exempt institutions, including defined benefit and defined contribution pension plans, foundations, endowments and other non-profit organizations, increased 94%21% to $352.7$423.3 billion at December 31, 2006.2007. For the year, net new business from these investors totaled $15.3$25.3 billion. BlackRock works with pension plan sponsors and their consultants to address changing asset allocation strategies and to consider appropriate investment opportunities. Management believes that these clients increasingly demonstrate a preference for more services from fewer managers and that BlackRock can benefit from this trend. In addition, management believes a more robust mutual fund family should be of interest to defined contribution plans and smaller institutional investors, while expanded alternative investment offerings should appeal to foundations and endowments.

AUM for taxable institutions worldwide increased 68%13% during the year to $240.5$255.0 billion at year-end 2006. The MLIM Transaction added $88.7 billion of assets to this channel. 2007.

The Company’s insurance business encompasses customized investment management, specialized risk management and accounting services. BlackRock is one of the largest managers of insurance assets worldwide, benefiting from an ongoing trend toward investment outsourcing. This business is, however, subject to event risk arising from insurance company mergers as well as client decisions to internalize asset management. In 2006, outflows resulting from such one-time events totaled $7.0 billion, which exceeded $5.9 billion of net inflows from other taxable institutions throughout the year.

9

Clients (continued)

At year-end 2006,2007, AUM in institutional cash management products were $174.5was $248.4 billion, up 110%36% from December 31, 2005. New business efforts produced $9.42006, including $64.2 billion of net inflows and the MLIM Transaction added $81.1 billion of assets at closing.new business. BlackRock continually seeks ways to provide innovative cash management solutions to clients. In 2006,2007, these efforts focused on helping clients identify opportunities to more profitably invest in a low rate environment,successfully manage around the highly unsettled market conditions while assuming relatively little additional risk.maintaining competitive yields. BlackRock also focuses on providing flexible and responsive client service, which is conducted through its call center and online account management tools. Management believes that these efforts together with competitive yields on the Company’s products, will continue to enable BlackRock to better withstand volatility in asset flows, build its client base and increase market share over time.

The investment and risk management expertise that BlackRock brings to the management of institutional products is also available globally through separate accounts, open-end and closed-end funds, offshore funds, unit trusts and alternative investment vehicles for individual investors. The scope and scale of the Company’s retail business were substantially enhanced through MLIM’s substantial base of U.S. mutual funds and separately managed account offerings and industry-leading international mutual fund platform. As of December 31, 2005, MLIM2007, BlackRock managed $222.7$421.1 billion and $65.3 billion for U.S. and international retail investors, respectively. At December 31, 2006, the combined firm managed $352.5 billion of assets on behalf of retail and high net worth investors worldwide, including $247.6$273.1 billion for investors based in the U.S. and $104.9$148.0 billion for international individuals. Aggregate growthinvestors, up 18% from year-end 2006. In 2007, $37.3 billion of $308.5 billion year-over-year includes $9.3 billion in combined net inflows during 2006. Of this total, $7.4 billion was raisednew business from U.S. retail and high net worth clients was largely driven by $23.3 billion of net inflows from U.S. investors and we closed$14.0 billion from investors internationally. These results reflect the year with $247.6growing strength of BlackRock’s retail platform globally. The Company sustained the strength of its Merrill Lynch distribution and is seeing increased traction in the U.S. outside of Merrill Lynch, recording over 30 new wins on broker-dealer mutual fund and Separately Managed Account (“SMA”) platforms. The $14.0 billion under management for these investors. Netof net new business fromin international retail clients totaled $1.9represents an annualized organic growth rate of 13% and includes $9.6 billion driving an increase in total international retail AUM to $104.9 billion at year-end.of net inflows into equity and balanced mandates.

- 9 -10

Competition

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

Geographic Information

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

The following chart shows the Company’s revenues and long livedlong-lived assets, including investments, separate account assets, in Europe of $4.3 billion,which includes goodwill and property and equipment and other assets by region for the yearyears ended December 2006.2007, 2006 and 2005. These amounts are aggregated on a legal entity basis and do not necessarily reflect, in all cases, where the customer is sourced or where the asset is physically located.

