Good morning. My name is Regina, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Incorporated Fourth Quarter 2007 Earnings Teleconference. Our host for today's call will be Chairman and Chief Executive Officer, Laurence D. Fink; Chief Financial Officer, Paul L. Audet; and General Counsel, Robert P. Connolly. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions]. Thank you. Mr. Connolly, you may begin your conference. Robert P. Connolly: Thank you. Good morning, everyone. Before Larry and Paul make their remarks, I want to point out that during the course of this conference call we may make a number of forward-looking statements. We call to your attention the fact that BlackRock's actual results may differ from these statements. And as you know, BlackRock has filed with the SEC reports, which lists some other factors, which may cause our results to differ materially from these statements. Finally, BlackRock assumes no duty to and does not undertake to update any forward-looking statements. With that, I will turn it over to Paul Audet, our Chief Financial Officer. Paul L. Audet: Good morning. As you can undoubtedly see in our release, BlackRock truly had a very successful year in 2007 as our financial results, new business generation, investment returns, client service, all exceeded our objectives going into 2007. Adjusted EPS for the fourth quarter at $2.52 exceeded analyst consensus by 18%, and this was due to strong contributions from our recurring operations, obviously elevated performance fees, and higher portfolio advisory revenue from BlackRock Solutions, as we in effect took on a lot of risk management assignments due to these market conditions. Fourth quarter adjusted EPS increased $0.23 or 10% from third quarter 2007 results, also largely from core operations, as performance fees were essentially flat third to fourth quarter, but net non operating income declined approximately $27 million. Adjusted EPS for the 2007 fourth quarter and full-year at $2.52 and $8.17 represented increases of 56% and 53% respectively over 2006. Obviously, this was also the first full quarter that we reported comparative results with the MLIM transaction as well as also the first full quarter of operations with Quellos. Accretion with respect to MLIM transaction based on our results on a full-year basis essentially doubled our initial estimates when we initially announced this transaction, while the Quellos transaction contributed approximately $0.10 to earnings in the fourth quarter. These are strong earnings, reflect solid investment returns and favorable equity markets. Obviously, the performance fee totals for the year at $350 million of which $300 million was reported in the second half, this week, very solid investment results, but also very [inaudible] equity markets for us. New business momentum was sustained despite a significant global integration effort, which covered not only MLIM, but also Quellos in the fourth quarter as well as volatile market conditions. We experienced a 12% organic growth rate in AUM including 7% organic growth in all our longer-dated assets. We operate a leading cash management business, which increased market share during 2007 as assets under management increased 32% or over $75 billion for the year. Most of this growth in cash management occurred in our 2a-7 mutual fund complex, which operated very effectively in these markets with no asset quality issues and very solid investment returns. As many of you are aware, we have a very large institutional business. We did experience very similar and normal late quarter outflows on equity assets of approximately $8 billion. This usually happens because a number of our large institutional clients regularly reposition their period-end balance sheets. But at the same time, liquidity assets are up almost $19 billion since we closed the books in December of 2007. I would also like to note one additional factor based on some information we've read recently. Our assignment with Florida to support their process is a temporary assignment, and we do not report assets under management under temporary assignments. So everyone should understand, while we're managing that process right now we are participating in a very significant RFP to... that is out in the marketplace, but we do not report any assets. The company during this period obviously continued to benefit from a diversified business mix and global footprint, which saw all of our product classes substantially increase new business over the full year. And the international operations generated $38 billion in new business and comprised and contributed approximately 50% of our pretax earnings for 2007. We also generated positive operating leverage for the fourth quarter and full year, which was up approximately 1% for both periods. And as we noted in our release, that full-year total of up 1% included approximately $92 million increase in intangible amortization. So on a real cash operating leverage basis, we are up approximately 3% year-over-year. The marketplace was very difficult in the second half. We did feel some implications as you probably saw on the release. We incurred approximately $0.12 and $0.14 charges for the fourth quarter and full year respectively due to costs that we took to support two non-2a-7 private placement enhanced cash funds. We’ve worked very, very long to work with our clients on this. We believe that we can support those clients and in effect move those... all of those assets to approximately 1.7 and in effect get all the clients’ cash back during the 2008 time frame. The company also reported approximately $0.06 of impairment charges in the fourth quarter on seed investments in BlackRock's sponsor-related CDOs. I would note that a significant portion of our fourth quarter performance fees were generated by products with higher deferred compensation formulas. This resulted in lower current period or fourth quarter compensation expense as a percent of revenue, and we'll increase compensation expense in future periods. Most of these deferred compensations cover three-year vesting periods. While we do that provide earnings guidance, we do have some objectives going into 2008. The firm believes that the long-dated AUM growth will be consistent with our 7% results achieved in 2007. Cash management flows will continue to be volatile, with opportunities for growth as the federal funds rate looks to be declined... decreased over the first half of the year, but we could see some reduction of that growth as markets stabilize, and we see some reallocation of 2007 [inaudible] quality growth into other products. Assuming a similar revenue mix for 2008, we would expect compensation of revenue ratios will rise approximately 0.5%. This really ties directly to some of the large deferred compensation awards occurring at the end of the year. We continue to see positive operating leverage in our business going forward into 2008, but we also see significant opportunities in these markets. As you know, we will invest in our business in order to take advantage of those kinds of opportunities to serve clients better and provide opportunities for future growth. On the whole, I just think you all saw a significant year. Obviously, we're very, very proud of what we did here, and I think the financial results show that. And with that, I'll turn it over to Larry. Laurence D. Fink: Thank you, Paul. Good morning, everyone. It is very nice for me to be sitting here at BlackRock. It is a... we had an extraordinary year. We had an extraordinary quarter. I'm very proud of the entire team as we navigated on behalf of our clients these markets, and we worked very diligently in trying to work with our clients in terms of helping them understand the severity of this credit problem in the marketplace and what the impact is