ANNUAL REPORT

08 ANNUAL REPORT

08HELPING CLIENTS SOLVE PROBLEMS

BlackRock's long-stated corporate mission has been to help our clients solve problems. This unwavering commitment to helping clients with their investment challenges may sound simple, but it demands we bring together the collective resources of our organization from around the world. It requires the integration of our deep capital markets expertise, extensive risk management and advisory capabilities, and our time-tested operating processes. More importantly, it requires that we stop to listen.

Today, we hear clearly that investors of all sizes have rapidly changing needs, unique to their particular circumstances. We hear that they want to be prepared for whatever the market brings next. We hear that clients want objective advice and tailored solutions from strategic partners that can provide a diversified platform through which to allocate investments globally. And we remain keenly aware of the fiduciary responsibilities of our business and the trust our clients and shareholders place in us.

Recent industry events highlight basic principles of corporate ethics, culture and integrity. As we enter our tenth year as a public company on the New York Stock Exchange, we recognize that our clients look to us as an independently managed firm for thoughtful and objective advice that they can trust. We are committed to earning that trust each and every day and, through our efforts, to creating enduring portfolio and shareholder value.

FINANCIAL & BUSINESS HIGHLIGHTS

(in thousands of dollars, except per share data)

Revenue Operating income, as adjusted 1 Net income, as adjusted 1

Per share: Diluted earnings, as adjusted 1 Book value

Assets under management (in millions)

Years ended December 31,

2008

$5,063,908 1,661,816 858,138

6.45 92.89

1,307,151

2007

$4,844,655 1,517,800 1,079,694

8.17 90.13

1,356,644

2006

$2,097,976 673,148 444,703

5.33 83.57

1,124,627

At December 31, 2008, BlackRock managed $1.307 trillion of assets, down less than 4% from year-end 2007 in the face of global equity market declines in excess of 30%. Over 1,000 clients in more than 39 countries awarded BlackRock $167.6 billion of net new business during 2008, driving a 12% organic growth rate for the year. We successfully navigated hostile money markets, adding 8% in liquidity AUM and gaining market share in the highly competitive cash management business. Our domestic retail business expanded its presence on third-party distribution platforms, helping drive $7.1 billion of net inflows from retail and high net worth investors. BlackRock's international retail platform retained its ranking as the second largest cross-border fund manager and ranked number one in net sales in the U.K. Institutional investors globally turned to us for innovative investment solutions, resulting in $23.9 billion of net new business in products such as liability-driven investing, fiduciary outsourcing and distressed or opportunistic investments. Institutional investors also sought a variety of financial markets advisory services from BlackRock, including the management and long-term liquidation of $145.0 billion of advisory assets. BlackRock Solutions? closed the year with more than $7 trillion of positions managed on our Aladdin? platform, adding 72 outsourcing, risk management, advisory and Aladdin assignments. During the fourth quarter, we finished insourcing operations and implementing our systems in Europe, effectively completing the MLIM integration. Investment performance remained competitive in many products -- 70%, 85% and 91% of equity and balanced fund assets outperformed peer group medians for the one-, three- and five-year periods ended December 31, 2008, respectively.2 We ended the year with over 5,000 employees in 21 countries working together to serve our clients and achieve our mission to be the most respected investment and risk manager in the world.

1 Operating income, operating margin, net income and diluted earnings per share are presented on an as adjusted basis. Please see pages 19 and 20 for GAAP reconciliation. 2 Please see Important Notes on inside back cover.

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MY FELLOW SHAREHOLDERS

December 31, 2008, respectively, and 31% annualized since our initial public offering on October 1, 1999.

April 2009

In 2008, the global capital markets experienced the most traumatic disruption since the 1930s. Equity markets worldwide suffered declines of 40% on average.* Credit markets were similarly challenged, as investors sought safety in the most liquid government securities and guaranteed bank deposits. The decrease in wealth has been devastating and is driving a dramatic retrenchment in the global economy, reshaping of the financial system, and reexamination of business and investment practices.

BlackRock navigated these hostile conditions by maintaining discipline in our investment processes, serving our clients and managing our business. We achieved organic growth of 12%, with $167.6 billion of net new business during the year. Our operating income, as adjusted, was up 9% versus 2007 to $1.7 billion. At the same time, our net income, as adjusted, declined 20% due to negative marks on investments we have made alongside our clients, principally in illiquid alternative investment products.

While it doesn't give me great joy to say, "we were less bad," our common stock performed slightly better (0.1%) than the S&P 500* for calendar year 2008. We have outperformed the S&P 500 by considerably more over time, having achieved excess returns of 17% and 24% per annum over the three- and five-year periods ended

I am proud of our record of creating long-term shareholder value, but our day-to-day focus remains dedicated to our clients. We have always believed that if we deliver what we promise to our clients and add value as a strategic partner in helping them solve problems, our franchise will flourish, our business will grow, our ability to retain and attract the best talent will be enhanced, and our strategic flexibility will be preserved. That, in a nutshell, is how we seek to build enduring shareholder value.

Events of the past year and the ongoing turmoil provide critical context for understanding BlackRock's business in 2008 and beyond. In my nearly 33 years in the business, I have never witnessed more hostile markets. Led by the continuing decline in home prices and deteriorating credit quality, yield spreads widened sharply. The impact was initially felt most significantly on the balance sheets of investment banks, commercial banks and other highly leveraged financial players, which were forced to delever by raising capital, selling assets or both.

Gradually, the depth of the oncoming recession became apparent and consumer confidence sank along with personal net worth. Consumers withdrew, spreading earnings pressure to other sectors of the global economy and dragging equity prices down further. For investors, not only were net asset values falling, but correlations across markets and investment strategies were increasing -- the benefits of diversification were elusive and traditional asset allocation strategies seemed to be failing.

September brought a tsunami of epic proportions. Although the financial system broadly was under increasing pressure, there was little appetite for supporting "too big to fail" institutions. Lehman Brothers was allowed to fail,

* Please see Important Notes on inside back cover.

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