The Company’s revenuesRevenues and long-lived assets in EuropeNorth America are primarily generatedcomprised of the United States, while Europe and held, respectively, inAsia-Pacific are primarily comprised of the United Kingdom and include $4.3 billion of separate account assets held by the Company’s registered life insurance subsidiary, which are held by the company on behalf of clients and are entirely offset by a corresponding separate account liability. Other primarily represents revenues and assets from the Company’s subsidiaries in Japan, and Australia.respectively.

Employees

At December 31, 2006,2007, BlackRock had a total of 5,1135,952 full-time employees, including 447 of Realty435 Metric Property Management, Inc. (“Metric”) employees whose salaries are fully reimbursed by certain real estate funds. Of all full-time employees, 1,474 represent employees1,795 are located in offices outside the United States.

- 10 -11

Item 1. BUSINESS (continued)

Regulation

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

U.S. Regulation

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

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

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

12

Regulation (continued)

U.S. Regulation (continued)

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

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

BlackRock has two subsidiaries that are registered as commodity pool operators and commodity trading advisers, and one additional subsidiary registered as only a commodity pool operator, with the CFTC. All three of these subsidiaries are members of the National Futures Association (the “NFA”). The CFTC and NFA each administer a comparable regulatory system covering futures contracts and various other financial instruments in which certain BlackRock clients may invest. One of BlackRock’s other subsidiaries, BlackRock Investments, Inc. (“BII”), is registered with the SEC as a broker-dealer and is a member-firm of the NASD.FINRA. BII’s NASDFINRA membership agreement limits its permitted activities to the sale of investment company securities, certain private placements of securities, and certain investment banking and financial consulting activities. Although BII has limited business activities, it is subject to the customer dealing, reporting and other requirements of the NASD,FINRA, as well as the net capital and other requirements of the SEC. As a result of the MLIM Transaction, BII is in the process of filingalso an applicationapproved person with the New York Stock Exchange (“NYSE”) to become an approved person,, which would subject BII’ssubjects its operations to NYSE regulation.

- 11 -

Regulation (continued)

Non-U.S. Regulation

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

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

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

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

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

U.S. Banking Regulation

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

- 12 -

Regulation (continued)

U.S. Banking Regulation (continued)

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

13

Regulation (continued)

U.S. Banking Regulation (continued)

The FRB has broad enforcement authority over BlackRock, including the power to prohibit BlackRock from conducting any activity that, in the FRB’s opinion, is unauthorized or constitutes an unsafe or unsound practice in conducting its business, and to impose substantial fines and other penalties.

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

Non-U.S. Regulation

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

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

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

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

14

Regulation (continued)

Non-U.S. Regulation (continued)

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

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

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

Other Regulation

BlackRock is subject to the USA PATRIOT Act of 2001, which contains the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. That Act contains anti-money laundering measures affecting insured depository institutions, broker-dealers and certain financial institutions. The Act requires U.S. financial institutions to adopt policies and procedures to combat money laundering and grants the Secretary of the Treasury broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ operations. Similarly, many of BlackRock’s subsidiaries outside the United States are subject to comparable rules and regulations with respect to anti-money laundering. BlackRock has established policies and procedures designed to ensure compliance with all applicable anti-money laundering laws and regulations.

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

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

- 13 -15

Available Information

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

16

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

- 14 -

Risks Related to BlackRock’s Business and Competition

Changes in the securities or other markets could lead to a decline in revenues.

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

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

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

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

17

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

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

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

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

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

- 15 -

Risks RelatedFurther, the governing agreements of many of the Company’s private investment funds generally provide that, subject to BlackRock’s Businesscertain conditions, investors in those funds, and Competition (continued)in some cases independent directors of those funds, may remove the investment adviser, general partner or the equivalent of the fund or liquidate the fund without cause by a simple majority vote, resulting in a reduction in the management or incentive fees as well as the total carried interest we would earn.

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

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

Competitive fee pressures could reduce revenues and profit margins.

