Edgar Filing: BlackRock Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2009

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

For the transition period from to .

Commission File No. 001-33099

LOGO

BlackRock, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0174431

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

55 East 52nd Street, New York, NY 10055

(Address of principal executive offices)

(212) 810-5300

(Registrant’s telephone number, including area code)

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


Title of each class		Name of each exchange on which registered
Common Stock, $.01 par value		New York Stock Exchange

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

None

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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

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

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2009 was approximately $3.6 billion. There is no non-voting common stock of the registrant outstanding.

As of February 28, 2010, there were 63,076,131 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference herein:

Portions of the definitive Proxy Statement of BlackRock, Inc. to be filed pursuant to Regulation 14A of the general rules and regulations under the Securities Exchange Act of 1934, as amended, for the 2010 annual meeting of stockholders to be held on May 13, 2010 (“Proxy Statement”) are incorporated by reference into Part III of this Form 10-K.

BlackRock, Inc.

Index to Form 10-K

TABLE OF CONTENTS


PART I

Item 1	Business	1
Item 1A	Risk Factors	26
Item 1B	Unresolved Staff Comments	35
Item 2	Properties	35
Item 3	Legal Proceedings	35
Item 4	Reserved	35

PART II

Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6	Selected Financial Data	38
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	99
Item 8	Financial Statements and Supplementary Data	101
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	101
Item 9A	Controls and Procedures	101
Item 9B	Other Information	104

PART III

Item 10	Directors, Executive Officers and Corporate Governance	104
Item 11	Executive Compensation	104
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	104
Item 13	Certain Relationships and Related Transactions, and Director Independence	104
Item 14	Principal Accountant Fees and Services	104

PART IV

Item 15	Exhibits and Financial Statement Schedules	105
	Signatures	111

Item 1.

BUSINESS

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is the largest publicly traded investment management firm with $3.346 trillion of assets under management (“AUM”) at December 31, 2009. BlackRock focuses exclusively on investment management and risk management; we do not engage in proprietary trading or other activities that could conflict with the interests of our clients. Our business is global — we invest in capital markets throughout the world, we have employees in 24 countries and we serve institutional and retail investors in more than 100 countries. We offer a broad array of equity, fixed income, multi-asset class, alternative investment and cash management products, as well as our BlackRock Solutions^® investment systems, risk management and advisory services. We offer our investment products directly and through intermediaries in a variety of vehicles, including open-end and closed-end mutual funds, iShares^® exchange-traded funds¹ (“ETFs”), collective investment trusts and separate accounts. Our clients include taxable, tax-exempt and official institutions, high net worth individuals and retail investors.

On December 1, 2009, BlackRock acquired Barclays Global Investors (“BGI”) from Barclays Bank PLC (“Barclays”), referred to as the “BGI Transaction”, adding substantial investment and risk management capabilities and more than 3,500 new colleagues to the combined organization. BGI has long been recognized for product innovation in indexed and scientific investing, including pioneering iShares, the industry’s leading ETF platform, sophisticated retirement solutions and liability-driven investment strategies. These strengths complement BlackRock’s active fundamental portfolio management capabilities, global mutual fund platform, customized solutions, risk management and advisory services. Together, the combined firm is strongly distinguished by its scale, breadth of capabilities and depth of intellectual capital focused on helping clients address their investment challenges and achieve their financial objectives. Upon closing of the BGI Transaction, we commenced operations as a unified firm with the integration of corporate systems largely completed and implementation of our operating platform well underway. Substantial operating and cultural integration work is expected to continue over the course of the next two years.

BlackRock is an independent, publicly traded company, with no single majority stockholder and a majority of independent directors. At December 31, 2009, Merrill Lynch & Co., Inc. (“Merrill Lynch”), a wholly-owned subsidiary of Bank of America Corporation, owned approximately 3.7% of BlackRock’s voting common stock outstanding and held approximately 34.2% of the Company’s capital stock. The PNC Financial Services Group, Inc. (“PNC”) owned approximately 35.2% of BlackRock’s voting common stock outstanding and held approximately 24.5% of the Company’s capital stock. Barclays owned approximately 4.8% of BlackRock’s voting common stock outstanding and held approximately 19.8% of the Company’s capital stock.

At December 31, 2009, BlackRock managed $3.346 trillion of AUM, a 156%, or $2.039 trillion, increase relative to BlackRock’s reported AUM at December 31, 2008. The majority of the increase, $1.850 trillion, was due to the BGI Transaction, including substantial net new business and market appreciation recorded by BGI during the first eleven months of 2009. The remaining $189 billion of growth represented net new business, investment performance, market appreciation and favorable foreign exchange movements.

¹	iShares^® is a registered trademark of BlackRock Institutional Trust Company, N.A.

Item 1.

BUSINESS

Overview

Reported AUM⁽¹⁾⁽²⁾

Year ended December 31,


*(Dollar amounts in millions)*	2004		2005		2006		2007		2008		2009		5-Yr CAGR⁽³⁾
Equity	$	16,838	$	36,774	$	316,961	$	362,705	$	203,292	$	1,536,056	147	%
Fixed income		238,944		301,224		445,320		510,207		481,365		1,055,626	35	%
Multi-asset class		123		3,425		78,601		98,623		77,516		142,029	310	%
Alternatives		8,202		25,323		48,292		71,771		61,544		102,101	66	%
Cash management		77,653		85,936		235,453		313,338		338,439		349,277	35	%
Advisory		—		—		—		—		144,995		161,167	NM

Total AUM	$	341,760	$	452,682	$	1,124,627	$	1,356,644	$	1,307,151	$	3,346,256	58	%

NM - Not Meaningful

⁽¹⁾	Based on the actual timing of closing of acquisitions and divestitures during the periods shown.

⁽²⁾	Data reflects the reclassification of AUM into the current period presentation.

⁽³⁾	Compound annual growth rate (“CAGR”)

Growth in reported AUM over the past five years includes acquired AUM of approximately $2.5 trillion from the acquisitions of BGI in 2009, the fund of funds business of Quellos Group, LLC (“Quellos”) in 2007, Merrill Lynch Investment Managers (“MLIM”) in 2006, and SSRM Holdings, Inc. in 2005.

Item 1.

BUSINESS

Overview (continued)

On a pro forma combined basis (as though the BGI Transaction had closed on December 31, 2008), AUM increased 23% or $634.5 billion from $2.712 trillion at year-end 2008. Net new business during the year totaled $159.8 billion, including $219.2 billion of net inflows in long-dated and advisory AUM and $59.4 billion of outflows in cash management products. In addition, a strong recovery in global credit and equity markets and favorable foreign exchange rate movements contributed $472.3 billion to AUM growth in 2009. At year-end, 85% of AUM was in long-dated strategies (46% in equities, 32% in fixed income, 4% in multi-asset class and 3% in alternative investments), 10% was in cash management products and 5% was in advisory or long-term liquidation portfolios. BlackRock has realized a 58% compound annual growth rate in AUM over the past five years through a combination of acquisitions, new business, investment performance, market appreciation and foreign exchange movements.

Component Changes in AUM


*(Dollar amounts in millions)*	Reported (based on the actual 12/1/09 closing of the BGI Transaction)			Pro Forma (as though the BGI Transaction closed on 12/31/08)
AUM 12/31/08	$	1,307,151		$	2,711,711
Net New Business - Long-Dated⁽¹⁾		81,542			207,556
Net New Business - Cash Mgt		(49,122	)		(59,424	)
Net New Business - Advisory		11,642			11,642
Acquired AUM⁽²⁾		1,850,252			2,424
Market / FX⁽³⁾		144,791			472,347

AUM 12/31/09	$	3,346,256		$	3,346,256

⁽¹⁾

Long-dated includes equities, fixed income, multi-asset class and alternatives.

⁽²⁾

Includes acquisition adjustments to conform to current period combined AUM policy.

⁽³⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

AUM data throughout the remainder of this section reflects the reclassification of the data into the current period presentation.

The discussion of pro forma combined AUM above and throughout the remainder of this section is provided as supplemental information to provide greater transparency regarding client activity and business trends throughout 2009.

Item 1.

BUSINESS (continued)

Overview (continued)

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

•

The Company’s diversified product offerings, which enhance its ability to offer a variety of traditional and alternative investment products across the risk spectrum and to tailor single- and multi- asset class investment solutions to address specific client needs;

•

the Company’s longstanding commitment to risk management and the continued development of, and increased interest in, BlackRock Solutions products and services;

•

the Company’s global presence, with approximately 40% of employees outside the United States supporting local investment capabilities and serving clients of which approximately 39% of total AUM was managed for clients domiciled outside the United States and Canada; and

•

the growing recognition of the BlackRock brand, the strength of the Company’s culture and the depth and breadth of its intellectual capital.

The Company’s ability to increase revenue, earnings and stockholder value over time is predicated on its ability to generate new business in investment management and BlackRock 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 attract and retain talented professionals is critical to the Company’s long-term success.

Item 1.

BUSINESS (continued)

Overview (continued)

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


	Selected GAAP Financial Results¹
*(Dollar amounts in millions, except per share amounts)*	2009			2008			2007			2006			2005			2004			5 Year CAGR
Total revenue	$	4,700		$	5,064		$	4,845		$	2,098		$	1,191		$	725		45	%
Operating income	$	1,278		$	1,593		$	1,294		$	472		$	341		$	165		51	%
Operating margin		27.2	%		31.5	%		26.7	%		22.5	%		28.6	%		22.9	%	4	%
Non-operating income (expense)³	$	(28	)	$	(422	)	$	162		$	37		$	28		$	30		(199	)%
Net income attributable to BlackRock, Inc.	$	875		$	784		$	993		$	321		$	231		$	143		44	%
Diluted earnings per common share	$	6.11		$	5.78		$	7.37		$	3.83		$	3.45		$	2.17		23	%

	Selected Non-GAAP Financial Results¹
*(Dollar amounts in millions, except per share amounts)*	2009²			2008²			2007²			2006			2005			2004			5 Year CAGR
As adjusted:
Operating income	$	1,570		$	1,662		$	1,518		$	674		$	408		$	263		43	%
Operating margin		38.2	%		38.7	%		37.4	%		36.7	%		38.9	%		40.1	%	(1	)%
Non-operating income (expense)³	$	(46	)	$	(384	)	$	150		$	29		$	18		$	25		(213	)%
Net income attributable to BlackRock, Inc.	$	1,021		$	856		$	1,077		$	443		$	266		$	178		42	%
Diluted earnings per common share	$	7.13		$	6.30		$	7.99		$	5.29		$	3.99		$	2.69		22	%

¹	Prior year data reflects certain reclassifications to conform to the current year presentation.

²	See reconciliation to GAAP measures in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview.

³	Excludes net income (loss) attributable to non-controlling interests (redeemable and nonredeemable) related to investment and non-investment activities.

See additional information in Item 6, Selected Financial Data.

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

Item 1.

BUSINESS (continued)

Overview (continued)

Operating Income, as Adjusted:

GAAP reported operating income includes certain significant items, the after-tax impact of which management considers non-recurring or transactions that ultimately will not impact BlackRock’s book value and, therefore, are excluded in calculating operating income, as adjusted.

Operating income, as adjusted (a non-GAAP measure), excludes certain expenses incurred related to the integration of the SSR, MLIM, Quellos and BGI Transactions in 2005, 2006, 2007 and 2009, respectively, transaction costs, which include advisory fees, legal fees and consulting expenses related to the BGI Transaction, a 2007 termination fee for closed-end fund administration and servicing arrangements with Merrill Lynch, 2008 and 2009 restructuring charges and compensation expense associated with appreciation / (depreciation) on assets related to certain BlackRock deferred compensation plans. These expenses have been excluded from operating income, as adjusted, because they have been deemed non-recurring by management and to help enhance the comparability of this information to prior periods.

The portion of compensation expense associated with certain of BlackRock’s long-term incentive plan (“LTIP”) awards that will be funded through distributions to participants of shares of BlackRock stock held by PNC and a Merrill Lynch cash compensation contribution, a portion of which has been received, have been excluded because, exclusive of the impact related to the exercise of LTIP participants’ put options, primarily in the three months ended March 31, 2007, these charges do not impact BlackRock’s book value. A detailed discussion of the LTIP is included in Note 15 to the consolidated financial statements beginning on page F-1 of this Form 10-K.

Compensation expense associated with appreciation (depreciation) on assets related to certain BlackRock deferred compensation plans has been excluded as returns on investments set aside for these plans, which substantially offset this expense, are reported in non-operating income (expense).

Management believes that operating income exclusive of these costs is more representative of the operating performance for the respective periods.

Operating Margin, as Adjusted:

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

Operating margin, as adjusted, allows the Company to compare performance from period-to-period by adjusting for items that may not recur, recur infrequently or may fluctuate based on market movements, such as restructuring charges, transaction/integration costs, closed-end fund launch costs and fluctuations in deferred compensation expense based on mark-to-market movements in investments held to fund certain compensation plans. The Company also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance to other companies. Management reviews both the GAAP and non-GAAP financial measures.

Item 1.

BUSINESS (continued)

Overview (continued)

Operating Margin, as Adjusted (continued):

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and to other third parties. Management believes that excluding such costs is useful to BlackRock because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred mutual fund sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, offset distribution fee revenue earned by the Company. Reimbursable property management compensation represented compensation and benefits paid to personnel of Metric Property Management, Inc. (“Metric”), a subsidiary of BlackRock Realty Advisors, Inc. (“Realty”). Prior to the transfer in 2008 to a third party, these employees were retained on Metric’s payroll when certain properties were acquired by Realty’s clients. The related compensation and benefits were fully reimbursed by Realty’s clients and have been excluded from revenue used for operating margin, as adjusted, because they did not bear an economic cost to BlackRock. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenues.

Non-Operating Income (Expense), Less Net Income (Loss) Attributable to Non-controlling Interests, as Adjusted:

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

Management believes that non-operating income (expense), less net income (loss) attributable to non-controlling interests, as adjusted, provides for comparability of this information to prior periods and is an effective measure for reviewing BlackRock’s non-operating contribution to its consolidated results. As compensation expense associated with depreciation or appreciation on assets related to certain BlackRock deferred compensation plans, which is included in operating income, offsets the gain/(loss) on the investments set aside for these plans, management believes that non-operating income (expense), less net income (loss) attributable to non-controlling interests, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s non-operating results that impact book value.

Net Income Attributable to BlackRock, Inc., as Adjusted:

GAAP reported net income attributable to BlackRock, Inc. and GAAP diluted earnings per common share include certain significant items, the after-tax impact of which management considers non-recurring or transactions that ultimately will not impact BlackRock’s book value and, therefore, are excluded in calculating net income attributable to BlackRock, Inc., as adjusted.

Net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted (non-GAAP measures), exclude the after-tax impact of the 2008 and 2009 restructuring charges, the 2007 termination of closed-end fund administration and servicing arrangements with Merrill Lynch, LTIP expense to be funded by PNC and by a Merrill Lynch cash compensation contribution, a portion of which has been received, the SSR, MLIM, Quellos and BGI integration costs, BGI transaction costs and the effect on deferred income tax expense attributable to changes in corporate income tax rates as a result of enacted legislation.

Item 1.

BUSINESS (continued)

Overview (continued)

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

Products *

BlackRock offers a broad spectrum of investment management and risk management products and services. Investment management offerings include single- and multi-asset class portfolios, which may be structured to focus on a particular investment style, capitalization range, region or market sector; credit or maturity profile; or liability structure. Revenue from these products primarily consists of advisory fees, typically structured as a percentage of AUM. In some instances, we earn securities lending fees or performance fees, which may be expressed as a share of earnings or a percentage of returns in excess of agreed-upon targets. In addition, BlackRock offers its Aladdin^® investment system, as well as risk management, outsourcing and advisory services, to institutional investors under the BlackRock Solutions name. Revenue on these services may be based on several criteria including asset volume, number of users, accomplishment of specific deliverables or other performance objectives.

Equity

BlackRock’s equity AUM closed the year at $1.536 trillion, up 656%, or $1.333 trillion, from reported AUM of $203.3 billion at December 31, 2008. The increase was due primarily to the BGI Transaction, which contributed $1.188 trillion in acquired assets. On a pro forma combined basis, equity AUM increased 47% or $488.2 billion from $1.048 trillion at year-end 2008. The pro forma increase included $124.2 billion in net new business and $360.2 billion from investment performance (alpha) and positive market movement (beta).