in terms of their investment portfolios and in terms of what are the opportunities as a result of these allocations in the credit markets and all the other associated markets. But I can say very loud and clear at the end of 2007 and looking into 2008, our model is working. Having one platform representing products and equities in fixed income in alternatives, working with our clients to try to solve problems comprehensively is a model that I believe is the model for the future. I believe clients worldwide are attracted to working alongside with BlackRock because we can provide them that comprehensiveness. And I think it's very, very important going forward as clients are struggling with portfolio allocation. They are struggling with liability issues. They are struggling with a understanding of the embedded assets that they have. They are struggling with what these credit issues mean to their portfolios. And they are struggling with the understanding of alternatives. And they're asking many questions as to what percent of alternatives should they have and what should the mix of alternatives be? Let me describe some of the things that we are particularly proud of in terms of what BlackRock represents to our clients, and that is the fulsome of our product mix. Sometimes, I find it somewhat disturbing when people still refer BlackRock as a fixed income manager. When they do that, they just forget to understand who we are, they don’t bother to look. But 34% of our assets today are in equities and balance. 38% of our assets are fixed income. 23% is in cash management and 5% alternatives. It is our hope as I’ve suggested in other quarters that we’d like to get our alternative product mix between 7% and 10%. We hope to do that mostly through organic growth. And I think our fourth quarter in terms of our... the opportunities we saw on the alternatives space is showing the marketplace that we do have huge organic opportunities in the alternatives space. The other real differentiating facet of BlackRock today going into 2008, 64% of our assets are domestic, 36% are international. 31% of our client base is retail, 69% of our client base is institutional. I would call this a very good mix of types of businesses, and I believe this allows us to have the ability to navigate in the global markets, to navigate in products when one product is strong and another product is weak. We have the ability to navigate in good markets and bad markets and flat markets, because of the product mix, the geographic mix, and the client mix. I would like to also note that we continue to see huge opportunities in all our markets on a global basis. We have been in the papers quite a bit related to some advisory assignments, particularly Florida. I'm very proud to say that we are differentiating ourselves in 2007 and I think we will continue to differentiate ourselves in 2008, because the whole foundation of BlackRock in all products is our emphasis of risk management. Having our BlackRock Solutions platform, which had the most outstanding year in their history in terms of integrating BlackRock onto one platform, and on top of that seeing a record number of clients’ enquiry in terms of Aladdin assignments, and in terms of advisory assignments is going to continue to drive BlackRock into 2008. And that emphasis of risk, that differentiation, does allow us to stand above most of our peers. We continue to expect BlackRock Solutions to have large-scale opportunities in 2008. I will say, the biggest issue that's confronting us more than ever before is making sure that we have the team in place to expand our presence. The greatest limiting factor for us in solutions is that… is having the proper team on a global basis, the management structure. And so we are growing our people there, we're going our staff, we're growing our presence, but we are not going to grow so fast that we're going to disrupt, what I would call, the One BlackRock culture, the one firm model. And so, we are trying to navigate the growth opportunities in these spaces with the idea of making sure that our One BlackRock model, our one culture, permeates throughout all our businesses making sure it is consistent in our businesses. So it is an interesting time. The enquiries even in the first few weeks of this year are quite extraordinary in terms of clients looking for long-term solutions in terms of their balance sheets. We have had a number of the new words already in terms of working alongside clients in our Advisory Services, and we believe we're going to see many more opportunities. And I hope in many of these opportunities, not only will it be an opportunity in terms of advice or possibly Aladdin assignment, in many of these opportunities it will be… it will allow us to enter into an asset management assignment too. So the intersecting of solutions, advisory, and asset management is more integrated and stronger today than it has ever been. Paul mentioned our cash management. Obviously, liquidity and liquidity businesses are on everyone's minds. It is a big issue. We spend a lot of management time making sure that we are providing the most... the best products for our clients. It was noted in our fourth quarter that we do have those two small asset management cash strategy funds that we are working to provide liquidity to our clients, and we did take some charges in the fourth quarter. We feel very good about the future of that. I’m working in resolving that alongside with a client. But it is fair for me to say, the majority of our $230 billion of liquidity business is as strong, if not stronger than ever as evidence of $19 billion of new cash flow into this year has really given another indication to everyone that our business is strong in cash management and getting stronger. Our market share in 2007 and going into 2008 picked up remarkably in our cash management business. The one thing of doubt, we had our best quarter ever in equity flows. To me, this is the greatest indication of what the new model of BlackRock is. We had $11 billion of equity flows in the fourth quarter. And I would tell you, the majority of these flows were in our retail mutual funds, domestically and globally. And we… and it is another indication of our brand recognition. So this is a combination of obviously performance, but one of the things that we struggled, one of the big issues we had when we announced the merger was the Merrill Lynch name was a larger brand name in the retail space. We have made huge progress in that. In April of this year, we are going to drop the hyphenated name globally in our mutual fund platform, and it will just be the BlackRock Fund Family. And we are very excited about that, and we feel we are prepared for that today and that will be a big event for all of us. But these flows in equity, these flows in our mutual fund platform is indicative that the BlackRock brand name is growing and growing very strongly. I would like to note some of the… the issue related to fixed income. We did have outflows in fixed income. Some of the outflows was a rebalancing out of fixed income into other products. And then we lost about four odd billion dollars with three or four clients. Some of it was a restructuring with an insurance company assignment. They put the assets back onto their general account away from a separate account. The other assignments were M&A related, where the clients had to redeploy the money that we are managing for them for these M&A opportunities that they had. And so there is nothing systemic there. Actually, our performance in the fourth quarter was strong. I'm told… I don't have… just finalized that, we are going to have… our one and three-year numbers are going to be probably in the first quartile in fixed income. And that has been basically flat to up a little last year. And so it really