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

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

A portion of the Company’s revenues areis derived from performance fees on investment and risk management advisory assignments. In most cases, performance fees are based on investment returns, although in some cases they are based on achieving specific service standards. Generally, the Company is entitled to performance fees only if the returns on the related portfolios exceed agreed-upon periodic or cumulative return targets. If these targets are not exceeded, performance fees for that period will not be earned and, if targets are based on cumulative returns, the Company may not earn performance fees in future periods. Performance fees will vary from period to period in relation to volatility in investment returns and the timing of revenue recognition, causing earnings to be more volatile than if assets were not managed on a performance fee basis. The volatility in earnings may decrease BlackRock’s stock price. Performance fees represented $242.3$350.2 million, or 11.5%7.2%, of total revenue for the year ended December 31, 2006.2007.

18

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

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

Risks Related to BlackRock’s Operations

Failure to maintain adequate infrastructure could impede the ability to support business growth.

BlackRock has experienced significant growth in its business activities as a result of the MLIM Transactionand Quellos Transactions and other efforts. The Company is in the process of building out its infrastructure to integrate the MLIM Businessand Quellos Businesses and to support continued growth, including technological capacity, data centers, backup facilities and sufficient space for expanding staff levels. The failure to maintain an adequate infrastructure commensurate with expansion could impede the Company’s growth, which could cause the Company’s earnings or stock price to decline.

- 16 -

Risks Related to BlackRock’s Operations (continued)

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

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

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

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

19

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

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

The continuing integration of the MLIM businessand Quellos businesses creates numerous risks and uncertainties that could adversely affect profitability.

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

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

- 17 -

Risks Related to the Recently Closed MLIM TransactionRelationships with Merrill Lynch and PNC

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

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

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

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

20

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

As a result of the stockholder agreements entered into with PNC and Merrill Lynch in connection with the MLIM Transaction, together with the Company’s ownership structure, stockholders may have no effective power to influence corporate actions. As of December 31, 2006,2007, Merrill Lynch owned approximately 45%45.1% of BlackRock’s issued and outstanding common stock and approximately 49.3%49.0% of total capital stock on a fully-diluted basis, and PNC owned approximately 34%33.5% of BlackRock’s total capital stock.

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

Legal and Regulatory Risks

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

BlackRock’s business is subject to extensive regulation in the United States and around the world. See the discussion under the heading “Business -– Regulation.” Violation of applicable laws or regulations could result in fines, temporary or permanent prohibition of the engagement in certain activities, reputational harm, suspensions of personnel or revocation of their licenses, suspension or termination of investment adviser or broker-dealer registrations, or other sanctions, which could cause the Company’s earnings or stock price to decline. Additionally, BlackRock’s business may be adversely impacted by regulatory and legislative initiatives imposed by various U.S. and non-U.S. regulatory and exchange authorities, and industry participants that continue to review and, in many cases, adopt changes to their established rules and policies.

- 18 -

Legal and Regulatory Risks (continued)

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

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

21

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

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

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

Since PNC’s ownership interest in BlackRock exceeds 25%, BlackRock is deemed to be a non-bank subsidiary of PNC, a financial holding company, which subjects BlackRock to general banking regulations that limit the activities and the types of businesses in which it may engage. Banking regulations may put BlackRock at a competitive disadvantage because most of its competitors are not subject to these limitations. As a non-bank subsidiary of PNC, BlackRock is subject to the supervision, regulation and examination of the FRB. The Company is also subject to the broad enforcement authority of the FRB, including the FRB’s power to prohibit BlackRock from engaging in any activity that, in the FRB’s opinion, constitutes an unsafe or unsound practice in conducting the Company’s business. The FRB also may impose substantial fines and other penalties for violations of applicable banking regulations.

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

Many aspects of BlackRock’s business involve substantial risks of legal liability. The Company including a numberand certain of the legal entities acquired in the MLIM Transaction, hasits subsidiaries have been named as a defendantdefendants in various legal actions, including arbitrations, class actions and other litigation arising in connection with BlackRock’s activities. 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 proceedings acquired in the MLIM Transaction, entities that BlackRock now owns may be named as defendants in these matters and the Company’s reputation may be negatively impacted. Liability for legal actions for which no indemnification is available could reduce earnings and cash flows and cause BlackRock’s stock price to decline. 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.