Component Changes in Equity AUM


	Reported						Pro Forma
	(based on the actual 12/1/09 closing of the BGI Transaction)						(as though the BGI Transaction closed on 12/31/08)
*(Dollar amounts in millions)*	Index		Active		Total		Index		Active			Total
AUM 12/31/08	$	51,076	$	152,216	$	203,292	$	763,344	$	284,500		$	1,047,844
Net New Business		32,274		9,778		42,052		146,791		(22,626	)		124,165
Acquired AUM⁽¹⁾		1,055,456		132,205		1,187,661		3,763		131			3,894
Market / FX⁽²⁾		44,199		58,852		103,051		269,107		91,046			360,153

AUM 12/31/09	$	1,183,005	$	353,051	$	1,536,056	$	1,183,005	$	353,051		$	1,536,056

⁽¹⁾

Includes acquisition adjustments to conform to current period combined AUM policy and pro forma AUM acquired from NAFTRAC by BGI.

⁽²⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

BlackRock manages equity portfolios utilizing three distinct investment approaches: index or passive, active fundamental and active scientific. Index strategies employ a structured balance of risk, return and cost to offer an efficient way to obtain exposure to equity markets. Fundamental investments seek to add value relative to a specified index or on an absolute basis primarily through security selection based on BlackRock’s proprietary research and portfolio manager judgment. Scientific equity strategies seek superior investment outcomes through a stock selection process that aims to systematically find and exploit pricing opportunities while rigorously managing risk and cost. A wide variety of products are offered in each of these styles, including global and regional portfolios; value, growth and core products; large, mid and small cap strategies; and selected sector funds.

*	See Product Performance Notes below.

Item 1.

BUSINESS (continued)

Products (continued)

Equity (continued)

At year-end 2009, index strategies represented $1.183 trillion, or 77%, of equity AUM. Active equity portfolios totaled $353.1 billion, or 23%, of equity AUM, including $208.7 billion in active fundamental strategies and $144.3 billion in active scientific products. During the year, investors reallocated from cash earning near zero to higher risk assets, helping to fuel a strong recovery in the global equity markets. Index strategies, including ETFs, attracted significant flows as an efficient means of gaining market exposure, in some cases pending longer-term allocations to active strategies. On a pro forma combined basis, BlackRock had net new business of $146.8 billion in index funds and $10.4 billion in active fundamental portfolios, which more than offset $33.0 billion of net outflows in active scientific equities.

BlackRock manages equity portfolios for a diverse base of institutional and retail clients globally. At December 31, 2009, 65% of equity AUM or $1.001 trillion was managed on behalf of institutional investors in separate accounts, collective investment trusts and mutual funds. An additional $381.4 billion or 25% of equity AUM were managed in iShares products, which are purchased by both institutional and retail investors on stock exchanges worldwide. The remaining 10%, or $153.9 billion, of equity AUM was managed for retail and high net worth investors, largely through open-end mutual funds and separately managed accounts. Approximately 59%, or $912.2 billion, of our equity AUM was managed for clients based in the United States and Canada. The remaining 41% or $623.9 billion of equity AUM included $444.5 billion managed for clients in Europe, the Middle East and Africa (“EMEA”), $167.8 billion in Asia Pacific and $11.5 billion for investors in Latin America and Iberia. Net inflows of $124.2 billion were positive across all regions, with $56.9 billion of net new business from the United States and Canada, $46.3 billion from EMEA, $18.8 billion from Asia Pacific and $2.1 billion from Latin America and Iberia.

Global equity markets were volatile throughout 2009, reaching their two-year lows in March and rebounding sharply thereafter. For example, the MSCI World Index declined to a low of 172.7 in March before rebounding to 299.4 at year-end, a 73% increase from its nadir and a 32% overall return for the full year. BlackRock’s index equity accounts closely tracked their corresponding benchmarks, with 68% of AUM achieving returns within 1% of index returns and 56% of AUM outperforming their benchmarks. Our active fundamental equity strategies maintained strong long-term track records, with 59%, 76% and 86% of active fundamental AUM above their benchmarks (which for certain non-U.S. products are based upon peer medians), while 10%, 19% and 24% of active scientific AUM outperformed their benchmarks (which for certain non-U.S. products are based upon peer medians) for the one-, three- and five-year periods ended December 31, 2009, respectively. Although active scientific equity strategies have struggled industry-wide since mid-2007, we believe in the long-term viability of the approach and have committed substantial resources to research and development of the next generation of active scientific equity investing.

Item 1.

BUSINESS (continued)

Products (continued)

Fixed Income

BlackRock’s fixed income AUM ended 2009 at $1.056 trillion, representing an increase of $574.2 billion or 119%, over the previous year’s reported results. The BGI Transaction added $517.3 billion of AUM. On a pro forma combined basis, fixed income AUM rose 18%, or $161.0 billion. During the year, we were awarded net new business of $77.1 billion, driving 48% of the year’s increase in AUM. Investment performance and market appreciation contributed $80.3 billion, or 50%, of the combined growth.

Component Changes in Fixed Income AUM


	Reported (based on the actual 12/1/09 closing of the BGI Transaction)							Pro Forma (as though the BGI Transaction closed on 12/31/08)
*(Dollar amounts in millions)*	Index			Active		Total		Index		Active		Total
AUM 12/31/08	$	3,411		$	477,954	$	481,365	$	365,031	$	529,592	$	894,623
Net New Business		6,393			25,559		31,952		62,824		14,226		77,050
Acquired AUM⁽¹⁾		467,340			49,918		517,258		486		3,164		3,650
Market / FX⁽²⁾		(17,818	)		42,869		25,051		30,985		49,318		80,303

AUM 12/31/09	$	459,326		$	596,300	$	1,055,626	$	459,326	$	596,300	$	1,055,626

⁽¹⁾

Includes acquisition adjustments to conform to current period combined AUM policy.

⁽²⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

BlackRock offers a broad range of index and actively managed fixed income products across regions, sectors, credit quality and maturities. Actively managed strategies may employ a fundamental or model-driven investment process. The former emphasizes risk-controlled sector rotation and security selection driven by sector experts and direct interaction with issuers and market makers, while the latter employs models to identify relative return opportunities and to apply those results, subject to a pragmatic review of model risk, on a systematic basis across portfolios. Fixed income mandates are often tailored to client-specified liabilities, accounting, regulatory or rating agency requirements, or other investment policies. Year-end fixed income AUM consisted of $459.3 billion, or 44%, in index portfolios and $596.3 billion in active strategies. Investors returned to the bond markets in 2009, driving a substantial tightening in credit spreads from the historically high levels reached during 2008. Demand for fixed income offerings was strong across products, with $62.8 billion of net new business in index products, including iShares, and $14.2 billion in active strategies. Key areas of growth included non-dollar denominated products, such as liability driven investment solutions in the U.K., and U.S. core strategies, with $38.2 billion and $15.8 billion of net inflows, respectively, throughout the year.

Of BlackRock’s total fixed income AUM, 81%, or $860.0 billion, was managed on behalf of institutional investors, 10% or $102.5 billion of AUM was managed in iShares products, including 22 new offerings launched during 2009, and 9% or $93.2 billion was managed for retail and high net worth investors. The client base was well diversified geographically, with 54% or $572.2 billion of fixed income AUM managed for clients based in the United States and Canada. The remaining 46% or $483.4 billion of fixed income AUM included $332.4 billion managed for clients in EMEA, $143.0 billion in Asia Pacific and $8.0 billion for investors in Latin America and Iberia. Net inflows of $38.9 billion and $45.7 billion from U.S and Canadian and EMEA clients, respectively, more than offset cumulative net outflows of $7.6 billion from clients in Asia Pacific and Latin America and Iberia.

A significant rally in credit spreads drove strong performance in the bond markets, with the Barclays Global Aggregate Index posting a 6.9% return for the year. BlackRock’s fixed income index accounts closely tracked their benchmarks, with 77% of accounts achieving returns within 1% of index returns and 53% of AUM outperforming their benchmarks. Our active fixed income strategies achieved strong performance in 2009, with 79%, 33% and 40% of active fundamental AUM above their benchmarks (which for certain non-U.S. products are based upon peer medians) and 71%, 70% and 89% of active model-based AUM above their benchmarks (which for certain non-U.S. products are based upon peer medians) for the one-, three- and five-year periods ended December 31, 2009, respectively.

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Multi-Asset Class

In view of the growing demand for investment solutions that utilize a combination of fixed income, equities and alternative investments, BlackRock is recognizing multi-asset class as a separate product category. Strategies include asset allocation and balanced mandates, target date and target risk funds, and fiduciary outsourcing relationships. BlackRock’s multi-asset class AUM closed the year at $142.0 billion, an increase of 83%, or $64.5 billion, from the $77.5 billion multi-asset class AUM that was reported as part of equity and balanced AUM at December 31, 2008. The LifePath^® portfolios, the industry’s first target date funds, represented over half of the acquired AUM. On a pro forma combined basis, multi-asset class AUM rose 33% or $35.4 billion, including $13.5 billion of net new business, largely driven by retail investors into mutual funds. The multi-asset class products were further spurred by the recovery in global financial markets as positive market movements added another $21.5 billion throughout the year.

Component Changes in Multi-Asset Class AUM


*(Dollar amounts in millions)*	Reported (based on the actual 12/1/09 closing of the BGI Transaction)		Pro Forma (as though the BGI Transaction closed on 12/31/08)
AUM 12/31/08	$	77,516	$	106,591
Net New Business		11,979		13,484
Acquired AUM⁽¹⁾		36,408		470
Market / FX⁽²⁾		16,126		21,484

AUM 12/31/09	$	142,029	$	142,029

⁽¹⁾

Includes acquisition adjustments to conform to current period combined AUM policy.

⁽²⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

Asset allocation and balanced mandates represented $86.7 billion, or 61%, of total multi-asset class AUM at December 31, 2009. These products have been in strong demand by retail investors globally seeking comprehensive investment solutions. Target date and target risk funds, including the LifePath portfolios and our newer SponsorMatch^® offerings, totaled $28.8 billion or 20% of multi-asset class AUM. These retirement savings products, which are Qualified Default Investment Options under the Pension Protection Act of 2006, utilize a proprietary asset allocation model that seeks to balance risk and return over an investment horizon based on the investor’s targeted retirement timing. Fiduciary outsourcing mandates, in which a pension plan sponsor retains BlackRock to assume responsibility for some or all aspects of plan management, represented $24.4 billion, or 17%, of multi-asset class AUM. The remaining $2.0 billion, or 2%, of multi-asset class AUM was managed in various global derivatives, diversified growth and relative return strategies.

BlackRock’s multi-asset class products were managed on behalf of a well-balanced client base. At December 31, 2009, institutional investors represented 54%, or $76.7 billion, of multi-asset class AUM, while retail and high net worth investors accounted for 46% or $65.2 billion. The remaining $0.2 billion were managed in iShares offerings. The geographic mix was similarly diversified, with 53% or $75.8 billion of AUM managed for clients based in the United States and Canada, and 47% or $66.2 billion managed for international investors, principally in EMEA. During the year, clients in the United States and Canada, EMEA and Latin America and Iberia awarded BlackRock net new business of $15.0 billion, which offset net outflows of $1.5 billion from clients in Asia Pacific.

Approximately 18% of BlackRock’s multi-asset class AUM is managed in portfolios that are customized to unique client requirements. The remaining strategies have achieved competitive performance, with 69% of AUM over their benchmarks for the one year, 73% for the three years and 86% for the five years ended December 31, 2009.

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Alternative Investments

BlackRock ended 2009 with $102.1 billion of AUM in its alternative investment products, a 66%, or $40.6 billion, increase as compared to reported AUM at year-end 2008. The BGI Transaction added $49.4 billion of AUM in a variety of currency, commodity, global macro and hedge fund offerings. These products complement BlackRock’s fund of funds, real estate, hedge fund and opportunistic strategies. Alternative AUM was adversely affected by net outflows, disbursements from opportunistic funds and declining real estate markets in 2009. In particular, while many alternative managers suspended redemptions in 2008, we were able to avoid such drastic action throughout the financial crisis. Although this policy may have amplified redemptions in our hedge funds and funds of hedge funds, we believe our focus on putting clients’ needs first will be rewarded over time.

Component Changes in Alternative Investments AUM


*(Dollar amounts in millions)*	Reported (based on the actual 12/1/09 closing of the BGI Transaction)			Pro Forma (as though the BGI Transaction closed on 12/31/08)
AUM 12/31/08	$	61,544		$	106,419
Net Redemptions		(4,441	)		(7,142	)
Acquired AUM⁽¹⁾		49,395			263
Market / FX⁽²⁾		(4,397	)		2,561

AUM 12/31/09	$	102,101		$	102,101

⁽¹⁾

Includes acquisition adjustments to conform to current period combined AUM policy and AUM acquired from R3 Capital Management, LLC.

⁽²⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

BlackRock’s alternative investment products include real estate debt and equity; funds of funds; macro funds, hedge funds and other absolute return strategies; and active currency and commodity funds, as described below. The alternative investment clientele was predominantly institutional, representing 81% or $83.1 billion of alternatives AUM. iShares contributed another 10%, or $10.1 billion, of AUM, and retail and high net worth investors comprised the remaining 9% or $8.9 billion of ending assets. The geographic mix was diversified, with 59% or $60.7 billion of AUM managed for clients in the United States and Canada, 23% or $23.7 billion for clients in EMEA, 17% or $17.6 billion for clients in Asia Pacific, and 1% or $62.4 million for clients in Latin America and Iberia. Many of our alternative investment products had strong investment performance in 2009, and a number reached or surpassed their high water marks by year-end.

•

Real Estate: At year-end 2009, BlackRock managed $18.1 billion in a variety of real estate debt and equity products. Offerings include high yield debt and core, value-added and opportunistic equity portfolios. Real estate AUM decreased 30% or $7.7 billion during the year, driven by $7.3 billion in market declines and $0.4 billion of net outflows. Commercial real estate markets are expected to continue to struggle through 2010.

•

Funds of Funds: At December 31, 2009, BlackRock managed $22.1 billion of AUM in funds of funds offered under the BlackRock Alternative Advisors (“BAA”) name. Products include hedge fund, private equity and real asset funds of funds, as well as co-investment and hybrid vehicles. BAA AUM declined $0.6 billion during 2009. Net outflows of $2.9 billion principally stemming from redemption requests submitted at the end of 2008, in addition to a disposition of a $0.2 billion real estate fund of funds portfolio, were almost fully offset by $2.5 billion of growth due to strong investment performance and market appreciation.

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Alternative Investments (continued)

•

Hedge Funds: BlackRock ended 2009 with $24.9 billion of AUM in a variety of fixed income and equity hedge funds, global macro funds, portable alpha, distressed and opportunistic strategies. Offerings include both open-end hedge funds and similar products, and closed-end funds that have been created to take advantage of specific opportunities over a defined, often longer-term investment horizon. During the year, we added $13.8 billion of AUM through the acquisitions of BGI and the R3 Capital Partners funds. On a pro forma combined basis, AUM decreased $1.4 billion, with $5.5 billion of net outflows, including $1.1 billion of disbursements from opportunistic investments, largely offset by $1.3 billion of acquired AUM and an additional $2.8 billion of investment returns and market appreciation.

•

Currency and Commodity Funds: At year-end, BlackRock managed $35.7 billion in currency and commodity mandates, the vast majority of which were acquired through the BGI Transaction. These products include active currency and currency overlay strategies primarily managed through institutional separate accounts, and commodity portfolios primarily offered as iShares products. Pro forma combined AUM increased $6.7 billion during 2009, driven by $2.3 billion of net new business and $4.4 billion of market appreciation.

Cash Management

AUM in cash management products stood at $349.3 billion at December 31, 2009, up $10.8 billion, or 3%, from AUM reported at year-end 2008. The BGI Transaction added $59.5 billion of AUM. The 2008 surge in cash management assets reversed in 2009, as investors tired of earning little to no return reallocated to various long-dated strategies offering the potential for higher returns. On a pro forma combined basis, net outflows totaled $59.4 billion, resulting in a 15% decrease in spot AUM and an approximately 10% decline in average AUM relative to 2008.

Component Changes in Cash Management AUM


*(Dollar amounts in millions)*	Reported (based on actual 12/1/09 closing of BGI Transaction)			Pro Forma (as though BGI Transaction closed on 12/31/08)
AUM 12/31/08	$	338,439		$	411,238
Net Redemptions		(49,122	)		(59,424	)
Acquired AUM⁽¹⁾		59,530			(5,855	)
Market / FX⁽²⁾		430			3,318

AUM 12/31/09	$	349,277		$	349,277

⁽¹⁾

Includes acquisition adjustments to conform to current period combined AUM policy.

⁽²⁾

Market/FX represents market appreciation (depreciation) and the impact of converting non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

BlackRock employs a conservative investment style that emphasizes quality, liquidity and superior client service throughout all market cycles. Disciplined risk management, including a rigorous credit surveillance process, is an integral part of the investment process. Products include taxable and tax-exempt money market funds and customized separate accounts. Portfolios may be denominated in U.S. dollar, Euro or Sterling. The BGI Transaction added substantial scale in our non-dollar offerings: 63% or $37.5 billion of total acquired cash management AUM was invested in offshore markets.