indicates the diversity or the variance in terms of returns that so many people had in fixed income in 2007. But we expect to continue to see some very large changes in asset allocation in 2008. Other than fear, other than worries, it is our opinion that a 3.73% 10-year Treasury is a very difficult return to make any long-term investment decisions. But it's safe, and you could be well protected in doing that. And so I am not here to suggest that the rates are not going to go any lower in the intermediate area of the curve, but I will tell you at a 3.73%, that's representing less and less value. But with the U.S. equity markets and global equity markets falling as much as they have, it is a safe place to put money. We will be a participant in that in the short run by winning assignments there. We have shown with our $19 billion growth in cash management in the first few weeks of this year. People are still flooding a lot of cash into liquidity. As Paul suggested, we should not monetize this type of growth rate in liquidity. On the other hand, we do believe as we continue to roll out more and more products we will be a participant in some of that redeployment of monies out of the short-term assets into some longer-dated assignments. The one other thing of particular to note in the fourth quarter of 2007, and I think we will... well, I know we are continuing that in 2008, is the opportunistic investing that we have done with our investors. We raised about $4.5 billion in two distressed products in the alternatives space. We are about to launch another product that is in the mortgage-related area to take advantage of the dislocation in the mortgage world. And we see huge opportunities for BlackRock on behalf of our clients in investing the monies. I would like to also state one differentiating feature that is giving us a lot of opportunity with our clients. BlackRock will not invest any of our capital for proprietary trading. We will not invest any of our capital to invest in things that we think are cheap. We use all our capital to invest alongside as a fiduciary with our clients. And so as we roll out these products, we expect that our clients are going to look for us to invest 1% to 5% predominantly, but at least 5% of the investment pool, and we will continue to do that. But we are very proud, and we believe we very much differentiate ourselves from the majority of organizations, that we do not do proprietary trading even though we see these opportunities, even though we believe they possess some great income opportunities. We believe the greater income opportunities are working alongside our clients, suggesting these opportunities, investing alongside with them, and working alongside with them. And so… there is not one instance where BlackRock has a fiduciary conflict. This is a very, very important differentiation as we roll out more and more products and as we work more and more with our clients. I would like to just note that one of the other big issues when we rolled out the Merrill Lynch transaction that some of the issues were, could we continue to build our relationships with the Merrill Lynch retail system. With one year totally behind us, our market share increased with the Merrill Lynch system. We are working alongside with the management team of Merrill Lynch in terms of finding new opportunities, investing for their clients, and taking advantage of the opportunities that BlackRock can provide for them. The other very, very important issue is our third-party retail distribution, and it's fair to say for us, we made huge progress in terms of the flows. A lot of our fourth quarter flows were third-party distribution. And so we're starting to see momentum picking up because of the third-party products and third-party relationships that we've. And the last thing I just would like to bring up is obviously we've had a pretty large setback in the equity markets year-to-date. We believe we will continue to have very volatile markets in the next quarter or so. We do have a long-term constructive view on the equity markets, but in the intermediate term we're very concerned. And I will just caution everybody, when you have these volatile markets you should expect people to defer, delay decisions. This happens every time, and I'd like to just remind everybody of that. Actually, at the beginning of this quarter… we've actually seen quite a few decisions that I talked about, the issues we had around our Advisory Services. So we're winning a lot of assignments on the Advisory side. We're seeing huge opportunities in terms of RFPs. But I just want to warn everybody, and I don't have any information that is telling me it's going to happen again, but historically we've seen delays in decision-making during very volatile markets. So 2008, we're very well positioned. We think we're going to have some great opportunities in terms of building out our relationships with our clients. I'm very excited about the buildout of the BlackRock brand on a global basis. We're still very interested in building out our product base on a global basis. Joining us this week is a whole new European equity team that we brought onboard at the end of last year and they started this week. We're looking at other opportunities to bringing on more product people to enhance our position in products worldwide. And we do believe… and I'm not suggesting anything will happen, but we do believe there will be large M&A opportunities for BlackRock, at least for us to see, and history will tell you most of the time we walk away from the majority of them. And if we happen to see something that works alongside of our Quellos transaction, works alongside our State Street Research transaction or MLIM, we would go ahead and do it. We're not interested in doing transactions for accretion, we're only interested in doing transactions that will build out our presence on a global basis. So I promise you, we're not doing... we would not do anything just for the sake of doing something because it's accretive. We would only do it if it is the lasting [ph] accretive, and the only way it is lasting accretive if it is an enhancement of product or enhancement in distribution. The last thing, I'd like to welcome everybody from our Quellos transaction onboard. It has been a spectacular first quarter with our team. We've seen huge synergies together with our BlackRock alternative advisory platform. Bryan White is our leader from Quellos now leading that effort, has done a great job of integrating our teams. We're seeing huge opportunities in our fund of funds platforms in private equity and in hedge funds. And we're extremely happy with how we're doing in that integration. And obviously we've been… we're very happy and very excited of the continuation of our buildout of our overall global platform. Last, I’d just like to thank all of the BlackRock employees for an incredible year. I'd like to thank everyone for all the hard work. This was not an easy year. I don't want to suggest that this is easy sailing for us. It was a very, very difficult year in terms of family life, work balance. We did... a lot of people worked extra hard to do what we've done this year. A lot of people worked beyond the measure to making ensure that we achieve these results that we did, and it was the overall culture, the overall synergies of the overall firm, it was a team effort by everyone that allowed us to have these results. I would like to thank all our clients in terms of working alongside with us. They entrusted us with lots of money, they entrusted us with a lot of issues related to decisions on behalf of them. And I believe we earned their respect in 2007, and I do believe we have that respect going into 2008 with our client base. Thank you, everybody. I'll open it up for questions. Question and Answer