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

- 19 -22

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

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 also subject to other regulatory inquiries and proceedings.

The Company including a numberand certain of the legal entities acquired in the MLIM Transaction, hasits subsidiaries have been named as a defendantdefendants in various legal actions, including arbitrations, class actions, and other litigation and regulatory proceedings arising in connection with BlackRock’s activities. While Merrill Lynch has agreed to indemnify the Company for certain 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. While Merrill Lynch agreed to indemnify the Company for certain of the pre-closing liabilities related to legal and regulatory proceedings acquired in the MLIM Transaction, entities that BlackRock now owns may be named as defendants in these matters and the Company’s reputation may be negatively impacted.

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

No matters were submitted to a vote of BlackRock’s security holders during the fourth quarter of the year ended December 31, 2006.2007.

- 20 -23

Part II

BlackRock’s common stock is listed on the NYSE and is traded under the symbol “BLK.”“BLK”. At the close of business on January 31, 2007,2008, there were 694582 common stockholders of record. Common stockholders include institutional or omnibus accounts that hold common stock for multiple underlying investors.

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

BlackRock’s closing stock price as of March 9, 2007February 27, 2008 was $158.62.$201.30.

Dividends

The Board of Directors has adopted a dividend policy establishing a targeted payout ratio of 40% of historical net income and reviews the dividend policy at least annually, subject in all cases to the Board of Directors’ exercise of its fiduciary duty to the Company. On February 27, 2007,15, 2008, the Board of Directors approved an increase of BlackRock’s quarterly dividend to $0.67$0.78 to be paid on March 23, 200724, 2008 to stockholders of record on March 7, 2007.2008.

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

- 21 -24

Issuer Purchases of Equity Securities

During the three months ended December 31, 2006,2007, the Company made the following purchases of its common stock, which are registered pursuant to Section 12(b) of the Exchange Act.

- 22 -25

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

- 23 -26

- 24 -27

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 factors previously disclosed in BlackRock’s SEC reports and those identified elsewhere in this report, including the Risk Factors section of Item 1A. of 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, including its separately managed accounts and the former MLIM Business: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 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 advisory and administration fees earned by BlackRock and the carrying value of certain investmentsassets and liabilities denominated in foreign currencies; (14)(15) the impact of changes to tax legislation and, generally, the tax position of the Company; (15)(16) BlackRock’s ability to successfully integrate the MLIM Businessand Quellos Businesses with its existing business; (16)(17) the ability of BlackRock to effectively manage the former MLIM and Quellos assets along with its historical assets under management; and (17)(18) BlackRock’s success in maintaining the distribution of its products.

- 25 -28

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is one of the largest publicly traded investment management firms in the United States with $1.125$1.357 trillion of AUMassets under management (“AUM”) at December 31, 2006.2007. 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 mutual funds. In addition, BlackRock provides risk management, strategic advisory and enterprise investment system outsourcing and financial advisory services to institutional investors.a broad base of clients.

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”). Immediately followingOn October 1, 2007, BlackRock acquired certain assets and assumed certain liabilities of the closing,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 December 31, 2007, Merrill Lynch owned 45%approximately 45.1% of the Company’s voting common stock and approximately 49.3%49.0% of the total capital stock on a fully diluted basis of the combined companyCompany and The PNC Financial Services Group, Inc. (“PNC”) owned approximately 34%33.5% of the total capital stock of the combined company (as compared with 69% immediately prior to the closing). Immediately prior to the MLIM Transaction, MLIM managed approximately $589.2 billion of AUM. Concurrent with the MLIM Transaction, BlackRock and Merrill Lynch entered into a global distribution agreement, which provides a framework under which Merrill Lynch provides portfolio administration and servicing of client investments in certain BlackRock products (including those of the former MLIM business).stock.

The following table summarizes BlackRock’s operating performance for the years ended December 31, 2007, 2006 2005 and 2004:2005:

BlackRock, Inc.

Financial Highlights

(Dollar amounts in thousands, except per share data)