The cash management team also manages the cash we receive as collateral for securities on loan in other portfolios. Securities lending, which is offered as a potential source of incremental returns on long-dated portfolios, is managed by a dedicated team, supported by quantitative analysis, proprietary technology and disciplined risk management. Fees for securities lending can be structured as a share of earnings or a percentage of the value of the cash collateral. The value of the securities on loan is reported as AUM in the corresponding asset class. The value of the cash collateral is not included in cash management AUM.

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Cash Management (continued)

Our cash management clientele remained largely institutional, with 80%, or $280.4 billion, of cash AUM managed on behalf of institutions and 19%, or $67.6 billion, managed for retail investors at year-end 2009. An additional $1.3 billion of cash AUM was managed in iShares products. The investor base was also predominantly domestic, with 76% or $265.4 billion of AUM managed for U.S. and Canadian investors and 24%, or $83.9 billion, managed for international clients, almost all of which were based in EMEA. While we suffered significant net outflows from U.S. clients reallocating out of cash, we attracted net inflows internationally where we gained market share as a relatively new entrant. We expect cash management AUM to remain volatile, with outflows likely as the economy stabilizes and central banks end their quantitative easing programs and eventually raise interest rates.

BlackRock Solutions and Advisory

BlackRock offers investment systems, risk management, outsourcing and advisory services under the BlackRock Solutions brand name. Over $9.0 trillion of positions are processed on our Aladdin operating platform, which serves as the investment system for BlackRock and a growing number of sophisticated institutional investors. BlackRock Solutions also offers comprehensive risk reporting via the Green Package^® and risk management advisory services, interactive fixed income analytics through our web-based calculator, AnSer^®, middle and back office outsourcing services and investment accounting. Clients have also retained BlackRock Solutions for a variety of financial markets advisory engagements, such as valuation and risk assessment of illiquid assets, portfolio restructuring, workouts and dispositions of distressed assets and financial and balance sheet strategies.

As the global capital markets began to recover, clients remained focused on risk management, and demand for BlackRock Solutions continued to grow. During the year, BlackRock Solutions added 48 net new assignments and revenue increased 21% to $477 million. Growth was well balanced across Aladdin, risk management and financial markets advisory services. Advisory AUM increased 11% to $161.2 billion, buoyed by $11.6 billion of net inflows and $4.5 billion of growth driven by market performance in these long-term liquidation portfolios. At year-end, BlackRock Solutions served 130 clients, including banks, insurance companies, official institutions, pension funds, asset managers and other institutional investors across North America, Europe, Asia and Australia.

The BlackRock Solutions, Aladdin and technology teams are also supporting key aspects of the BGI integration. These efforts, which are expected to continue through 2011, are vital to establishing a unified operating platform and consistent operating processes. We expect the integration of BGI’s extensive quantitative tools, risk management models and portfolio construction applications across asset classes to enhance the Aladdin platform over time. Additionally, we will seek to leverage our scale for the benefit of our clients through the creation of a robust global trading platform.

Transition Management Services

BlackRock also offers transition management services, involving the temporary oversight of a client’s assets as they transition from one manager to another or from one strategy to another. We provide a comprehensive service that includes project management and implementation based on achieving best execution consistent with the client’s risk management tolerances. We use Aladdin and other state-of-the-art tools and work closely with BlackRock’s trading cost research team to manage four dimensions of risk throughout the transition: exposure, execution, process and operational risk. The average transition assignment is executed within two weeks, although the duration can be longer or shorter depending on the size, complexity and liquidity of the related assets. These portfolios are not included in AUM unless BlackRock has been retained to manage the assets after the transition phase.

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* Product Performance Notes

Past performance is not indicative of future results. The performance information reflects all benchmark-based client accounts and products managed by BlackRock, other than ETFs and structured products. Source of performance information is BlackRock, Inc. and peer medians are based in part on data from Morningstar, Inc. for non-U.S. funds. Fund performance reflects the reinvestment of dividends and distributions, but does not reflect fees or sales charges. If fees or sales charges were reflected, the performance information shown could have differed significantly.

Clients

BlackRock manages money for institutional and retail investors worldwide. Our client base is diversified by both geography and client type. We serve clients through 74 offices across four regions: United States and Canada, EMEA, Asia Pacific and Latin America and Iberia. Clients include tax-exempt institutions, such as defined benefit and defined contribution pension plans, charities, foundations and endowments; official institutions, such as central banks, sovereign wealth funds, supranationals and other government entities; taxable institutions, including insurance companies, financial institutions, corporations and third party fund sponsors; and retail and high net worth investors. We also serve both institutional and retail investors who acquire iShares on stock exchanges worldwide.

AUM by Client Domicile and Client Type

Year ended December 31, 2009


*(Dollar amounts in millions)*	U.S. & Canada		EMEA		Asia Pacific		Latin America & Iberia		Total AUM
Institutions	$	1,369,752	$	776,510	$	309,272	$	6,474	$	2,462,008
Retail & High Net Worth		277,486		74,397		30,496		6,320		388,700
iShares*		394,349		85,078		7,771		8,350		495,548

Total AUM	$	2,041,587	$	935,985	$	347,540	$	21,144	$	3,346,256

*	By jurisdiction of fund, rather than domicile of underlying investors.

Global Presence

BlackRock serves clients in more than 100 countries through the efforts of professionals located in 24 countries. Our global presence enables us to deliver highly responsive service and to tailor our offerings to best serve the needs of local investors. Portfolios may be invested in local, regional or global capital markets. Products may be structured to address location-specific issues, such as regulations, taxation, operational infrastructure, and market liquidity, and client-specific issues, such as investment policy, liability structure and ratings.

•

At year-end 2009, assets managed on behalf of clients domiciled in the United States and Canada (including offshore investors), totaled $2.042 trillion or 61% of total AUM, an increase of $1.070 trillion versus reported AUM at December 31, 2008. On a pro forma combined basis, AUM increased 19% or $322.3 billion, including $62.1 billion of net new business and $264.4 billion from investment performance and market appreciation. Offerings include closed-end funds and iShares traded on domestic stock exchanges, a full range of open-end mutual funds, collective investment funds, common trusts, private funds and separate accounts. Clients invest across the full product range, as evidenced by the year-end mix of 45% in equities, 28% in fixed income, 4% in multi-asset class, 3% in alternatives, 13% in cash management and 7% in advisory mandates. In addition, we have a wide variety of BlackRock Solutions assignments for institutional investors and governmental entities in the United States and Canada.

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Clients (continued)

Global Presence (continued)

•

AUM for clients domiciled in EMEA ended the year at $936.0 billion or 28% of total AUM, an increase of $691.4 billion relative to reported AUM at December 31, 2008. During the year, clients awarded us net new business of $88.4 billion on a pro forma combined basis, including inflows from clients in 31 countries across the region. Our offerings include fund families in the U.K., Luxembourg and Dublin, and iShares listed on eight stock exchanges throughout EMEA, as well as separate accounts and pooled investment products. The product mix reflected the evolution of our product line-up in the region, with more established equity and multi-asset class offerings accounting for 47% and 5% of total EMEA client AUM, respectively, and our relatively newer fixed income, alternatives and cash management products representing 36%, 3% and 9% of EMEA client AUM at year-end, respectively. In addition, advisory AUM represented less than 1% of EMEA client AUM, and we have Aladdin, risk management and financial advisory assignments for institutional investors and governmental entities throughout Europe.

•

Clients in the Asia Pacific region are served through offices in Japan, Australia, Hong Kong, Singapore, Taiwan and Korea and joint ventures in China and India. At December 31, 2009, we managed $347.5 billion of AUM for clients in the region, an increase of 20% or $58.1 billion on a pro forma basis. Net new business contributed $7.3 billion, and the remainder of the increase was attributable to investment performance and favorable market movements. At year-end, the mix of products managed for these clients consisted of 48% in equities, 41% in fixed income, 4% in multi-asset class, 5% in alternatives, 1% in advisory and less than 1% in cash management products.

•

BlackRock’s business in Latin America and Iberia grew significantly during the year, from $6.8 billion of reported AUM at year-end 2008 to $21.1 billion of AUM in December 31, 2009. On a pro forma combined basis, AUM increased $9.6 billion or 83%, driven by net new business of $1.9 billion, acquired assets of $3.8 billion (reflecting the BGI acquisition of the NAFTRAC ETF platform in Mexico in the first half of 2009) and $3.9 billion of investment performance and market and foreign exchange appreciation. BlackRock is the largest manager of pension plan assets in Mexico, Chile, Peru and Colombia, with clients using a combination of BlackRock’s domestic and cross-border investment offerings². At year-end, the product mix consisted of 55% in equities, 38% in fixed income, 7% in multi-asset class, and less than 1% in each of alternatives and cash management products.

Institutional Investors

Assets managed for institutional investors totaled $2.462 trillion at year-end 2009, up 142%, or $1.447 trillion, relative to reported AUM at year-end 2008. Our institutional clients invest in the full range of products offered by BlackRock. At year-end, institutional AUM included $2.182 trillion invested in a wide variety of long-dated mandates and $280.4 billion invested in institutional cash management products. Net new business during the year reflected the shift in investor appetite for higher returns and the resulting reallocation from money market funds to equities, fixed income, multi-asset class and alternative investments. On a pro forma combined basis, AUM increased $397.0 billion, or 19%, during the year, including $126.5 billion of net new business in long-dated assets, which was partially offset by $37.9 billion of net outflows in institutional cash products. The remaining pro forma combined growth of $309.8 billion represented investment performance and market and foreign exchange appreciation.

Our institutional client base is well diversified by both client domicile and client segment. At December 31, 2009, approximately 56% or $1.370 trillion of AUM was managed for clients based in the United States and Canada, 32% or $776.5 billion for clients in EMEA, 13% or $309.3 billion for clients in Asia Pacific and less than 1% or $6.5 billion for clients in Latin America and Iberia. Globally, these clients spanned a broad range of tax-exempt, taxable and official institutions, as described below.

²	Consar custody reports; Superintendencia de Pensiones; Superintendencia de Banca, Seguros y AFPs; and Superintendencia Financiera de Colombia, respectively.

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Institutional Investors (continued)

•

BlackRock is among the largest managers of pension plan assets in the world, with $1.403 trillion, or 57%, of institutional AUM managed for defined benefit and defined contribution plans for corporations, public funds and union funds at December 31, 2009. An additional $61.8 billion or 2.5% of year-end institutional AUM was managed for other tax-exempt investors, including charities, foundations and endowments. Assets managed for these clients grew $313.1 billion on a pro forma combined basis during 2009, as tax-exempt investors reallocated to a variety of products, including tactical and core allocations to index equity and fixed income, liability-driven investments and fiduciary outsourcing services.

•

We also managed $240.0 billion or 10% of institutional AUM for official institutions, including central banks, sovereign wealth funds, supranationals, multilateral entities and government ministries and agencies. These clients often require specialized investment policy advice, the use of customized benchmarks, and training support. In addition, BlackRock has been selected to provide a range of financial markets advisory services, including long-term portfolio liquidation assignments counted in advisory AUM, for these clients. During 2009, investment and advisory AUM for official institutions increased 11% or $22.8 billion.

•

BlackRock is also one of the top two independent managers of assets for insurance companies, which accounted for $200.8 billion or 8% of institutional AUM at year-end. Assets managed on behalf of these clients increased $43.7 billion during 2009, and included $28.8 billion of net new business driven by a continuing trend toward outsourcing of some or all of the investment function by insurance companies globally. Assets managed for other taxable institutions, including corporations, banks and third party fund sponsors for which we provide sub-advisory services, totaled $286.9 billion or 12% of institutional AUM at year-end.

•

The remaining $269.3 billion or 11% of institutional AUM was managed on behalf of taxable and tax-exempt institutions invested in our cash management products at December 31, 2009. See the Product section above for additional information on our cash management AUM.

Retail and High Net Worth Investors

BlackRock’s investment management expertise is offered to retail investors globally through separate accounts, open-end and closed-end funds, unit trusts and private investment funds. At December 31, 2009, assets managed for retail and high net worth investors totaled $388.7 billion, up 33%, or $96.9 billion, versus year-end 2008 reported AUM. On a pro forma combined basis, we were awarded net new business of $27.9 billion in long-dated assets, which was partially offset by $21.5 billion of net outflows in money market funds. Investment performance and market appreciation contributed $61.3 billion of additional AUM growth.

Retail and high net worth investors are largely served through intermediaries, including broker-dealers, banks, trust companies, insurance companies and independent financial advisors. Clients invest primarily in mutual funds, which totaled $289.4 billion or 74% of retail and high net worth AUM at December 31, 2009, with the remainder invested in private investment funds and separately managed accounts. The product mix is well diversified, with 40%, or $153.9 billion, invested in equities, 24%, or $93.2 billion, in fixed income, 17% in each of multi-asset class ($65.2 billion) and cash management ($67.6 billion), and 2%, or $8.9 billion, in alternative investment products.

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Retail and High Net Worth Investors (continued)

The client base is also diversified geographically, with $213.8 billion, or 67%, of long-dated AUM managed for retail and high net worth investors based in the United States and Canada, $71.5 billion, or 22%, for investors based in EMEA, $29.6 billion, or 9%, in Asia Pacific, and $6.3 billion, or 2%, in Latin America and Iberia. The remaining $67.6 billion, or 17%, of retail and high net worth AUM is invested in cash management products, principally money market funds offered in the United States. Our success in each of these regions reflects strong relationships with intermediaries and an established ability to deliver our global investment expertise in funds and other products tailored to local regulations and requirements.

Our retail and high net worth offerings include the BlackRock Funds in the United States, our Luxembourg cross-border fund families, BlackRock Global Funds (“BGF”) and BlackRock Strategic Funds, and a range of retail funds in the U.K. BGF is registered in 37 countries and has more S&P rated funds than any cross-border mutual fund family. In 2009, we were ranked as the third largest cross border fund provider and the third largest asset gatherer in that universe³. In the U.K., we ranked among the seven largest fund managers³, and are known for our innovative product offerings, including the absolute alpha products we introduced in 2005. In the United States, we had over 50 product placements on broker-dealer platforms during the year and have grown our market position from tenth to fourth largest fund manager since we acquired MLIM in late-2006⁴. In 2009, BlackRock won the Dalbar award for customer service in financial services, the tenth occasion on which we have been recognized for outstanding achievement in this area.

iShares

At December 31, 2009, iShares AUM reached $495.5 billion, all of which was added in connection with the BGI acquisition. iShares is the industry’s leading ETF platform, with more than 51% market share in the United States and 38% market share in EMEA⁵. In addition, we are the largest ETF manager in Mexico, have pioneered the product in Chile and Peru, and have introduced products in Brazil, Australia and Asia Pacific. iShares AUM increased $169.6 billion, or 52%, during 2009 on a pro forma combined basis, including $64.6 billion of net new business and $101.3 billion in market appreciation and favorable foreign exchange movements. At year-end, our iShares product mix included $381.4 billion, or 77%, in equity offerings and $102.5 billion, or 21%, in bond funds. The remainder was split between alternative investments ($10.1 billion, or 2%) and cash management products ($1.3 billion, or less than 1%).

BlackRock brings institutional quality index management to the public market via ETFs with iShares. Our global leadership position in the ETF market is reflected in the size, liquidity and range of our products. As of year-end, we managed three of the top five, six of the top ten, and 13 of the top 20 ETFs by AUM in the marketplace⁵. Our 417 iShares offerings, up from 362 at year-end 2008, were traded on 19 exchanges throughout the world. These included 220 funds in the United States and Canada with $394.3 billion, or 80%, of iShares AUM. Assets in these funds increased $128.7 billion, or 48%, during the year, including $48.4 billion of net inflows.

The iShares platform also has an expansive international business, with local operations in EMEA, Asia Pacific, and Latin America and Iberia. At December 31, 2009, $101.2 billion of AUM was managed in 197 funds across these regions. International iShares AUM increased $41.0 billion or 68% during 2009, with $16.2 billion of the growth attributable to net inflows and $21.0 billion to favorable market and foreign exchange rate movements. In addition, the acquisition of the NAFTRAC ETF platform in Mexico in early 2009 added $3.8 billion in AUM to the iShares complex and solidified our leading position in Mexico and Latin America.

³	Lipper Feri

⁴

Simfund

⁵

Bloomberg

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BUSINESS (continued)

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, the efficient delivery of beta, 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. Certain of the Company’s competitors, however, have greater marketing resources than BlackRock, particularly in retail channels. 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.

Item 1.

BUSINESS (continued)

Geographic Information

BlackRock has clients in over 100 countries across the globe, including the United States, the United Kingdom, and Japan.