[Operator Instructions]. Your first question comes from William Katz of Buckingham Research.

Okay. Thank you, and good morning. Very comprehensive updates, so thank you for that. I just want to sort of talk about the fixed income business for a moment. If you look back over the last several quarters and maybe the genesis of the transaction, it does seem like the growth rate has showed... slowed sharply, and not just because of large numbers. Larry, sort of curious, are we at the end of this cycle? I mean, I appreciate we’re staying in the long-end of the bond, but could there be a more decisive rotation to equities and are you fully prepared to capture if that were to happen? Laurence D. Fink: I think that's what I was trying to say. The 3.70% whatever for the 10-year I think we are going to see, and this is why in the long run we are very constructive on equities. I think you're going to see a very large rotation into equities, be it from cash or intermediate bonds. With the bond market rallying so much and the equity market falling, you're going to see some really significant rebalancing from qualified pension plans. And so, we still see a lot of growth build in the global area. In the domestic side, I think we're going to see a big rotation over the course of the next few years. And to answer your question, in terms of are we going to be able to take advantage of it, I would say not fully yet, but I would say we're very well prepared and we're going to get prepared for that rotation. Our performance in equities as we noted in our release was very strong. Our global equity platform that we were nurturing... our global equity product had an extraordinary year last year, and if we continue to do that we will be very prepared to take on some very large flows in terms of global equities. I discussed about our new team in European equities that we're enhancing. Our U.S. equity teams also had some very good years. Our Global Opportunity Fund had one of the most remarkable years ever on a $40 billion platform. And so, to answer your question, Bill, I won't say we're fully prepared yet because I would never say that, but I think we're certainly a lot more prepared than we've ever been before. But I don't think it will be that dire. I still believe a lot of people will need to be in fixed income. And so I don't think it’s going to be this gigantic rotation, but there will be... the trends will be a rotation from fixed to equities.

