Fiscal 2007 Outlook

These estimates reflect the Company’s expectation that it will generate up to $85 million of pre-tax expense synergies associated with the MLIM transaction. Fourth quarter 2006 reflects synergies at a run rate of approximately 90% of the $85 million estimate. Management continues to estimate total merger synergies of approximately $140 million. The remaining $55 million of synergies is expected to be substantially realized in 2008 as final systems conversions are completed in late 2007 and early 2008.

- GAAP diluted earnings per share are expected to be in the range of $6.90 to $7.20. Included in the GAAP diluted earnings per share range is expected pre-tax expense of approximately $125 million for identified intangible amortization (non-cash), performance fees of $100-250 million, fully diluted shares outstanding of approximately 132 million and an effective tax rate of 36-37%.

- Diluted earnings per share, as adjusted, are expected in the range of $7.25 to $7.55. Per diluted share adjustments include approximately $83 million related to MLIM integration costs, expenses funded through a contribution of stock currently held by PNC and an annual payment by Merrill Lynch related to future compensation expense.

Following this release, the company will return to its policy of not providing earnings guidance and the company assumes no duty to, and does not intend to, update this guidance.

Key questions and answers from the fourth quarter fiscal 2006 earnings call conducted by BlackRock on January 17, 2007.

William Katz (Buckingham Research): On the fixed income business, if you look back over the last several quarters, it does seem like the growth rate has slowed sharply. Are we at the end of this cycle? Could there be a more decisive rotation to equities and are you fully prepared to capture if that were to happen?

Laurence D. Fink: The 3.70% whatever for the 10-year we are going to see, and this is why in the long run we are very constructive on equities. 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 significant rebalancing from qualified pension plans. We still see a lot of growth build in the global area. In the domestic side, we''re going to see a big rotation over the course of the next few years.

In terms of are we going to be able to take advantage of it, I would say not fully yet, but 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 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. We are enhancing our new team in European equities. 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. Though, we''re not fully prepared yet but 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. It’s going to be this gigantic rotation, but the trends will be a rotation from fixed to equities.

William Katz (Buckingham Research): You are out marketing an array of Closed-End Funds. Can you provide an assessment of how successful that is and what the appetite is for that product right now?

Laurence D. Fink: It''s in the marketing period now and I don''t think I''m allowed to talk about it. I can''t talk about it for SEC reasons. It is in the market, it''s going to be small, but we expect it to be small. Closed-End market is digesting huge flows in 2007 and one should expect the digestion will take some quarters. I don''t think we are going to see the huge inflows of money in Closed-End Funds as we did last year.

Christopher Spahr (Deutsche Bank): Can you comment on how we should think about the performance fees going forward, both on a year-over-year basis and on quarterly basis?

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. 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. We benefited because of the type of hedge fund products that we have. In addition, we had some extra ordinary 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. We expect we are well positioned again in 2008 to take advantage of these global opportunities in terms of our hedge funds. We raised a lot more hedge funds and products in the fourth quarter. We don''t forecast on what is going to happen in 2008 related to hedge funds, but we are growing out our alternative platform we are certainly building on a more diversified base of alternative products that have performance-based fees.

Christopher Spahr (Deutsche Bank): Advisory revenues by asset class appeared to be higher across all asset classes. Can you give color about the sustainability of those?

Paul L. Audet: The revenues were up as you probably saw across all asset classes, largely because we''ve had sizable organic growth across all asset classes. You also had sizable market contributions. The key here is, if you look at the equities and in certain of the alternative products, some of those market contributions are sub-sizable. If you look at the various ratios, a $130 billion of organic growth versus about $70 billion of market, that you can automatically look at those percentages and you can apply those same ratios to try to see what was the revenue growth ex-market or on a quarter basis.

Douglas Sipkin (Wachovia): Did you have any revenue impact from liquidity funds this quarter for supporting some of your money market products?

Paul L. Audet: No, there was no impact. We have been waiving fees on those products for the last six months.

Thomas Gallagher (Credit Suisse): On your strong equity of retail flows this quarter, it is not an area where we expect strength in this market, and we''ve seen peer flows decline here. What strategies are 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 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. It''s specialty product that also with these global opportunity products.

Craig Siegenthaler (Credit Suisse): The minority interest line items declined two quarters here. What JVs or investments make this up and why has the cash flow you are paying to minority owners been declining here?