The following table illustrates the Company’s revenues and long-lived assets, including goodwill and property and equipment for the years ended December 2009, 2008 and 2007. These amounts are aggregated on a legal entity jurisdiction basis and do not necessarily reflect where the customer is sourced.


Revenues *(Dollar amounts in millions)*	2009		% of total		2008		% of total		2007		% of total
Americas	$	3,309	70	%	$	3,438	68	%	$	3,070	63	%
Europe		1,179	25	%		1,360	27	%		1,490	31	%
Asia-Pacific		212	5	%		266	5	%		285	6	%

Total revenues	$	4,700	100	%	$	5,064	100	%	$	4,845	100	%


Long-lived Assets *(Dollar amounts in millions)*
Americas	$	12,895	99	%	$	5,714	99	%	$	5,695	98	%
Europe		46	—	%		27	—	%		35	1	%
Asia-Pacific		74	1	%		52	1	%		56	1	%

Total long-lived assets	$	13,015	100	%	$	5,793	100	%	$	5,786	100	%

Americas primarily is comprised of the United States, Canada, Brazil and Mexico, while Europe primarily is comprised of the United Kingdom and Asia-Pacific primarily is comprised of Japan, Australia and Hong Kong.

Employees

At December 31, 2009, BlackRock had a total of 8,629 full-time employees. Of all full-time employees, 3,532 are located in offices outside the United States. At December 31, 2008, BlackRock had a total of 5,341 full-time employees.

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, trust customers of BlackRock Institutional Trust Company, N.A. (“BTC”) and the bank subsidiaries of Bank of America and PNC and their customers. Under these laws and regulations, agencies that regulate investment advisers, investment funds and financial and bank holding companies and their subsidiaries, such as BlackRock and its subsidiaries, have broad administrative powers, including the power to limit, restrict or prohibit the regulated entity from carrying on business if it fails to comply with such laws and regulations. Possible sanctions for significant compliance failures include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment adviser and other registrations, censures and fines.

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

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 below discussion is general in nature and does not purport to be complete.

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 System (the “Federal Reserve”), the Office of the Comptroller of the Currency of the United States (the “OCC”), the Financial Industry Regulatory Authority (“FINRA”), the National Futures Association (the “NFA”), the Commodity Futures Trading Commission (the “CFTC”) and other government agencies and regulatory bodies. Certain BlackRock U.S. subsidiaries are also subject to various terrorist financing, privacy, anti-money laundering regulations and economic sanctions, laws and regulations established by various agencies.

The Investment Advisers Act of 1940, as amended (the “Advisers Act”), imposes numerous obligations on registered investment advisers such as BlackRock, including record-keeping, operational and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. The Investment Company Act of 1940, as amended (the “Investment Company Act”), imposes stringent governance, compliance, operational, disclosure and related obligations on registered investment companies and their investment advisers and distributors, such as BlackRock. The SEC is authorized to institute proceedings and impose sanctions for violations of the 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 the Advisers Act, the Investment Company Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines and reputational damage.

Item 1.

BUSINESS (continued)

Regulation (continued)

U.S. Regulation (continued)

BlackRock’s trading and investment activities for client accounts are regulated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as the rules of various U.S. and non-U.S. securities exchanges and self-regulatory organizations, including laws governing trading on inside information, market manipulation and a broad number of technical 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 restrictions on the Company’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 and the public, 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, safekeeping of client assets and a variety of other matters. BlackRock may be adversely affected by new legislation, rule-making or changes in the interpretation or enforcement of existing rules and regulations imposed by various regulators.

Certain BlackRock 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 impose excise taxes for violations of these 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, two other subsidiaries that are registered as commodity trading advisers and three additional subsidiaries only registered as commodity pool operators with the CFTC. All seven of these subsidiaries are members of 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. Four of BlackRock’s other subsidiaries, BlackRock Investments, LLC (“BRIL”), BlackRock Capital Markets, LLC, BlackRock Execution Services, and BlackRock Fund Distribution Company (“BFDC”) are registered with the SEC as broker-dealers and are member-firms of FINRA. Each broker-dealer has a membership agreement with FINRA that limits the scope of such broker-dealer’s permitted activities. BRIL is also an approved person with the New York Stock Exchange (“NYSE”). BRIL and BFDC are members of the Municipal Securities Rulemaking Board (“MSRB”) and are subject to MSRB rules.

Item 1.

BUSINESS (continued)

Regulation (continued)

U.S. Banking Regulation

Each of Bank of America and PNC is a bank holding company and a “financial holding company” regulated by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Because the ownership interests of each of Bank of America and PNC in BlackRock exceeds 25% on an economic or voting basis, BlackRock is deemed to be a non-bank subsidiary of Bank of America and PNC and is therefore subject to the supervision and regulation of the Federal Reserve and to most banking laws, regulations and orders that apply to Bank of America and PNC. The supervision and regulation of Bank of America, PNC and their respective subsidiaries under applicable banking laws is intended primarily for the protection of their respective banking subsidiaries, their depositors, the deposit insurance funds of the Federal Deposit Insurance Corporation, and the banking system as a whole, rather than for the protection of stockholders, creditors or clients of Bank of America, PNC or BlackRock. Bank of America’s and PNC’s relationships and good standing with their 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.

BTC is a national trust company that does not accept deposits and is a member of the Federal Reserve System. Accordingly, BTC is examined and supervised by the OCC and is subject to various banking laws and regulations enforced by the OCC, such as capital adequacy, regulations governing fiduciaries, conflicts of interest, self-dealing, and anti-money laundering laws and regulations. BTC is also subject to various Federal Reserve regulations applicable to member institutions, such as regulations restricting transactions with affiliates. These laws and regulations are meant for the protection of BTC’s customers, and not BTC, BTC’s affiliates or shareholders.

BlackRock generally may conduct only activities that are authorized for a “financial holding company” under the BHC Act. Investment management is an authorized 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 Federal Reserve has broad powers to approve, deny or refuse to act upon applications or notices for BlackRock to conduct new activities, acquire or divest businesses or assets, or reconfigure existing operations. There are limits on the ability of bank subsidiaries of Bank of America and PNC to extend credit to or conduct other transactions with BlackRock. Bank of America, PNC and their subsidiaries are also subject to examination by various banking regulators, which results in examination reports and ratings that may adversely impact the conduct and growth of BlackRock’s businesses.

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

Any failure of either Bank of America or PNC to maintain its status as a financial holding company could result in substantial limitations on certain BlackRock activities and its growth. Such a change of status could be caused by any failure of one of Bank of America’s or PNC’s bank subsidiaries to remain “well capitalized,” by any examination downgrade of one of Bank of America’s or PNC’s bank subsidiaries, or by any failure of one of Bank of America’s or 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 and regulations of non-U.S. jurisdictions and non-U.S. regulatory agencies and bodies. As BlackRock continues to expand its international business, a number of its subsidiaries and international operations have become subject to regulatory systems comparable to those affecting its operations in the United States.

Item 1.

BUSINESS (continued)

Regulation (continued)

Non-U.S. Regulation (continued)

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

The United Kingdom has adopted the MiFID rules into national legislation, as have those other European jurisdictions (excluding Switzerland which is not part of the EU) in which BlackRock has a presence. However, the introduction of further new regulations that will apply to BlackRock’s European activities remains likely as a result of further EU-wide legislation. A review of MiFID by the European Commission is mandated for 2010 to report on the need for extensions to the pre- and post-trade transparency obligations and may result in further rules in this area. A new EU directive, the Alternative Investment Fund Managers Directive, is currently in draft form and is likely to be implemented in 2013. This will regulate managers of, and service providers to, alternative investment funds domiciled within Europe and the marketing of all alternative investment funds into Europe. There are also ongoing plans to reform the framework to which regulated firms are subject, including in relation to regulatory capital and the protection of client assets.

In addition to the FSA, the activities of certain BlackRock subsidiaries, branches, and representative offices are overseen by comparable regulators in Germany, The Netherlands, Ireland, Luxembourg, Switzerland, Isle of Man, Jersey, Guernsey, France, Belgium, Italy, Poland, Spain and Sweden. 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 subject certain BlackRock subsidiaries to net capital requirements. Other BlackRock subsidiaries, branches, and representative offices are regulated in China, Hong Kong, Singapore, Taiwan, South Korea, India, Dubai, Brazil, Chile, Mexico and Canada.

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

In Australia, BlackRock’s subsidiaries are subject to various Australian federal and state laws and certain subsidiaries are regulated by the Australian Securities and Investments Commission (the “ASIC”) and the Australian Prudential Regulatory Authority (the “APRA”). The ASIC regulates companies and financial services in Australia and is responsible for promoting investor, creditor and consumer protection. The APRA is the prudential regulator of the Australian financial services industry and oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies and most members of the superannuation (pension) industry. Failure to comply with applicable law and regulations could result in the cancellation, suspension or variation of the regulated subsidiaries licenses in Australia.

Item 1.

BUSINESS (continued)

Regulation (continued)

The activities of certain BlackRock subsidiaries in Hong Kong are subject to the Securities and Futures Ordinance (the “SFO”) which governs the securities and futures markets and the non-bank retail leveraged foreign exchange market in Hong Kong. The SFO is administered by the Securities and Futures Commission (the “SFC”), an independent non-governmental body. The relevant subsidiaries, and certain individuals representing them, which conduct business in any of the regulated activities specified in the SFO are generally required to be registered or licensed with the SFC, and are subject to the rules, codes and guidelines issued by the SFC from time to time.

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.

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 at http://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 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 filings 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., 55 East 52nd Street, New York, New York 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 at http://www.sec.gov.

Item 1A.

RISK FACTORS

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 identify, measure, monitor, manage and analyze market and operating risks, BlackRock’s business, financial condition, operating results or non-operating results could be materially adversely affected, however, by any of the following risks.

Risks Related to BlackRock’s Business and Competition

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

BlackRock’s investment management revenues are primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees expressed as a percentage of the returns earned on AUM. Movements in equity market prices, interest rates, foreign exchange rates, or all three could cause the following, which would result in lower investment advisory, administration and performance fees or earnings:

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the value of AUM to decrease;

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the returns realized on AUM to decrease;

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

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clients to rebalance assets away from products that BlackRock manages into products that it does not manage;

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clients to rebalance assets away from products that earn higher fees into products with lower fees; and

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an impairment to the value of intangible assets and goodwill.

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

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

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existing clients withdrawing funds in favor of better performing products, which could result in lower investment advisory and administration fees;

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the diminishing ability to attract funds from existing and new clients;

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the Company earning minimal or no performance fees; and

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an impairment to the value of intangible assets and goodwill.

BlackRock may elect to provide support to its products from time to time.

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

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

At December 31, 2009, BlackRock held approximately $1 billion of investments that are reflected on its statement of financial condition. Approximately $0.5 billion of this amount is the result of consolidation of certain sponsored investment funds. BlackRock’s economic interest in these investments is primarily the result of seed and co-investments in its sponsored investment funds. A decline in the prices of stocks or bonds, or the value of real estate or other alternative investments within or outside the United States could lower the value of these investments and result in a decline of non-operating income and increased volatility to earnings.

Item 1A.

RISK FACTORS (continued)

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

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

The soundness of other financial institutions could adversely affect BlackRock.

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

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

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

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

The ability to attract and retain quality personnel has contributed significantly to BlackRock’s growth and success and is important to attracting and retaining clients. The market for qualified fund managers, investment analysts, financial advisers and other professionals is competitive. There can be no assurance that the Company will be successful in its efforts to recruit and retain required personnel. Loss 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 and the liquidation of certain funds may be accelerated at the option of investors.

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

Additionally, BlackRock manages its U.S. mutual funds and exchanged traded funds under 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 managed by the Company will approve the fund’s management contract each year, or will not condition its approval on the terms of the management contract being revised in a way that is adverse to the Company.

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

Item 1A.

RISK FACTORS (continued)

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

When clients retain BlackRock to manage assets or provide products or services on their behalf, they specify guidelines or contractual requirements that the Company is required to observe in the provision of its services. A failure to comply with these guidelines or contractual requirements could result in damage to BlackRock’s reputation or in its clients seeking to recover losses, withdrawing their AUM or terminating their contracts, any of which could cause the Company’s revenues and earnings 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 is derived from performance fees on investment and risk management advisory assignments. In most cases, performance fees are based on relative or absolute investment returns, although in some cases they are based on achieving specific service standards. Generally, the Company is entitled to performance fees only if the returns on the related portfolios exceed agreed-upon periodic or cumulative return targets. If these targets are not exceeded, performance fees for that period will not be earned and, if targets are based on cumulative returns, the Company may not earn performance fees in future periods. Performance fees will vary from period to period in relation to volatility in investment returns and the timing of revenue recognition, causing earnings to be more volatile. The volatility in earnings may decrease BlackRock’s stock price. Performance fees represented $202 million, or 4%, of total revenue for the year ended December 31, 2009.

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, Quellos and BGI Transactions. 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 such acquisitions.

Item 1A.

RISK FACTORS (continued)

Risks Related to BlackRock’s Operations

Failure to maintain adequate infrastructure could impede BlackRock’s productivity and growth.

The Company’s infrastructure, including its technological capacity, data centers, backup facilities and office space, is vital to the competitiveness of its business. The failure to maintain an adequate infrastructure commensurate with the size and scope of its business, including any expansion, could impede the Company’s productivity and growth, which could cause the Company’s earnings or stock price to decline.

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

As a result of BlackRock’s extensive international business activities, the Company faces increased operational, regulatory, reputational 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 activities, could result in operational failures and regulatory fines or sanctions, which could cause the Company’s earnings or stock price to decline.

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

A key element to BlackRock’s continued success is the ability to maintain a technological advantage both in terms of operational efficiency and in providing the sophisticated risk analytics incorporated into BlackRock’s operating systems that support investment advisory and BlackRock 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 and BlackRock Solutions clients. There can be no assurance that the Company will be able to maintain this technological advantage or be able to effectively protect and enforce its intellectual property rights in these systems and processes.

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

BlackRock is dependent on the effectiveness of its information security policies, procedures and capabilities to protect its computer and telecommunications systems and the data that reside on or are transmitted through them. An externally caused information security incident, such as a hacker attack, 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 failure of a key vendor to BlackRock to fulfill its obligations could have a material adverse effect on BlackRock and its products.

BlackRock depends on a number of key vendors for various fund administration, custody and transfer agent roles and other operational needs. The failure or inability of BlackRock to diversify its sources for key services or the failure of any key vendors to fulfill their obligations could lead to operational issues in certain products, which could result in financial losses for the Company and its clients.

Item 1A.

RISK FACTORS (continued)

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

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

•

the diversion of management’s attention to integration matters;

•

difficulties in achieving expected synergies associated with the transaction;

•

difficulties in the integration of operations and systems;

•

difficulties in the assimilation of employees;

•

challenges in keeping existing clients and obtaining new clients, including potential conflicts of interest and client imposed concentration limits on the use of an investment manager; and

•

challenges in attracting and retaining key personnel.

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 transaction. In addition, BlackRock may be required to spend additional time or money on integration that would otherwise be spent on the development and expansion of its business and services.

Failure to manage risks in operating securities lending for clients could lead to a loss of clients and a decline in revenues and liquidity

The size of BlackRock’s securities lending programs increased significantly with the completion of the BGI transaction. As part of these programs, BlackRock must manage risks associated with (i) ensuring that the value of the collateral held against the securities on loan does not decline in value or become illiquid and that its nature and value complies with regulatory requirements, (ii) the potential that a borrower may not return a security on a timely basis, (iii) the potential that the collateral held may not be sufficient to repurchase the loaned security, and (iv) errors in the settlement of securities, daily mark-to-market valuations and collateral collection. The failure of the Company’s controls to mitigate these risks could result in financial losses for our clients that participate in our securities lending programs as well as for the Company.

Risks Related to Relationships with Bank of America/Merrill Lynch, PNC, Barclays and Other Institutional Investors

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

Under a global distribution agreement entered into with Merrill Lynch, Merrill Lynch provides distribution, portfolio administration and servicing for certain BlackRock investment 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. 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.

Item 1A.

RISK FACTORS (continued)

Loss of market share with Merrill Lynch’s Global Wealth & Investment Management business could harm operating results.

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

The failure of Barclays to fulfill its commitments, or the inadequacy of the support provided, under certain capital support agreements in favor of a number of securities lending related cash management funds acquired in the BGI Transaction, could negatively impact such funds and BlackRock.

Barclays has provided capital support agreements to support certain securities lending related cash management products acquired by BlackRock in the BGI Transaction. The failure of Barclays to fulfill its obligations under these agreements, or the inadequacy of the support provided, could cause our clients to suffer losses and BlackRock to suffer reputational and other adverse impacts. For a discussion on the capital support agreements see “Management, Discussion and Analysis – Liquidity and Capital Resources – Barclays Support of Certain Securities Lending Related Cash Funds.”