Okay. Thank you. And the second question I have is, you mentioned that about half of your pretax income came from outside the United States. Can you give me what the revenue mix was, please? Paul L. Audet: Bill, I gave you that at this point of time, but the revenue mix at this point in time I'm not in a position to say, but we may in effect disclose something along that in the year in the 10-K.

Okay, and just a couple of more housekeeping items. I think you are out marketing [inaudible] array of Closed-End Funds. Any sort of assessment of how successful that is and what the appetite is for that kind of product right now? Laurence D. Fink: Well, it's in the marketing period now and I don't think I'm allowed to talk about it. Bob Connolly is telling me, I can't talk about it for SEC reasons. So it is in the market, it's going to be small, but we expect it to be small. I would tell you right now, I believe this Closed-End market is digesting huge flows in 2007 and one should expect the digestion will take some quarters. So I don't think we are going to see the huge inflows of money in Closed-End Funds as we did last year.

Okay. And then just in terms of the comps) revenue guidance, just... I was listening, where you reflecting the increase from the fourth quarter or from '07 into '08? Paul L. Audet: It was really more a '07 fees. Fourth quarter performance fees were obviously much higher deferred comp [inaudible], but some of our other programs also had different comp allocations. So it's really an... it was more significantly felt in the fourth quarter and it's rolling into '07 by that amount that we... that I discussed.

Okay, and then just finally, [inaudible], but it looked like you had a little relief on the tax rate sequentially. Laurence D. Fink: Yes.

Is that a reasonable run rate on a go-forward basis? Paul L. Audet: I think that around 35.5% is not an unreasonable number forward.

Okay. Thank you.

Your next question comes from Christopher Spahr of Deutsche Bank. Laurence D. Fink: Hi, Chris. Happy New Year.

Happy New Year. Good morning. I just wonder if you can maybe just give a little bit color on how we should think about the performance fees going forward, both on a year-over-year basis and on [inaudible]? Laurence D. Fink: I never ask anyone to do any monetization of performance fees. We had an extraordinary year in performance fees. Our fixed income hedge funds navigated very carefully in this credit crisis. We had one fund that was up extraordinarily well. And if you look at some of our hedge funds products, they are heavily oriented towards energy and commodities. I don't have to tell you what energy and commodities have done. And so we really benefited because of the type of hedge fund products that we have. In addition, we had some extra ordinary hedge... performance fees in real estate because we sold a bunch of real estate in the third and fourth quarter on behalf of our clients and we took some performance fees when we wanted to take some of the risk down in our real estate platform. And so we expect we are well positioned again in 2008 to take advantage of these global opportunities in terms of our hedge funds. And as we discussed, we raised a lot more hedge funds and products in the fourth quarter. So obviously, we don't forecast or tell anyone what is going to happen in 2008 related to hedge funds, but we... what I can say as we are growing out our alternative platform we are certainly building on a more diversified base of alternative products that have performance-based fees.

But I guess the fees were up about 44% the last couple of years, each year. So I'm just wondering like if--? Laurence D. Fink: It's because we're rolling out more and more products, and fortunately we have been writing those rollout of products.

Sure. Paul L. Audet: And we saw favorable markets. I mean... it's hard to tell you that you can automatically look at what we did this year and say, while you've increased the last couple of years could you run an increase when you're looking at a market that's down pretty substantially to start the New Year.

Okay. And then finally, Advisory revenues [inaudible] by asset class appeared to be higher across all asset classes. So I just wonder if you can give a color about the sustainability of those? Paul L. Audet: Well, the revenues were up as you probably saw across all asset classes, largely because we've had pretty sizable organic growth across all asset classes. And you also had, if you kind of look at our numbers, pretty sizable market contributions. I think the key here is, if you look at the equities and in certain of the alternative products, some of those market contributions are pretty sub-sizable. So if it was to me, I would say that if you look at the various ratios, a $130 billion of organic growth versus about $70 billion of market, that you can automatically kind of look at those kind of percentages and I think you can apply those same ratios to try to see what was the revenue growth ex-market or on a quarter basis.

Okay. Thank you very much.

Your next question comes from Douglas Sipkin of Wachovia. Laurence D. Fink: Hi, Doug.

Hi, good morning, and Happy New Year. Just a couple of quick follow-ups, drilling down on I guess the individual revenues for the asset products a little bit more. Just specifically holding in on the alternatives, the $134 million number, I mean how much is that... like how much of that includes performance fees for this quarter? I mean I'm trying to just think about that number, trying to gauge sort of a normalized level for that alternative revenue number. And then also as it relates to the cash management, I would imagine then you guys are recognizing revenues in there on assets that you're now reporting. So also how much of that would you attribute to maybe temporary type of stuff, just trying to gauge what sort of that run rate for base fees would be into 2008? Laurence D. Fink: Well, I… actually if you kind of... rather than looking on a product-by-product basis, because we don't get into all of these pieces until we file the K, what I can tell you is obviously if you look at base… if you looked at our investment advisory base fees that we reported versus our performance fees, that will give you a pretty good idea of what I would tend to call more recurring, the investment advisory fee total. And as to temporary assignments, Doug, I mean really they’re just not significant enough for me to sit down there and tell you that I have all those numbers handy. They are not going to really indicate a run rate.

Okay. So when I look back at that 1.16, I mean that's as true as I guess we're going to see I guess going forward, unless obviously the assets change dramatically. Laurence D. Fink: I think that is a fair total to report on a recurring basis before obviously the implications of market.

Okay. And then obviously, in conjunction with your comments about the bond yields being sold, I mean with the dramatic growth that you guys have seen in the cash management business I mean are you taking more steps, I mean are you implementing more procedures to try to make sure that you guys capture some of that rebalancing out of cash management when it does happen? I know obviously you’d a very strong quarter for equities, but it seemed like most of it, you’d highlighted, came on the retail side. How should we be thinking about your ability to capture that liquidity assets on the equity... on the institutional side whenever hopefully this allocation comes to the market? Paul L. Audet: The way I would look at this… I mean it's very hard to know where the clients will be deciding and how they will be deciding. But I would tell you, what BlackRock has is maybe the best opportunity. If you've heard us talk about how we run our business, I mean the way we view One BlackRock and how we look at our clients, the way we run our marketing and our sales and support personnel, our clients know and our people that support our clients know every product and every relationship. So they recognize and understand how much a client who might be in long-dated fixed income or long-dated equity also has with respect to our institutional balances and our money market funds. I think we are working with our clients all the time everyday to understand that total exposure. So we are probably better positioned to work with them and understand if they are looking for rotational opportunities where we can in effect provide that... the kind of product that they are looking for. It is just hard to say a percentage. I don't think anyone will really know many of our large institutional clients also participate in the direct markets in the money market side. They may choose to rotate into some of those areas, but I do think that we are better positioned to capture those assets, if they are reallocated, than anybody else.

Good. And then just finally, if you could just reiterate, I think you provided some color around any impact you had from liquidity funds this quarter for supporting some of your money market products? Paul L. Audet: Really, no… there was no impact. I mean for all intents and purposes, while we had sustained as I said in my notes some outflows in the fourth quarter, we sustained... we actually had 7 billion of those outflows on the last day of the year, every year.

No, I'm talking from a revenue standpoint, I guess as it relates to maybe one of your non-2a-7 funds? Paul L. Audet: You mean revenue implication?

Yes. Paul L. Audet: We have been waiving fees on those products for the last six months. There is no revenue implications that you have to worry about.