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

Bank of America/Merrill Lynch, PNC and Barclays 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 their respective stockholder agreements with BlackRock. 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 likely be approved or disapproved solely in accordance with the determinations of the BlackRock Board of Directors, so long as the shares held by Bank of America/Merrill Lynch, PNC and Barclays constitute a substantial portion of the outstanding shares. This arrangement has the effect of concentrating control over BlackRock in its Board of Directors, whether or not stockholders agree with any particular determination of the Board. At December 31, 2009, Bank of America/Merrill Lynch, PNC and Barclays owned approximately 3.7%, 35.2% and 4.8%, respectively, of BlackRock’s voting common stock.

The majority of our stock is held by a group of large shareholders. Future sales of our common stock in the public market by us or our large stockholders could adversely affect the trading price of our common stock.

As of December 31, 2009, Bank of America/Merrill Lynch, PNC and Barclays owned 34.2%, 24.5% and 19.8% of our capital stock, respectively. In connection with the BGI Transaction, 16.4 million shares were sold to other institutional investors. We have entered into registration rights agreements with Bank of America/Merrill Lynch, PNC and Barclays, as well as the institutional investors who purchased shares of BlackRock capital stock in connection with the BGI Transaction. The registration rights agreements, which include customary “piggyback” registration provisions, allow the respective stockholders to cause us to file one or more registration statements for the resale of their respective shares of capital stock and cooperate in certain underwritten offerings. Sales by us or our large stockholders of a substantial number of shares of our common stock in the public market pursuant to registration rights or otherwise, or the perception that these sales might occur, could cause the market price of our common stock to decline.

Item 1A.

RISK FACTORS (continued)

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.

BlackRock may be adversely impacted by legal and regulatory changes in the United States and internationally.

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

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

Certain BlackRock subsidiaries are registered with the SEC under the Advisers Act and BlackRock’s U.S. mutual funds are registered with the SEC under the Investment Company Act. The 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 Advisers Act or the Investment Company Act could cause the SEC to institute proceedings and impose sanctions for violations of either of these acts, including censure, termination of an investment adviser’s registration or prohibition to serve as adviser to SEC-registered funds, and could lead to litigation by investors in those funds or harm to the Company’s reputation, any of which could cause its earnings or stock price to decline.

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

Certain BlackRock subsidiaries are subject to ERISA 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 the relevant 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.

Item 1A.

RISK FACTORS (continued)

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

Because the total equity ownership interest of each of Bank of America and PNC in BlackRock exceeds 25% on an economic or voting basis, BlackRock is deemed to be a non-bank subsidiary of each of Bank of America and PNC, which are both financial holding companies under the Bank Holding Company Act of 1956, as amended. As a non-bank subsidiary of Bank of America and PNC, BlackRock is subject to banking regulation, including the supervision and regulation of the Federal Reserve. Such banking regulation limits the activities and the types of businesses that BlackRock may conduct. The Federal Reserve has broad enforcement authority over BlackRock, including the power to prohibit BlackRock from conducting any activity that, in the Federal Reserve’s opinion, is unauthorized or constitutes an unsafe or unsound practice in conducting BlackRock’s business, and to impose substantial fines and other penalties for violations. Any failure of either Bank of America or PNC to maintain its status as a financial holding company could result in substantial limitations on certain BlackRock activities and its growth. In addition, BlackRock’s trust bank subsidiary is subject to regulation by the OCC parallel in many respects to that imposed under the Advisers Act and the Investment Company Act as described above and to capital requirements established by the OCC. The OCC has broad enforcement authority over BlackRock’s trust bank subsidiary. Being subject to banking regulation may put BlackRock at a competitive disadvantage because most of its competitors are not subject to these limitations.

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

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

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

Item 1A.

RISK FACTORS (continued)

There are parallel legal and regulatory arrangements in force in many other non-U.S. jurisdictions where BlackRock’s subsidiaries conduct business or where the funds and products it manages are organized. Failure to comply with laws and regulations in any of these jurisdictions could result in substantial harm to BlackRock’s reputation and results of operation.

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 and certain of its subsidiaries have been named as defendants in various legal actions, including arbitrations, class actions and other litigation arising in connection with BlackRock’s activities. From time to time, BlackRock receives subpoenas or other requests for information from various U.S. and non-U.S. governmental and regulatory authorities in connection with certain industry-wide or other investigations or proceedings. Additionally, certain of the investment funds that the Company manages are subject to lawsuits, any of which could potentially harm the investment returns of the applicable fund or result in the Company being liable to the funds for any resulting damages.

The legislative and economic effects of climate change could impact investment strategies and the value of assets that BlackRock manages.

BlackRock invests in a variety of sectors on behalf of its clients. To the extent certain of these sectors are negatively impacted by climate change or legislation or international agreements related to climate change, the value of, and the returns realized on, the related AUM could decrease or cause clients to withdraw funds in favor of products in sectors that BlackRock may not offer.

Item 1B.

UNRESOLVED STAFF COMMENTS

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 Exchange Act of 1934.

Item 2.

PROPERTIES

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

Item 3.

LEGAL PROCEEDINGS

From time to time, BlackRock receives subpoenas or other requests for information from various U.S. federal, state governmental and regulatory authorities in connection with certain industry-wide or other investigations or proceedings. It is BlackRock’s policy to fully cooperate with such inquiries. The Company and certain of its subsidiaries have been named as defendants in various legal actions, including arbitrations and other litigation arising in connection with BlackRock’s activities. Additionally, certain of the investment funds that the Company manages are subject to lawsuits, any of which could potentially harm the investment returns of the applicable fund or result in the Company being liable to the funds for any resulting damages.

Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability, if any, arising out of 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.

Item 4.

RESERVED

Part II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

BlackRock’s common stock is listed on the NYSE and is traded under the symbol “BLK”. At the close of business on January 31, 2010, there were 441 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 prices for the common stock and dividends declared per share for the common stock as reported on the NYSE:


	Common Stock Price Ranges				Closing		Cash Dividend
	High		Low		Price		Declared
2009
First Quarter	$	143.32	$	88.91	$	130.04	$	0.78
Second Quarter	$	183.80	$	119.12	$	175.42	$	0.78
Third Quarter	$	220.17	$	159.45	$	216.82	$	0.78
Fourth Quarter	$	241.66	$	206.00	$	232.20	$	0.78

2008
First Quarter	$	231.99	$	165.72	$	204.18	$	0.78
Second Quarter	$	227.51	$	171.86	$	177.00	$	0.78
Third Quarter	$	249.37	$	156.20	$	194.50	$	0.78
Fourth Quarter	$	195.00	$	94.78	$	134.15	$	0.78

BlackRock’s closing common stock price as of March 5, 2010 was $219.83.

Dividends

On February 25, 2010, the Board of Directors approved an increase of BlackRock’s quarterly dividend to $1.00 to be paid on March 23, 2010 to stockholders of record on March 8, 2010.

Barclays, Merrill Lynch, PNC and their respective affiliates along with other institutional investors receive dividends on the non-voting participating preferred stock that they hold equivalent to the dividends received by common stockholders.

Item 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (continued)

Issuer Purchases of Equity Securities

During the three months ended December 31, 2009, the Company made the following purchases of its common stock, which is registered pursuant to Section 12(b) of the Exchange Act.


	Total Number of Shares Purchased ¹	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs²

October 1, 2009 through October 31, 2009	3,731	$	216.74	—	751,400

November 1, 2009 through November 30, 2009	2,242	$	235.04	—	751,400

December 1, 2009 through December 31, 2009	18,714	$	225.42	—	751,400

Total	24,687	$	224.99	—	751,400

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

²	On August 2, 2006, the Company announced a 2.1 million share repurchase program with no stated expiration date.

Item 6.

SELECTED FINANCIAL DATA

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 Operations included in this Form 10-K. Prior year data reflects certain reclassifications to conform to the current year presentation.


	Year ended December 31,
*(Dollar amounts in millions, except per share data)*	2009			2008			2007¹		2006 ¹		2005

Income statement data:
Total revenue	$	4,700		$	5,064		$	4,845	$	2,098	$	1,191

Expenses
Restructuring charges		22			38			—		—		—
Termination of closed-end fund administration and servicing arrangements		—			—			128		—		—
Fee sharing payment ²		—			—			—		34		—
Other operating expenses ³		3,400			3,433			3,423		1,592		850

Total expenses		3,422			3,471			3,551		1,626		850

Operating income		1,278			1,593			1,294		472		341

Total non-operating income (expense)		(6	)		(577	)		526		53		31


Income before income taxes		1,272			1,016			1,820		525		372
Income tax expense		375			387			463		188		138

Net income		897			629			1,357		337		234
Less: Net income (loss) attributable to non-controlling interests ⁴		22			(155	)		364		16		3

Net income attributable to BlackRock, Inc.	$	875		$	784		$	993	$	321	$	231


Per share data ^5:
Basic earnings	$	6.24		$	5.86		$	7.53	$	3.95	$	3.60
Diluted earnings	$	6.11		$	5.78		$	7.37	$	3.83	$	3.45
Book value⁶	$	128.86		$	92.91		$	90.16	$	83.63	$	14.56
Common and preferred cash dividends	$	3.12		$	3.12		$	2.68	$	1.68	$	1.20

Item 6.

SELECTED FINANCIAL DATA (continued)


	December 31,
*(Dollar amounts in millions)*	2009 ⁷		2008		2007		2006 ¹		2005
Balance sheet data:
Cash and cash equivalents	$	4,708	$	2,032	$	1,656	$	1,160	$	484
Separate account assets ⁸	$	119,629	$	2,623	$	4,670	$	4,300	$	—
Collateral held under securities lending agreements ⁸	$	19,335	$	—	$	—	$	—	$	—
Goodwill and intangible assets, net	$	30,218	$	11,974	$	12,073	$	11,139	$	484
Total assets	$	177,994	$	19,924	$	22,561	$	20,470	$	1,849

Short-term borrowings	$	2,234	$	200	$	300	$	—	$	—
Convertible debentures		243		245		242		238		235
Long-term borrowings		3,191		697		697		3		4

Total borrowings	$	5,668	$	1,142	$	1,239	$	241	$	239

Total stockholders’ equity	$	24,329	$	12,069	$	11,601	$	10,789	$	932

	December 31,
*(Dollar amounts in millions)*	2009 ⁷		2008		2007		2006 ¹		2005

Assets under management:
Equity
Index	$	1,183,005	$	51,076	$	71,381	$	61,631	$	1,256
Active		353,051		152,216		291,324		255,330		35,518
Fixed income
Index		459,326		3,411		3,942		4,274		797
Active		596,300		477,954		506,265		441,046		300,427
Multi-asset class		142,029		77,516		98,623		78,601		3,425
Alternative		102,101		61,544		71,771		48,292		25,323

Long-dated		2,835,812		823,717		1,043,306		889,174		366,746
Cash management		349,277		338,439		313,338		235,453		85,936

Sub-total		3,185,089		1,162,156		1,356,644		1,124,627		452,682
Advisory⁹		161,167		144,995		—		—		—

Total	$	3,346,256	$	1,307,151	$	1,356,644	$	1,124,627	$	452,682

¹	Significant increases in 2006 and 2007 (for income statement and AUM data only) are primarily the result of the MLIM Transaction which closed on September 29, 2006.

²	Includes a 2006 fee sharing payment to MetLife, Inc. representing a one-time expense related to a large institutional real estate equity client account acquired in the SSR Transaction.

³	Includes all other operating expenses.

⁴	Includes both redeemable and nonredeemable non-controlling interests.

⁵	Series A, B, C and D non-voting participating preferred stock is considered to be a common stock equivalent for purposes of earnings per share calculations.

⁶	Total BlackRock stockholders’ equity divided by total common and preferred shares outstanding at December 31 of the respective year-end.

⁷	Significant increases in 2009 are primarily the result of the BGI Transaction which closed on December 1, 2009.

⁸	Equal and offsetting amounts, related to separate account assets which are segregated funds held for purposes of funding individual and group pension contracts and collateral held under securities lending agreements related to these assets, are recorded in liabilities.

⁹	Advisory AUM represents long-term portfolio liquidation assignments.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

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

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

In addition to risk factors previously disclosed in BlackRock’s Securities and Exchange Commission (“SEC”) reports and those identified elsewhere in this report the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) the relative and absolute investment performance of BlackRock’s investment products; (4) the impact of increased competition; (5) the impact of capital improvement projects; (6) the impact of future acquisitions or divestitures; (7) the unfavorable resolution of legal proceedings; (8) the extent and timing of any share repurchases; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to BlackRock, Barclays PLC, Bank of America Corporation, Merrill Lynch & Co., Inc. or The PNC Financial Services Group, Inc.; (11) terrorist activities and international hostilities, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (12) the ability to attract and retain highly talented professionals; (13) fluctuations in the carrying value of BlackRock’s investments; (14) the impact of changes to tax legislation and, generally, the tax position of the Company; (15) BlackRock’s success in maintaining the distribution of its products; (16) the impact of BlackRock electing to provide support to its products from time to time; (17) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions; and (18) the ability of BlackRock to integrate the operations of Barclays Global Investors.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview

BlackRock, Inc. (“BlackRock” or the “Company”) is the largest publicly traded investment management firm which as of December 31, 2009 managed $3.346 trillion of assets under management (“AUM”) on behalf of institutional and individual investors worldwide. The Company’s products include equities, fixed income, multi-asset class, alternatives and cash management, and offer clients diversified access to global markets through separate accounts, common trust funds, mutual funds, exchange traded funds, hedge funds, and closed-end funds. In addition, BlackRock Solutions^® provides market risk management, financial markets advisory and enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation of illiquid securities, dispositions and workout assignments (including long-term portfolio liquidation assignments), risk management and strategic planning and execution.

On September 29, 2006, Merrill Lynch & Co., Inc. (“Merrill Lynch”) contributed the entities and assets that constituted its investment management business, Merrill Lynch Investment Managers (“MLIM”), to BlackRock in exchange for common and non-voting preferred stock such that immediately after such closing Merrill Lynch held approximately 45% of BlackRock’s common stock outstanding and approximately 49.3% of the Company’s capital stock on a fully diluted basis (the “MLIM Transaction”). On October 1, 2007, BlackRock acquired certain assets and assumed certain liabilities of the fund of funds business of Quellos Group, LLC (“Quellos”) for up to $1.719 billion in a combination of cash and common stock (the “Quellos Transaction”).

On January 1, 2009, Bank of America Corporation (“Bank of America”) acquired Merrill Lynch & Co., Inc. (“Merrill Lynch”). In connection with this transaction, BlackRock entered into exchange agreements with each of Merrill Lynch and The PNC Financial Services Group, Inc. (“PNC”) pursuant to which each agreed to exchange a portion of the BlackRock voting common stock they held for non-voting preferred stock.

On December 1, 2009, BlackRock acquired from Barclays Bank PLC (“Barclays”) all of the outstanding equity interests of subsidiaries of Barclays conducting the business of Barclays Global Investors (“BGI”) in exchange for capital shares valued at closing of $8.53 billion and $6.65 billion in cash, both of which are subject to certain adjustments.

As of December 31, 2009, equity ownership of BlackRock was as follows:


	Voting Common Stock		Capital Stock

Bank of America/Merrill Lynch	3.7	%	34.2	%
PNC	35.2	%	24.5	%
Barclays	4.8	%	19.8	%
Other	56.3	%	21.5	%

	100.0	%	100.0	%

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

The following table summarizes BlackRock’s operating performance for the years ended December 31, 2009, 2008 and 2007:

BlackRock, Inc.

Financial Highlights

(Dollar amounts in millions, except per share data)


										Variance
	Year ended December 31,									2009 vs. 2008					2008 vs. 2007
	2009			2008			2007			Amount			%		Amount			%

GAAP basis:
Total revenue	$	4,700		$	5,064		$	4,845		$	(364	)	(7	)%	$	219		5	%
Total expenses	$	3,422		$	3,471		$	3,551		$	(49	)	(1	)%	$	(80	)	(2	)%
Operating income	$	1,278		$	1,593		$	1,294		$	(315	)	(20	)%	$	299		23	%
Operating margin		27.2	%		31.5	%		26.7	%		(4.3	)%	(14	)%		4.8	%	18	%
Non-operating income (expense), net of non-controlling interests ¹	$	(28	)	$	(422	)	$	162		$	394		93	%	$	(584	)	NM

Net income attributable to BlackRock, Inc.	$	875		$	784		$	993		$	91		12	%	$	(209	)	(21	)%
Diluted earnings per common share ^(e)	$	6.11		$	5.78		$	7.37		$	0.33		6	%	$	(1.59	)	(22	)%

Effective tax rate		30.0	%		33.0	%		31.8	%		(3.0	)%	(9	)%		1.2	%	4	%

As adjusted:
Operating income ^(a)	$	1,570		$	1,662		$	1,518		$	(92	)	6	%	$	144		9	%
Operating margin ^(a)		38.2	%		38.7	%		37.4	%		(0.5	)%	(1	)%		1.3	%	4	%
Non-operating income (expense), net of non-controlling interests ^{1, (b)}	$	(46	)	$	(384	)	$	150		$	338		88	%	$	(534	)	NM

Net income attributable to BlackRock, Inc. ^{(c), (d)}	$	1,021		$	856		$	1,077		$	165		19	%	$	(221	)	(21	)%

Diluted earnings per common share ^{(c), (d), (e)}	$	7.13		$	6.30		$	7.99		$	0.83		13	%	$	(1.69	)	(21	)%

Other:
Diluted weighted-average common shares outstanding ^(e)		139,481,449			131,376,517			131,378,061			8,104,932		6	%		(1,544	)	—	%
Assets under management	$	3,346,256		$	1,307,151		$	1,356,644		$	2,039,105		156	%	$	(49,493	)	(4	)%
Book value per share	$	128.86		$	92.91		$	90.16		$	35.95		39	%	$	2.75		3	%
Cash dividends declared and paid per share	$	3.12		$	3.12		$	2.68		$	—		—	%	$	0.44		16	%

NM – Not Meaningful

¹	Includes net income (loss) attributable to non-controlling interests (redeemable and nonredeemable) related to investment and non-investment activities.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock reports its financial results on a GAAP basis; however, management believes that evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of BlackRock’s financial performance over time. BlackRock’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Certain prior period non-GAAP data has been reclassified to conform to the current presentation. Computations for all periods are derived from the Company’s consolidated statements of income as follows:

(a)	Operating income, as adjusted, and operating margin, as adjusted:

Operating income, as adjusted, equals operating income, GAAP basis, excluding certain items deemed non-recurring by management or transactions that ultimately will not impact BlackRock’s book value, as indicated in the table below. Operating income used for operating margin measurement equals operating income, as adjusted, excluding the impact of closed-end fund launch costs and commissions. Operating margin, as adjusted, equals operating income used for operating margin measurement, divided by revenue used for operating margin measurement, as indicated in the table below.


	Year ended
*(Dollar amounts in millions)*	2009			2008			2007

Operating income, GAAP basis	$	1,278		$	1,593		$	1,294
Non-GAAP adjustments:
BGI transaction/integration costs		183			—			—
MLIM/Quellos integration costs		—			—			20
PNC LTIP funding obligation		59			59			54
Merrill Lynch compensation contribution		10			10			10
Restructuring charges		22			38			—
Termination of closed-end fund administration and servicing arrangements		—			—			128
Compensation expense related to (depreciation) appreciation on deferred compensation plans		18			(38	)		12

Operating income, as adjusted		1,570			1,662			1,518
Closed-end fund launch costs		2			9			36
Closed-end fund launch commissions		1			—			6

Operating income used for operating margin measurement	$	1,573		$	1,671		$	1,560


Revenue, GAAP basis	$	4,700		$	5,064		$	4,845
Non-GAAP adjustments:
Distribution and servicing costs		(477	)		(591	)		(539	)
Amortization of deferred mutual fund sales commissions		(100	)		(130	)		(108	)
Reimbursable property management compensation		—			(21	)		(27	)

Revenue used for operating margin measurement	$	4,123		$	4,322		$	4,171


Operating margin, GAAP basis		27.2	%		31.5	%		26.7	%

Operating margin, as adjusted		38.2	%		38.7	%		37.4	%

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(a)	(continued)

Management believes that operating income, as adjusted, and operating margin, as adjusted, are effective indicators of BlackRock’s financial performance over time. As such, management believes that operating income, as adjusted, and operating margin, as adjusted, provide useful disclosure to investors.

Operating income, as adjusted:

Restructuring charges recorded in 2008 and 2009 consist of compensation costs, occupancy costs and professional fees. MLIM and Quellos integration costs recorded in 2007 consist principally of certain professional fees, rebranding costs and compensation costs incurred in conjunction with these integrations. BGI transaction/integration costs recorded in 2009 consist principally of certain advisory fees, compensation expense, legal fees and consulting expenses incurred in conjunction with the BGI transaction. The expenses associated with: (i) the 2008 and 2009 restructuring, (ii) BGI transaction and integration costs, (iii) MLIM and Quellos integration costs and (iv) the 2007 termination of the closed-end fund administration and servicing arrangements with Merrill Lynch have been deemed non-recurring by management and have been excluded from operating income, as adjusted, to help enhance the comparability of this information to prior periods. As such, management believes that operating margins exclusive of these costs are useful measures in evaluating BlackRock’s operating performance for the respective periods.

The portion of compensation expense associated with certain long-term incentive plans (“LTIP”) that will be funded through the distribution to participants of shares of BlackRock stock held by PNC and a Merrill Lynch cash compensation contribution, a portion of which has been received, have been excluded because these charges ultimately do not impact BlackRock’s book value.

Operating margin, as adjusted:

Operating margin, as adjusted, allows the Company to compare performance from period-to-period by adjusting for items that may not recur, recur infrequently or may fluctuate based on market movements, such as restructuring charges, transaction/integration costs, closed-end fund launch costs and fluctuations in compensation expense based on mark-to-market movements in investments held to fund certain compensation plans. The Company also uses operating margin, as adjusted, to monitor corporate performance and efficiency and as a benchmark to compare its performance to other companies. Management uses both the GAAP and non-GAAP financial measures in evaluating the financial performance for BlackRock. The non-GAAP measure by itself may pose limitations because it does not include all of the Company’s revenues and expenses.

Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and to other third parties. Management believes that excluding such costs is useful to BlackRock because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted under GAAP on a net basis within investment advisory, administration fees and securities lending revenue. Amortization of deferred mutual fund sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, offset distribution fee revenue earned by the Company. Reimbursable property management compensation represented compensation and benefits paid to personnel of Metric Property Management, Inc. (“Metric”), a subsidiary of BlackRock Realty Advisors, Inc. (“Realty”). Prior to the transfer in 2008, these employees were retained on Metric’s payroll when certain properties were acquired by Realty’s clients. The related compensation and benefits were fully reimbursed by Realty’s clients and have been excluded from revenue used for operating margin, as adjusted, because they did not bear an economic cost to BlackRock. For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenues.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(b)	Non-operating income (expense), less net income (loss) attributable to non-controlling interests, as adjusted:

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


	Year ended December 31,
*(Dollar amounts in millions)*	2009			2008			2007

Non-operating income (expense), GAAP basis	$	(6	)	$	(577	)	$	526
Less: Net income (loss) attributable to NCI, GAAP basis		22			(155	)		364

Non-operating income (expense) ¹		(28	)		(422	)		162
Compensation expense related to (appreciation) depreciation on deferred compensation plans		(18	)		38			(12	)

Non-operating income (expense), as adjusted ¹	$	(46	)	$	(384	)	$	150

¹	Includes net income (loss) attributable to NCI (redeemable and nonredeemable) related to investment and non-investment activities.

Management believes that non-operating income (expense), less net income (loss) attributable to non-controlling interests, as adjusted, provides for comparability of this information to prior periods and is an effective measure for reviewing BlackRock’s non-operating contribution to its results. As compensation expense associated with depreciation (appreciation) on assets related to certain BlackRock deferred compensation plans, which is included in operating income, offsets the gain/(loss) on the investments set aside for these plans, management believes that non-operating income (expense), less net income (loss) attributable to NCI, as adjusted, provides a useful measure, for both management and investors, of BlackRock’s non-operating results that impact book value.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(c)	Net income attributable to BlackRock, Inc., as adjusted:

Management believes that net income attributable to BlackRock, Inc., as adjusted, and diluted earnings per common share, as adjusted, are useful measures of BlackRock’s profitability and financial performance. Net income attributable to BlackRock, Inc., as adjusted, equals net income attributable to BlackRock, Inc., GAAP basis, adjusted for significant non-recurring items as well as charges that ultimately will not impact BlackRock’s book value.


	Year ended December 31,
*(Dollar amounts in millions)*	2009			2008		2007
Net income attributable to BlackRock, Inc., GAAP basis	$	875		$	784	$	993
Non-GAAP adjustments, net of tax: ^(d)
BGI transaction/integration costs		129			—		—
PNC’s LTIP funding obligation		41			39		34
Merrill Lynch compensation contribution		7			7		6
Restructuring charges		14			26		—
MLIM/Quellos integration costs		—			—		13
Termination of closed-end fund administration and servicing arrangements		—			—		82
Income tax law changes		(45	)		—		(51	)

Net income attributable to BlackRock, Inc., as adjusted	$	1,021		$	856	$	1,077


Allocation of net income attributable to BlackRock, Inc., as adjusted: ^(f)
Common shares	$	995		$	828	$	1,049
Participating RSUs		26			28		28

Net income attributable to BlackRock, Inc., as adjusted	$	1,021		$	856	$	1,077


Diluted weighted average common shares outstanding ⁽^e⁾		139,481,449			131,376,517		131,378,061

Diluted earnings per common share, GAAP basis⁽^e⁾	$	6.11		$	5.78	$	7.37

Diluted earnings per common share, as adjusted ⁽^e⁾	$	7.13		$	6.30	$	7.99

The restructuring charges and the BGI, MLIM and Quellos integration costs reflected in GAAP net income attributable to BlackRock, Inc. have been deemed non-recurring by management and have been excluded from net income attributable to BlackRock, Inc., as adjusted, to help enhance the comparability of this information to prior reporting periods.

The portion of the compensation expense associated with LTIP awards that will be funded through the distribution to participants of shares of BlackRock stock held by PNC and the Merrill Lynch cash compensation contribution, a portion of which has been received, have been excluded from net income attributable to BlackRock, Inc., as adjusted, because these charges ultimately do not impact BlackRock’s book value. The termination of the closed-end fund administration and servicing arrangements with Merrill Lynch has been excluded from net income attributable to BlackRock, Inc., as adjusted, as the termination of the arrangements is deemed non-recurring by management.

During third quarter 2009, legislation was enacted primarily with respect to New York City corporate income taxes, effective January 1, 2009, which resulted in a revaluation of deferred income tax assets and liabilities. The resulting decrease in income taxes has been excluded from net income attributable to BlackRock, Inc., as adjusted, as it is non-recurring, it does not ultimately impact cash flows and to enhance comparability to prior reporting periods.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock, Inc.

Financial Highlights

(continued)

(c)	Net income attributable to BlackRock, Inc., as adjusted (continued):

During third quarter 2007, the United Kingdom and Germany enacted legislation reducing corporate income taxes, effective in April and January of 2008, respectively, which resulted in a revaluation of certain deferred tax liabilities. The resulting decrease in income taxes has been excluded from net income, as adjusted, as it is non-recurring, it does not ultimately impact cash flows and to enhance comparability to current and prior reporting periods.

(d)	For the years ended December 31, 2009, 2008 and 2007 non-GAAP adjustments were tax effected at 30%, 33% and 36%, respectively, which reflect the blended rate applicable to the adjustments.

(e)

Series A, B, C and D non-voting participating preferred stock are considered to be common stock equivalents for purposes of determining basic and diluted earnings per share calculations. Certain unvested restricted stock units are not included in this number as they are deemed participating securities in accordance with required provisions of Accounting Standards Codification (“ASC”) 260-10, Earnings per Share (“ASC 260-10”).

(f)	Allocation of net income attributable to BlackRock, Inc., as adjusted, to common shares and participating RSUs is calculated pursuant to the two-class method as defined in ASC 260-10.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock has portfolio managers located around the world, including the United States, the United Kingdom, the Netherlands, Japan, Hong Kong, Australia and Germany. The Company provides a wide array of taxable and tax-exempt fixed income, equity and balanced investment funds, including exchange traded funds and mutual funds, and separate accounts, as well as a wide assortment of index-based equity and alternative investment products for a diverse global clientele. BlackRock provides global advisory services for investment funds and other non-U.S. equivalent retail products. The Company’s non-U.S. mutual funds are based in a number of domiciles and cover a range of asset classes, including cash management, fixed income and equities. The BlackRock Global Funds, the Company’s primary retail fund group offered outside the United States, are authorized for distribution in more than 35 jurisdictions worldwide. In the United States, the primary retail offerings include various open-end and closed-end funds. Additional fund offerings include structured products, real estate funds, hedge funds, hedge funds of funds, private equity funds and funds of funds, managed futures funds and exchange funds. These products are sold to both U.S. and non-U.S. high net worth, retail and institutional investors in a wide variety of active and passive strategies covering both equity and fixed income assets.

BlackRock’s client base consists of financial institutions and other corporate clients, pension funds, high net worth individuals and retail investors around the world. BlackRock maintains a significant sales and marketing presence both inside and outside the United States that is focused on establishing and maintaining retail and institutional investment management relationships by marketing its services to retail and institutional investors directly and through financial professionals, pension consultants and establishing third-party distribution relationships. BlackRock also distributes its products and services through Merrill Lynch under a global distribution agreement, which, following Bank of America’s acquisition of Merrill Lynch, runs through January 2014. After such term, the agreement will renew for one automatic three-year extension if certain conditions are met. See Note 17, Related Party Transactions, to the consolidated financial statements beginning on page F-1 of this Form 10-K.

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

BlackRock also earns revenue by lending securities on behalf of clients, primarily to brokerage institutions. Such revenues are accounted for on an accrual basis. The security loans are secured by collateral in the form of cash and securities, ranging from approximately 102% to 108% of the value of the loaned securities. The net income earned on the collateral is shared between BlackRock and the funds or other third-party accounts managed by the Company from which the securities are borrowed.

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

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Overview (continued)

BlackRock provides a variety of risk management, investment analytic and investment system and advisory services to financial institutions, pension funds, asset managers, foundations, consultants, mutual fund sponsors, real estate investment trusts and government agencies. These services are provided under the brand name BlackRock Solutions and include a wide array of risk management services, valuation services related to illiquid securities, disposition and workout assignments (including long-term portfolio liquidation assignments), strategic planning and execution, and enterprise investment system outsourcing to clients. Fees earned for BlackRock Solutions and advisory services are determined using some, or all, of the following methods: (i) fixed fees, (ii) percentages of various attributes of advisory assets under management and (iii) performance fees if contractual thresholds are met.

The Company also earns fees for transition management services comprised of referral fees or agency commissions from acting as an introducing broker-dealer in buying and selling securities on behalf of its customers. Commissions and related clearing expenses related to transition management services are recorded on a trade-date basis as securities transactions occur.

Operating expenses reflect employee compensation and benefits, distribution and servicing costs, amortization of deferred mutual fund sales commissions, direct fund expenses, general and administration expenses and amortization of finite-lived intangible assets.

•

Employee compensation and benefits expense reflects salaries, commissions, deferred and incentive compensation, employer payroll taxes and related benefit costs.

•

Distribution and servicing costs include payments made to Merrill Lynch-affiliated entities under a global distribution agreement and to PNC-affiliated entities, as well as other third parties, primarily associated with the distribution and servicing of client investments in certain BlackRock products.

•

Direct fund expenses consist primarily of third party non-advisory expenses incurred by BlackRock related to certain funds for the use of certain index trademarks, reference data for certain indices, custodial services, fund administration, fund accounting, transfer agent services, shareholder reporting services, legal expenses, audit and tax services as well as other fund related expenses directly attributable to the non-advisory operations of the fund. These expenses may vary over time with fluctuations in AUM, number of shareholder accounts, or other attributes directly related to volume of business.

BlackRock holds investments primarily in sponsored investment products that invest in a variety of asset classes, including private equity, distressed credit/mortgage debt securities, hedge funds and real estate. Investments generally are made for co-investment purposes, to establish a performance track record, to hedge exposure to certain deferred compensation plans, or for regulatory purposes. Non-operating income (expense) and other comprehensive income for available-for-sale investments includes the impact of changes in the valuations or pick up of equity method earnings of these investments, as well as interest income and interest expense.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Assets Under Management

AUM for reporting purposes is generally based upon how investment advisory and administration fees are calculated for each portfolio. Net asset values, total assets, committed assets or other measures may be used to determine portfolio AUM.

BlackRock, Inc.

Assets Under Management ¹

By Asset Class


	Year ended December 31,						Variance
*(Dollar amounts in millions)*	2009		2008		2007		2009 vs. 2008		2008 vs. 2007

Equity
Index	$	1,183,005	$	51,076	$	71,381	NM		(28	)%
Active		353,051		152,216		291,324	132	%	(48	)%
Fixed income
Index		459,326		3,411		3,942	NM		(13	)%
Active		596,300		477,954		506,265	25	%	(6	)%
Multi-asset class		142,029		77,516		98,623	83	%	(21	)%
Alternative		102,101		61,544		71,771	66	%	(14	)%

Long-dated		2,835,812		823,717		1,043,306	244	%	(21	)%
Cash management		349,277		338,439		313,338	3	%	8	%

Sub-total		3,185,089		1,162,156		1,356,644	174	%	(14	)%
Advisory ²		161,167		144,995		—	11	%	NM

Total	$	3,346,256	$	1,307,151	$	1,356,644	156	%	(4	)%

NM – Not Meaningful

¹	Data reflects the reclassification of AUM into the current period presentation.