Okay, great. Thanks a lot, and very nice quarter. Laurence D. Fink: Thank you.

Your next question will be from Craig Siegenthaler of Credit Suisse. Laurence D. Fink: Hello, Craig.

Hi. Actually, it is Tom Gallagher here. I just wanted to ask a quick one, and then Craig is going to have a few more detailed ones. Larry, I just noticed this morning Ambac put on review for downgrade by Moody's, and it looks like all bonds insured by them are put on review. Laurence D. Fink: Yes.

Now, there is obvious... just curious to get your view on… I guess you could probably go on for a while about a discussion of reverberations to the fixed-income market from something like this, but just curious on your take on this, whether you see it having a meaningful impact on your business positively, negatively, can you give a little color on that? Thanks. Laurence D. Fink: No, I don't know anything directly. I mean possibly I think all this turmoil on the marketplace is causing clients worldwide to re-address who they are dealing with. Having well... being well positioned in terms of the risk management, I think we are going to be a beneficiary in 2008 of the market turmoil. I also do believe clients are going to be looking to dealing with larger capitalized, larger firms, more global firms. So I think the unraveling of some of these monolines and continuation of credit deterioration relative to the world is good for BlackRock. It's probably absolutely bad for all of us in little ways. It is going to... obviously, with these companies imploding in terms of the monoline is going to have some... a real impact on potentially the muni market, certainly a lot of potential in terms of the housing market and the mortgage insurance market. So it's going to have some large implications, and I don't know how they're going to fill out. We are not exposed to those credits in terms of owning their bonds or things like that, and essentially one of them just raised $1 billion of bonds last week and the bonds are down over 20 points, maybe as of today they're down even more. We didn't participate in it and so… it’s not getting prettier, it's getting worse, and because of this we’re getting asked many questions certainly on the municipal side from a lot of clients, what does this mean for the municipal market, for the insurance, so many people relied on insurance, what does this mean for the conventional mortgage market. I think if these companies do go under, it is going to put a huge… kind of really put a major dampening effect on jumbled mortgages. And if we put a lot more... people are got to be running more towards Fannie Mae and Freddie Mac securities because it will be the only thing that people will look to ensure. I will say though, Fannie and Freddie also relies on these insurers too. So I don't know really what the impact would be for the agencies too if we had a collapse in these mortgage insurers, but I think the problems will be severe and problematic.

Okay, that's helpful. It sounds like it's fair to say, you either have a neutral or underweight position as you think about fixed income market exposure within your total portfolio that would have exposure to the monoline. Laurence D. Fink: Yes. I don't think... well, I don't even know if any monolines are in the index. So I... we were worried about those credits for a while.

Okay, thanks. And then Craig has a few.

Sure. Just a question on your strong equity of retail flows this quarter, not really an area where we expect strength in this market, and we've seen peer flows decline here. So, I'm wondering what strategies are really driving these flows? Is it life cycle presence, is it simply magic counts, or is this mostly traditional mutual funds? Laurence D. Fink: It's traditionally mutual funds, heavily weighted two global products. Our global opportunity funds continue to have very large flows and some of our specialty products. Tom Callan and team have had an extraordinary record being with the top noted portfolio managers in the small cap... international small cap space for the last five years. We continue to see flows there. We still see a lot of flows in terms of our commodity-based products. And so, it's just... it’s specialty product that also with these global opportunity products.

So I'm guessing a lot of those flows are also U.S. distributed not... well, I guess some of them are also European too, maybe you could talk about the mix there? And also, what's your view on target-date funds with your Department of Labor’s change in option last quarter? Laurence D. Fink: I'm not... I don't know if I could properly answer that question related to the issue. I know we've rolled out target-dated funds, but I can't tell you the specifics of what that... what the Departmental Of Labor issues and what does it mean for that. So I just don't want to comment on it. I could get one of my pros to call you offline, but I don't think I'm prepared to discuss the ramifications here. I'm getting the breakout between U.S. and International, hold on for a second, in terms of flows. International was $7.7 billion, U.S. was $9.8, and then you add the market decline, so it's pretty well mixed.