²	Advisory AUM represents long-term portfolio liquidation assignments.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Assets Under Management (continued)

BlackRock, Inc.

Mix of Assets Under Management

By Asset Class ¹


	Year ended December 31,
	2009		2008		2007

Equity
Index	35	%	4	%	5	%
Active	11	%	12	%	22	%
Fixed income
Index	14	%	—	%	1	%
Active	18	%	36	%	37	%
Multi-asset class	4	%	6	%	7	%
Alternative	3	%	5	%	5	%

Long-dated	85	%	63	%	77	%
Cash management	10	%	26	%	23	%

Sub-total	95	%	89	%	100	%
Advisory²	5	%	11	%	—	%

Total	100	%	100	%	100	%

¹	Data reflects the reclassification of AUM into the current period presentation.

²	Advisory AUM represents long-term portfolio liquidation assignments.

AUM increased approximately $2.039 trillion, or 156%, to $3.346 trillion at December 31, 2009, compared to $1.307 trillion at December 31, 2008. The growth in AUM was primarily attributable to $1.849 trillion acquired in the BGI Transaction, $1 billion acquired from R3 Capital Management, LLC, $145 billion in net market appreciation and foreign exchange movements, $82 billion of net subscriptions in long-dated mandates, $12 billion of net new business in advisory assignments offset by $49 billion of outflows in cash management products. Net market appreciation of $144 billion included $104 billion of net appreciation in equity products due to an increase in global equity markets, $29 billion in fixed income products due to current income and changes in interest rate spreads and $16 billion in multi-asset class products, offset by $5 billion market depreciation in alternative products, primarily in real estate products.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Assets Under Management (continued)

The following table presents the component changes in BlackRock’s AUM for the years ended December 31, 2009, 2008 and 2007.

BlackRock, Inc.

Component Changes in Assets Under Management


	Year ended December 31,
*(Dollar amounts in millions)*	2009			2008			2007

Beginning assets under management	$	1,307,151		$	1,356,644		$	1,124,627
Net subscriptions/(redemptions)¹
Long-dated		81,542			(2,822	)		62,367
Cash management		(49,122	)		25,670			75,272
Advisory ²		11,642			144,756			—

Total net subscriptions		44,062			167,604			137,639
Acquisitions³		1,850,252			—			21,868
Market appreciation (depreciation)		143,706			(188,950	)		60,132
Foreign exchange ⁴		1,085			(28,147	)		12,378

Total change		2,039,105			(49,493	)		232,017

Ending assets under management	$	3,346,256		$	1,307,151		$	1,356,644


Percent change in total change in AUM from net subscriptions		2	%		NM			59	%
Percent change in total AUM		156	%		(4	)%		21	%

NM – Not Meaningful

¹	Includes distributions representing return of capital and return of investment to investors.

²	Advisory AUM represents long-term portfolio liquidation assignments.

³	Includes AUM acquired from Barclays in December 2009, R3 Capital Management, LLC in April 2009 and Quellos Group, LLC in October 2007 and acquisition adjustments to conform to current period combined AUM policy.

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

BlackRock has historically grown aggregate AUM through organic growth and acquisitions. Management believes that the Company will be able to continue to grow AUM by focusing on strong investment performance and client service and by developing new products and new distribution capabilities.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Assets Under Management (continued)

The following table presents the component changes in BlackRock’s AUM ¹ by product type during 2009.


*(Dollar amounts in millions)*	December 31, 2008		Net subscriptions (redemptions)²			Acquisitions³		Market appreciation (depreciation)			Foreign exchange ⁴			December 31, 2009
Equity
Index	$	51,076	$	32,274		$	1,055,456	$	49,060		$	(4,861	)	$	1,183,005
Active		152,216		9,778			132,205		55,169			3,683			353,051
Fixed income
Index		3,411		6,393			467,340		(11,184	)		(6,634	)		459,326
Active		477,954		25,559			49,918		39,614			3,255			596,300
Multi-asset class		77,516		11,979			36,408		15,756			370			142,029
Alternative		61,544		(4,441	)		49,395		(4,717	)		320			102,101

Long-dated		823,717		81,542			1,790,722		143,698			(3,867	)		2,835,812
Cash management		338,439		(49,122	)		59,530		(161	)		591			349,277

Sub-total		1,162,156		32,420			1,850,252		143,537			(3,276	)		3,185,089
Advisory⁵		144,995		11,642			—		169			4,361			161,167

Total	$	1,307,151	$	44,062		$	1,850,252	$	143,706		$	1,085		$	3,346,256

¹	Data reflects the reclassification of AUM into the current period presentation.

²	Includes distributions representing return of capital and return on investment to investors.

³	Includes AUM acquired from Barclays in December 2009 and R3 Capital Management, LLC in April 2009 and acquisition adjustments to conform to current period combined AUM policy.

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

⁵	Advisory AUM represents long-term portfolio liquidation assignments.

Business Outlook

The Company began 2010 with a substantially increased AUM base as a result of the BGI Transaction and strong market and organic growth in 2009. At the same time, domestic and international markets continue to be volatile as a result of investor concerns that the global economy is weaker than investors expected. The U.S. housing market, employment levels, debt levels in European nations and the stability of certain foreign currencies are heightening investor anxiety in the early part of 2010. The timing and direction of these volatile markets, investment performance and the level of new client asset flows will have a direct impact on the Company’s revenue. With the BGI Transaction, the Company offers an expanded range of products with investment objectives to track various indices and others that target returns in excess of specified benchmarks as well as liquidity funds. Consequently, BlackRock should be well positioned to meet these challenges, as well as navigate the following issues that may also impact the Company’s results in 2010:

•

The levels of institutional liquidity assets may continue to decline from year-end levels. These assets are expected to be redeployed to direct investment, bank deposits or longer-dated strategies as market conditions stabilize. The Company’s diversified global product offerings, client service and independent advice may enable it to retain a portion of these assets.

•

Additionally, as investors shift their preferences between active and passive investment styles, the Company’s broad active and passive product profile ability should enable it to retain and capture AUM as it has a wide array of offerings in both product styles.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Business Outlook (continued)

•

The regulatory environment is evolving for financial institutions. The SEC has enacted reforms to Rule 2a-7 under the Investment Company Act, governing money market funds with the intent to protect the industry and our clients. The SEC indicated there is likely to be a second round of changes governing money market funds. These changes, should they be enacted, may affect the margins of the money market industry and may affect industry participants differently depending on scale. Other financial services reforms may favor the separation of fiduciary management and banking activities from proprietary investing. BlackRock acts as an independent asset manager and does not engage in proprietary trading or deposit taking activities.

•

The liquidity crunch and associated market disruption gave rise to greater demand for our advisory services, combining our extensive capital markets and structuring expertise with rigorous modeling and analytical capabilities. While the demand for these services remained high through the volatile markets, demand for short-term advisory services may decline as market concerns ease. A meaningful percentage of BlackRock Solutions and advisory revenues in 2009 was composed of one-time advisory and portfolio structuring fees. At the same time, as markets have stabilized, we have seen clients investing in longer-term risk and systems solutions.

•

A return to higher market levels may enable the Company’s alternative investment products with absolute return objectives to contribute additional performance fee revenue. However, such fees are dependent on achieving investor “high water marks”.

•

The global exchange traded funds market is expected to continue to grow. BlackRock has a large array of products and assets under management in this market. As a first mover in several products, many of the iShares products have achieved a critical mass, providing both liquidity to investors and minimizing the difference between the unit exchange traded market values and the underlying unit net asset values. As additional asset managers enter the marketplace to offer exchange traded funds, the Company’s market share may decline even while the overall market grows.

•

The Company will continue to assess the appropriateness of its cost structure as it integrates BGI. The Company may decide to take additional measures to reduce costs. The benefits of any cost reduction measures may be realized over time and may or may not require upfront costs.

•

At the same time, the Company plans to invest in future growth opportunities. There may be opportunities where the cost in the current period will precede the expected future revenue.

•

Certain costs, such as direct fund expenses and cash incentive compensation, will tend to move in line with revenue. As stock awards are expensed subsequent to their grant date, the associated expense will not vary with future revenues. The stock awards related to 2009 performance will be expensed in 2010 and subsequent years.

•

Real estate costs are expected to increase. We leased new space, most notably in London, on which we will begin incurring rent expense even though we will not move into that space until it is fully built out in 2011. The Company has not completed analyzing its requirements in all other locations impacted by the acquisition of BGI.

•

Marketing expenses, including travel and entertainment, are expected to increase to levels which reflect our increased client base, a more geographically diverse firm and additional client opportunities.

•

The effective tax rate of the Company is affected, among other things, by the geographic distribution of earnings and global changes in tax legislation, including efforts by governments to raise taxes to reduce projected deficits. The effective tax rate may vary from period to period as a result of these factors.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008

Revenue


	Year ended December 31,				Variance
*(Dollar amounts in millions)*	2009		2008		Amount			% Change

Investment advisory, administration fees and securities lending revenue:
Equity
Index	$	192	$	28	$	164		NM
Active		1,230		1,587		(357	)	(22	)%
Fixed income
Index		35		2		33		NM
Active		865		872		(7	)	(1	)%
Multi-asset class		479		519		(40	)	(8	)%
Alternative		400		541		(141	)	(26	)%
Cash management		625		708		(83	)	(12	)%

Total		3,826		4,257		(431	)	(10	)%
Investment advisory performance fees
Equity		46		86		(40	)	(47	)%
Fixed income		21		5		16		320	%
Multi-asset class		20		8		12		150	%
Alternative		115		78		37		47	%

Total		202		177		25		14	%

BlackRock Solutions and advisory		477		393		84		21	%
Distribution fees		100		139		(39	)	(28	)%
Other revenue		95		98		(3	)	(3	)%

Total revenue	$	4,700	$	5,064	$	(364	)	(7	)%

NM – Not Meaningful

Total revenue for the year ended December 31, 2009 decreased $364 million, or 7%, to $4,700 million, compared with $5,064 million for the year ended December 31, 2008. Total revenue for the year ended December 31, 2009 includes $312 million of incremental revenue related to the BGI acquisition. The $364 million decrease was the result of a $431 million decrease in total investment advisory, administration fees and securities lending revenue, a $39 million decrease in distribution fees and a $3 million decrease in other revenue, offset by an $84 million increase in BlackRock Solutions and advisory revenue and a $25 million increase in performance fees.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Revenue (continued)

Investment Advisory, Administration Fees and Securities Lending Revenue

Investment advisory, administration fees and securities lending revenue for the year ended December 31, 2009 included approximately $278 million of fees related to the BGI acquisition. The decrease in investment advisory, administration fees and securities lending revenues of $431 million for the year ended December 31, 2009, compared with the year ended December 31, 2008 consisted of decreases of $357 million in active equity products, $40 million in multi-asset class products, $141 million in alternative investment products, $7 million in active fixed income products and $83 million in cash management products primarily associated with a market driven reduction in average AUM for equity, multi-asset class and alternative products and net redemptions in cash management products. The decrease is offset by a $164 million increase in equity index products and a $33 million increase in fixed income index products primarily related to products acquired in the BGI acquisition.

Performance Fees

Investment advisory performance fees increased $25 million, or 14%, to $202 million for the year ended December 31, 2009, as compared to $177 million for the year ended December 31, 2008, primarily due to an increase in performance fees in alternative equity hedge funds, fixed income and multi-asset class separate accounts, offset by a decrease in international equity separate accounts. The year ended December 31, 2009 included $24 million of performance fees related to the BGI acquisition.

BlackRock Solutions and Advisory

BlackRock Solutions and advisory revenue for the year ended December 31, 2009 increased $84 million, or 21%, compared with the year ended December 31, 2008. The increase in BlackRock Solutions and advisory revenue was primarily the result of additional advisory assignments during the period, as well as additional Aladdin and risk management mandates. Revenue earned on advisory assignments was comprised of advisory and portfolio structuring assignment fees and ongoing fees based on AUM of the respective portfolio assignments.

Distribution Fees

Distribution fees decreased $39 million to $100 million for the year ended December 31, 2009, as compared to $139 million for the year ended December 31, 2008. The decrease in distribution fees was primarily the result of lower sales, redemptions and AUM in certain share classes of open-end mutual funds.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Revenue (continued)

Other Revenue


	Year ended December 31,				Variance
*(Dollar amounts in millions)*	2009		2008		Amount			% Change
Other revenue:
Commissions revenue	$	28	$	26	$	2		8	%
Transition management service fees		22		13		9		69	%
Equity method investment earnings ⁽¹⁾		15		1		14		NM
Fund accounting		9		11		(2	)	(18	)%
Property management fees		1		32		(31	)	(97	)%
Other miscellaneous revenue		20		15		5		33	%

Total other revenue	$	95	$	98	$	(3	)	(3	)%

NM – Not Meaningful

⁽¹⁾	Related to operating and advisory company investments.

Other revenue of $95 million for the year ended December 31, 2009 decreased $3 million, or 3%, compared with the year ended December 31, 2008. Other revenue for the year ended December 31, 2009 included $10 million of incremental revenue related to the operations of BGI.

The decrease in other revenue was primarily the result of a $31 million decline in property management fees primarily related to the outsourcing in the fourth quarter of 2008 of Metric contracts with BlackRock real estate clients, partially offset by a $14 million increase in BlackRock’s share of underlying earnings from certain operating and advisory company investments and a $9 million increase in fees earned for transition management services.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Expenses


	Year ended December 31,					Variance
*(Dollar amounts in millions)*	2009		2008			Amount			%

Expenses:
Employee compensation and benefits	$	1,802	$	1,815		$	(13	)	(1	)%
Distribution and servicing costs		477		591			(114	)	(19	)%
Amortization of deferred mutual fund sales commissions		100		130			(30	)	(23	)%
Direct fund expenses		95		86			9		10	%
General and administration		779		665			114		17	%
Restructuring charges		22		38			(16	)	(42	)%
Amortization of intangible assets		147		146			1		1	%

Total expenses, GAAP	$	3,422	$	3,471		$	(49	)	(1	)%


Total expenses, GAAP	$	3,422	$	3,471		$	(49	)	(1	)%
Less: Non-GAAP adjustments:
BGI transaction/integration costs
Employee compensation and benefits		60		—			60		NM
General and administration		123		—			123		NM

Total BGI transaction/integration costs		183		—			183		NM
PNC LTIP funding obligation		59		59			—		—	%
Merrill Lynch compensation contribution		10		10			—		—	%
Restructuring charges		22		38			(16	)	(42	)%
Compensation expense related to appreciation (depreciation) on deferred compensation plans		18		(38	)		56		NM

Total non-GAAP adjustments		292		69			223		323	%

Total expenses, as adjusted	$	3,130	$	3,402		$	(272	)	(8	)%


Employee compensation and benefits, as adjusted⁽¹⁾	$	1,655	$	1,784		$	(129	)	(7	)%

NM – Not Meaningful

⁽¹⁾	Adjusted for BGI integration costs, PNC LTIP funding obligation, Merrill Lynch compensation cash contribution and compensation expense related to appreciation (depreciation) on certain deferred compensation plans.

Total GAAP expenses decreased $49 million, or 1%, to $3,422 million for the year ended December 31, 2009, compared to $3,471 million for the year ended December 31, 2008. Excluding certain items deemed non-recurring by management or transactions that ultimately will not effect the Company’s book value, total expenses, as adjusted, decreased $272 million, or 8%. The decrease in total expenses, as adjusted, is primarily attributable to decreases in employee compensation and benefits, distribution and servicing costs and amortization of deferred mutual funds sales commissions.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Expenses (continued)

Employee Compensation and Benefits

Employee compensation and benefits expense decreased $13 million, or 1%, to $1,802 million, for the year ended December 31, 2009, compared to $1,815 million for the year ended December 31, 2008. Employee compensation and benefits expense for the year ended December 31, 2009 included $89 million of incremental expense related to an increase in the number of employees related to BGI.

The decrease in employee compensation and benefits expense was attributable to a $118 million decrease in salaries, benefits and commissions, a $12 million decrease in incentive compensation associated with lower operating income, partially offset by a $60 million increase related to the BGI integration costs and a $57 million increase in deferred compensation, which is offset primarily by an increase in non-operating income related to appreciation on assets associated with certain deferred compensation plans. The $118 million decrease in salaries, benefits and commissions is due to lower employment levels as a result of the Company’s cost control efforts and outsourcing of Metric services, partially offset by a one month impact of the increase in employees related to the BGI Transaction. Employees at December 31, 2009 totaled 8,629 as compared to 5,341 at December 31, 2008.