And if I can just ask one more, the minority interest line items really declined two quarters here. I'm just wondering what JVs or investments make this up and why has the cash flow you are paying to minority owners been declining here? Paul L. Audet: Look, this is gross-up issues, so the non-operating income saw great declines too. This is any private equity related activities that we have to consolidate on our books and records. So you have a gross-up with respect to non-operating income and a gross-up with respect to minority interest. And the simple reason why they declined was as markets here have realigned a little bit a lot of the revenues that were being generated by our private equity related funds and/or real estate related activities has shown mark-to-market declines. Obviously, non-operating income comes down, but in many instances we have very minor ownership in terms of our investment in these underlying entities and therefore most of that increase or decrease is basically netted out as minority interest.

All right, thanks a lot.

Your next question comes from Prashant Bhatia from Citigroup. Laurence D. Fink: How are you doing?

Hi. Just in terms of... we have seen some pretty big write-downs here by the major brokers on the structured product. I guess looking at some of the pension fund and other investment complexes, do you think they have taken appropriate marks as far as you can tell, a lot of these firms are your clients, do you think? Laurence D. Fink: Probably not, because a lot of them they have held a maturity account. I mean, you could say that about banks too when they put things and held the maturity accounts. The security firms have those assets in trading accounts and therefore they are required for SEC reasons to mark them for FASB... for accounting reasons. There are a lot of assets being held worldwide that are held in accounts for… held to maturity and so they are going to have to take some periodic hits on that impairment. And I can't tell you the specifics of any institution, be it a pension plan or a bank or an insurance company, who has these products and when are they going to take these in periodic impairments.

Okay. And I guess a lot of that was driven by a thirst for yield. How are you seeing that shift? What are clients turning to now to kind of satisfy that thirst for yield because it not structured product anymore? How does that impact you? Laurence D. Fink: I mean, I think clients are looking at just subordinated debt in the corporate market. They are looking at high yield securities. They are not looking at the lowest grade high yield, but I think worldwide people are shying away from risk. And yet, Prashant, those two alternative products we raise, there was a good example of clients were clamoring to take on more systematic risk in specified products that other people are liquidating or buying on behalf of our other clients. So it really depends on the clients. We are recommending the clients by the way. With this chaos it is you are being paid to take on more risk. And so we are not saying overall, but in some of these asset categories, as these products melt down we are suggesting to take on more risk. And we're trying to work with them on doing that and explaining why you're been paid to take on more risk.

Okay. And then also, you talked about investors potentially deferring some of the near-term decisions. I know you have taken some of your integration and put it on the backburner related to some of the overseas operations. Could that be an opportunity for you to maybe move that integration back on the frontburner or is that something that--? Laurence D. Fink: It's on the frontburner. It is... first and primarily, we want to get it closed. We just did it in a more... as we understood the complexity of the integration, we determined to do it in a slower fashion, and we're right on track. We feel very good about it. We've integrated a lot of the equity products in London already. We're doing a great job in terms of getting this onboard. Our teams are really enjoying being put on the internal Aladdin system here, being part of it, being part of the overall risk management system. So we are not... we didn't defer it for any reason, other than it was much more complex. Obviously, we had a lot of client business also, but the client business was not slowing our internal integration down. It was really the complexity of the integration, but it's right on track.

Okay. And then just finally in terms of the M&A type opportunity, I guess looking at the franchise longer term, how important is it strategically to have a big indexing component? Laurence D. Fink: We're studying that now. I would say index/ETFs. We don’t have a… we’re not… I don't think we have a conclusion yet, but we actually have an active study going on, on that question. And as we get... and so that question has been raised. We're looking at that, and that's what… as I’ve discussed in terms of product and product expansion, either organically or through acquisition, that's a product that we are looking ahead and discussing, should that be a product expansion.

Okay, great. Thank you.

We have reached the allotted time for questions. Sir, are there any closing remarks? Laurence D. Fink: I think I’ve said them all. Once again, it's an extraordinary year for us, a lot of hard work. I repeat again, I'm thrilled to be in at BlackRock. I think it's really been an incredible year in terms of BlackRock, in terms of some turnover of some very key professionals at BlackRock over the years, but what I'm very proud of the organization is that we are able to navigate and manage. I said in other reports that BlackRock has spent years in terms of management's succession issues, and we have... in terms of losing our two founders of the firm over the past year and the succession of the management teams in place, it has been pretty much flawless in terms of the transitions we had, in terms of the navigation with our clients, in terms of turnover of these people, and then the introduction of our new leaders in the firm, and it has worked out very well. So I would like to just congratulate everybody at BlackRock and thank all our clients for all the support. Hopefully everyone finds ways to enjoy this first quarter and hopefully the financial markets start improving after this call. Thanks. Have a good quarter.

This concludes today's conference. Thank you for participating. You may now disconnect.