Distribution and Servicing Costs

Distribution and servicing costs decreased $114 million to $477 million for the year ended December 31, 2009, compared to $591 million for the year ended December 31, 2008. These costs include payments to Bank of America/Merrill Lynch under a global distribution agreement, and payments to PNC as well as other third parties, primarily associated with the distribution and servicing of client investments in certain BlackRock products. The $114 million decrease primarily related to lower levels of average AUM serviced by related parties across all asset classes and an increase in waivers within certain cash management funds, resulting in lower distribution payments.

Distribution and servicing costs for the year ended December 31, 2009 included $349 million of costs attributable to Bank of America/Merrill Lynch and affiliates and $19 million of costs attributable to PNC and affiliates as compared to $464 million and $30 million, respectively, in the year ended December 31, 2008. Distribution and servicing costs related to other third parties increased $12 million to $109 million for the year ended December 31, 2009, as compared to $97 million for the year ended December 31, 2008 due to an expansion of distribution platforms.

Amortization of Deferred Mutual Fund Sales Commissions

Amortization of deferred mutual fund sales commissions decreased $30 million to $100 million for the year ended December 31, 2009, as compared to $130 million for the year ended December 31, 2008. The decrease in amortization of deferred mutual fund sales commissions was primarily the result of lower sales and redemptions in certain share classes of U.S. open-end mutual funds.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Expenses (continued)

Direct Fund Expenses

Direct fund expenses incurred by BlackRock related to non-advisory operating expenses of certain funds increased $9 million primarily related to the addition of BGI funds with these arrangements.

General and Administration Expenses


	Year ended December 31,				Variance
*(Dollar amounts in millions)*	2009		2008		Amount			% Change

General and administration expenses:
Professional services	$	162	$	76	$	86		113	%
Occupancy		165		139		26		19	%
Portfolio services		100		88		12		14	%
Technology		114		116		(2	)	(2	)%
Closed-end fund launch costs		2		9		(7	)	(78	)%
Marketing and promotional		85		154		(69	)	(45	)%
Other general and administration		151		83		68		82	%

Total general and administration expenses	$	779	$	665	$	114		17	%


Total general and administration expenses, as adjusted ⁽¹⁾	$	656	$	665	$	(9	)	(1	)%

⁽¹⁾	Adjusted for $123 million of BGI transaction and integration costs in 2009.

General and administration expenses increased $114 million, or 17%, for the year ended December 31, 2009 compared with the year ended December 31, 2008.

The year ended December 31, 2009 included $91 million, $11 million, $7 million, $1 million, and $13 million of professional services, marketing and promotional, technology, occupancy, and other general and administration expenses, respectively, related to the acquisition and integration of BGI. Excluding these expenses, general and administration expenses decreased $9 million, or 1%, for the year ended December 31, 2009 compared to the year ended December 31, 2008.

Total general and administration expenses for the year ended December 31, 2009 included $43 million of incremental BGI expenses related to each category, excluding closed-end fund launch costs.

Marketing and promotional expenses decreased $69 million, or 45%, primarily due to a decline in travel and promotional expenses. Occupancy increased $26 million which included an $11 million expense related to the write-off of certain leasehold improvements. Portfolio service costs increased $12 million, or 14%, to $100 million, due to fund expense reimbursements. Professional services increased $86 million, or 113%, to $162 million compared to $76 million for the year ended December 31, 2008 primarily related to legal, advisory and consulting costs incurred in connection with the BGI Transaction. Other general and administration expenses increased $68 million, or 82%, to $151 million from $83 million, primarily related to a $61 million increase in balance sheet related foreign currency remeasurement costs, a $21 million increase to a provision related to an outstanding loan to Anthracite Capital Inc., and a $10 million expense for potentially uncollectible fee receivables, partially offset by a reduction of various expenses primarily the result of cost control efforts.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Expenses (continued)

Restructuring Charges

For the year ended December 31, 2009 BlackRock recorded pre-tax restructuring charges of $22 million, primarily related to severance, outplacement costs, occupancy costs and accelerated amortization of certain previously granted stock awards associated with a reduction in work force and reengineering efforts. For the year ended December 31, 2008, BlackRock recorded pre-tax restructuring charges of $38 million, primarily related to severance, outplacement costs and accelerated amortization of certain previously granted stock awards associated with a 9% reduction in work force. See Restructuring charges discussion in Note 20 to the consolidated financial statements beginning on page F-1 of this Form 10-K.

Amortization of Intangible Assets

Amortization of intangible assets increased $1 million to $147 million for the year ended December 31, 2009, as compared to $146 million for the year ended December 31, 2008. The increase in amortization of intangible assets reflects amortization of finite-lived management contracts acquired in the BGI Transaction.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Non-operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008

Non-Operating Income (Expense), Less Net Income (Loss) Attributable to Non-Controlling Interests

Non-operating income (expense), less net income (loss) attributable to non-controlling interests for the years ended December 31, 2009 and 2008 was as follows:


	Year ended December 31,						Variance
*(Dollar amounts in millions)*	2009			2008			Amount			%
Non-operating (expense), GAAP basis	$	(6	)	$	(577	)	$	571		99	%
Less: Net income (loss) attributable to NCI, GAAP basis		22			(155	)		177		NM

Non-operating (expense)¹		(28	)		(422	)		394		93	%
Compensation expense related to (appreciation) depreciation on deferred compensation plans		(18	)		38			(56	)	NM

Non-operating (expense), as adjusted¹	$	(46	)	$	(384	)	$	338		88	%

NM – Not Meaningful

¹	Includes net income (loss) attributable to non-controlling interests (redeemable and nonredeemable) related to investment and non-investment activities.

The components of non-operating income (expense), less net income (loss) attributable to non-controlling interests, for the years ended December 31, 2009 and 2008 were as follows:


	Year ended December 31,						Variance
*(Dollar amounts in millions)*	2009			2008			Amount			%
Net gain (loss) on investments¹
Private equity	$	9		$	(28	)	$	37		NM
Real estate		(114	)		(127	)		13		10	%
Distressed credit/mortgage funds		100			(141	)		241		NM
Hedge funds/funds of hedge funds		18			(53	)		71		NM
Other investments²		(11	)		(30	)		19		63	%

Sub-total		2			(379	)		381		NM
Investments related to deferred compensation plans		18			(38	)		56		NM

Total net gain (loss) on investments¹		20			(417	)		437		NM
Net income (loss) attributable to other non-controlling interests³		—			(1	)		1		100	%
Interest and dividend income		20			65			(45	)	(69	)%
Interest expense		(68	)		(69	)		1		(1	)%

Total non-operating income (expense)¹		(28	)		(422	)		394		93	%
Compensation expense related to depreciation (appreciation) on deferred compensation plans		(18	)		38			(56	)	NM

Non-operating income (expense), as adjusted¹	$	(46	)	$	(384	)	$	338		88	%

NM – Not Meaningful

¹	Includes net income (loss) attributable to non-controlling interests (redeemable and nonredeemable) related to investment and non-investment activities.

²	Includes net gains / (losses) related to equity and fixed income investments and BlackRock’s seed capital hedging program.

³	Includes non-controlling interests related to operating entities (non-investment activities).

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Non-operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Non-Operating Income (Expense), Less Net Income (Loss) Attributable to Non-Controlling Interests (continued)

Non-operating expense, less net income (loss) attributable to non-controlling interests, decreased $394 million to $28 million for the year ended December 31, 2009, as compared to $422 million for the year ended December 31, 2008.

The $20 million net gain on investments, less non-controlling interests, related to the Company’s co-investment and seed investments, included valuation gains in distressed credit/mortgage funds of $100 million, investments related to deferred compensation plans of $18 million, hedge funds/funds of hedge funds of $18 million and private equity products of $9 million offset by net losses in real estate products of $114 million and other investments of $11 million.

Net interest expense was $48 million, an increase of $44 million primarily due to a decline in interest rates earned on cash equivalents and interest rates paid on its line of credit, offset by an $8 million increase in interest expense related to $2.5 billion in issuances of long-term notes in December 2009.

Net Economic Investment Portfolio

The Company reviews its net economic exposure to its investment portfolio by reducing its GAAP investments by the net assets attributable to non-controlling interests of consolidated sponsored investment funds. Changes in the investment portfolio are due to purchases, sales, maturities, distributions as well as the impact of valuations. The following table represents the carrying value, by asset type, at December 31, 2009 and 2008:


*(Dollar amounts in millions)*	December 31, 2009		December 31, 2008		Variance
*(Dollar amounts in millions)*	December 31, 2009		December 31, 2008		Amount			% Change
Private equity	$	236	$	220	$	16		7	%
Real estate		44		157		(113	)	(72	)%
Distressed credit/mortgage funds		197		176		21		12	%
Hedge funds/funds of hedge funds		108		126		(18	)	(14	)%
Other investments		152		224		(72	)	(32	)%

Total net “economic” investment exposure		737		903		(166	)	(18	)%
Deferred compensation investments		71		59		12		20	%
Hedged investments		36		49		(13	)	(27	)%

Total net “economic” investments	$	844	$	1,011	$	(167	)	(17	)%

Income Tax Expense

Income tax expense was $375 million and $387 million for the years ended December 31, 2009 and 2008, respectively. The effective income tax rate for the year ended December 31, 2009 was 30.0%, as compared to 33.0% for the year ended December 31, 2008. The year over year tax rate decrease is primarily attributable to approximately $45 million of tax benefits related to legislation which was enacted in 2009 with respect to New York City corporate income taxes.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Operating Income and Operating Margin

GAAP

Operating income totaled $1,278 million for the year ended December 31, 2009, which was a decrease of $315 million compared to the year ended December 31, 2008. Year ended December 31, 2009 operating income included $141 million resulting from incremental revenue and expenses related to the operations of BGI and $183 million of BGI transaction and integration costs. The transaction and integration expenses are not part of the on-going business and are principally comprised of advisory fees, compensation expense, legal fees and consulting expenses.

Operating income for the year ended December 31, 2009 included the effect of a $431 million decrease in investment advisory, administration fees and securities lending revenue, associated with a market driven reduction in average AUM for all asset classes for the year ended December 31, 2009 as compared to the year ended December 31, 2008, a $42 million reduction in distribution fees and other revenue, offset by an $84 million increase in BlackRock Solutions and advisory revenue, a $25 million increase in performance fees revenue and a $49 million net decrease in operating expenses primarily due to declines in employee compensation and benefits, distribution and servicing costs, amortization of deferred mutual fund sales commissions and restructuring expenses, offset by increases in direct fund expenses and general and administration expenses.

The Company’s operating margin was 27.2% for the year ended December 31, 2009, compared to 31.5% for the year ended December 31, 2008. The reduction in operating margin in 2009 as compared to 2008 included the effect of $183 million of BGI transaction and integration costs and a change from $50 million of foreign currency remeasurement benefits in 2008 to $11 million of foreign currency remeasurement costs in 2009.

As Adjusted

Operating income, as adjusted, totaled $1,570 million for the year ended December 31, 2009, which was a decrease of $92 million compared to the year ended December 31, 2008. The decline of operating income, as adjusted, for the year ended December 31, 2009 as compared to the year ended December 31, 2008 is related to the effect of the $364 million decrease in total revenue offset by a $272 million decrease in operating expenses due to decreases in employee compensation and benefits, distribution and servicing costs and general and administration expenses.

Operating margin, as adjusted, was 38.2% and 38.7% for the years ended December 31, 2009 and 2008, respectively. The reduction in margin includes the effect of the $61 million increase in expenses related to the change in foreign currency remeasurement offset by a reduction of certain expenses as a result of additional cost controls in 2009.

Operating income, as adjusted, and operating margin, as adjusted, are described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Net Income Attributable to BlackRock, Inc.

The components of net income attributable to BlackRock, Inc. and net income attributable to BlackRock, Inc., as adjusted, for the years ended December 31, 2009 and 2008 are as follows:


	Year Ended December 31,								Year Ended December 31,
	2009			2008					2009			2008
*(Dollar amounts in millions, except per share data)*	GAAP			GAAP			% Change		As adjusted			As adjusted			% Change
Operating income	$	1,278		$	1,593		(20	)%	$	1,570		$	1,662		(6	)%
Non-operating (expense)¹		(28	)		(422	)	(93	)%		(46	)		(384	)	(88	)%
Income tax expense		(375	)		(387	)	(3	)%		(503	)		(422	)	19	%

Net income attributable to BlackRock, Inc.	$	875		$	784		12	%	$	1,021		$	856		19	%


Allocation of net income attributable to BlackRock, Inc.:
Common shares	$	853		$	759		12	%	$	995		$	828		20	%
Participating RSUs		22			25		(12	)%		26			28		(7	)%

Net income attributable to BlackRock, Inc.	$	875		$	784		12	%	$	1,021		$	856		19	%


Diluted weighted-average common shares outstanding²		139,481,449			131,376,517		6	%		139,481,449			131,376,517		6	%

Diluted earnings per common share	$	6.11		$	5.78		6	%	$	7.13		$	6.30		13	%

¹	Includes net income (loss) attributable to non-controlling interests (redeemable and nonredeemable) related to investment and non-investment activities.

Series A, B, C, and D non-voting participating preferred stock are considered to be common stock equivalents for purposes of determining basic and diluted earnings per share calculations. Certain unvested restricted stock units are not included in this number as they are deemed participating securities in accordance with required provisions of ASC 260-10.

GAAP

Net income attributable to BlackRock, Inc. for the year ended December 31, 2009 includes operating income of $1,278 million, or $5.75 per diluted common share, non-operating expenses, less net income attributable to non-controlling interests, of $28 million, or $0.13 per diluted common share and $70 million, or $0.49 per diluted common share, of tax benefits related to local income tax law changes, a favorable tax ruling and the final resolution of outstanding tax matters. Net income attributable to BlackRock, Inc. totaled $875 million, or $6.11 per diluted common share, for the year ended December 31, 2009, which was an increase of $91 million, or $0.33 per diluted common share, compared to the year ended December 31, 2008.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2009, as compared with the year ended December 31, 2008 (continued)

Net Income Attributable to BlackRock, Inc. (continued)

Net income attributable to BlackRock, Inc. for the year ended December 31, 2009 included the after-tax effect of the portion of LTIP awards, which will be funded through a capital contribution of BlackRock stock held by PNC of $41 million, BGI transaction/integration costs of $129 million, restructuring charges of $14 million, and an expected cash contribution, a portion of which has been paid by Merrill Lynch in third quarter 2009 of $7 million to fund certain compensation of former MLIM employees. In addition, net income for the year ended December 31, 2009 included a $45 million one-time reduction in income tax expense as a result of enacted legislation primarily with respect to New York City corporate income taxes, which resulted in a revaluation of certain deferred income tax assets and liabilities.

Net income attributable to BlackRock, Inc. of $784 million for the year ended December 31, 2008 included the after-tax effect of the portion of certain LTIP awards, which will be funded through a capital contribution of BlackRock stock held by PNC of $39 million, restructuring charges of $26 million and an expected contribution by Merrill Lynch of $7 million to fund certain compensation of former MLIM employees, a portion of which was received by BlackRock in third quarter 2009.

As Adjusted

Exclusive of the items discussed above, diluted earnings per common share, as adjusted, of $7.13 for the year ended December 31, 2009 increased $0.83, or 13%, compared to the year ended December 31, 2008.

Net income attributable to BlackRock, Inc., as adjusted, for the year ended December 31, 2009 includes operating income of $1,570 million, or $7.35 per diluted common share, non-operating expenses, less net income attributable to non-controlling interests, of $46 million, or $0.22 per diluted common share.

Diluted earnings per common share, as adjusted, is described in more detail in the Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Operating results for the year ended December 31, 2008, as compared with the year ended December 31, 2007

AUM decreased $49 billion, or 4%, to $1.307 trillion at December 31, 2008, compared with $1.357 trillion at December 31, 2007. The decline in AUM was attributable to $189 billion in net market depreciation and $28 billion in net foreign exchange movements, partially offset by $168 billion in net subscriptions.

The following table presents the component changes in BlackRock’s AUM¹ for 2008.


*(Dollar amounts in millions)*	December 31, 2007		Net subscriptions (redemptions)¹			Market appreciation (depreciation)			Foreign exchange²			December 31, 2008

Equity
Index	$	71,381	$	11,183		$	(31,354	)	$	(134	)	$	51,076
Active		291,324		(17,204	)		(109,867	)		(12,037	)		152,216
Fixed income
Index		3,942		(612	)		162			(81	)		3,411
Active		506,265		(6,247	)		(16,134	)		(5,930	)		477,954
Multi-asset class		98,623		5,087	&nb