SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the plan year ended March 31, 2006

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                      to                     

A.		Full title of the plan and address of the plan, if different from that of the issuer named below:

McKesson Corporation Profit-Sharing Investment Plan

B.		Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

McKesson Plaza
One Post Street, San Francisco, CA 94104
Telephone (415) 983-8300

 

 

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

TABLE OF CONTENTS

Item		Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			1
FINANCIAL STATEMENTS as of and for the Years Ended March 31, 2006 and 2005:
Statements of Net Assets Available for Benefits			2
Statements of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4-11
SUPPLEMENTAL SCHEDULE AS OF MARCH 31, 2006:
Form 5500, Schedule H, Part IV, Line 4i – Schedule of Assets (Held at End of Year)			12-17
EXHIBITS:
23.1 Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.1

     All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

McKesson Corporation Profit-Sharing Investment Plan
San Francisco, California

     We have audited the accompanying statements of net assets available for benefits of the McKesson Corporation Profit-Sharing Investment Plan (the “Plan”) as of March 31, 2006 and 2005, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of March 31, 2006 and 2005, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

     Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan’s management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2006 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.

Deloitte & Touche LLP

San Francisco, California
September 27, 2006

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

		2006												2005
		Participant				Non-Participant								Participant				Non-Participant
		Directed				Directed				Plan Total				Directed				Directed				Plan Total
ASSETS:
Cash and cash equivalents:
Allocated		$				$	2,997			$	2,997			$				$	922			$	922
Unallocated							117				117								184				184
Total cash and cash equivalents			—				3,114				3,114				—				1,106				1,106
Investments:
Mutual funds and brokerage link			550,418								550,418				392,079								392,079
Common/ collective trusts			220,347								220,347				211,360								211,360
Separately managed accounts			162,652								162,652				145,693								145,693
Funds held in insurance companies			113,602								113,602				111,371								111,371
Participant loans			19,786								19,786				18,268								18,268
McKesson Corporation common stock:
Allocated							437,711				437,711								336,090				336,090
Unallocated							95,754				95,754								103,631				103,631
Employee stock fund			53,253								53,253				36,354								36,354
Total investments			1,120,058				533,465				1,653,523				915,125				439,721				1,354,846
Receivables:
Contributions											—								3,064				3,064
Dividends and interest on:
Allocated							511				511								533				533
Unallocated							121				121								173				173
Due from broker for securities sold – allocated							132				132												—
Total receivables			—				764				764				—				3,770				3,770
Total assets			1,120,058				537,343				1,657,401				915,125				444,597				1,359,722
LIABILITIES:
Line of credit – on unallocated stock							3,600				3,600								3,600				3,600
ESOP promissory notes payable – on unallocated stock							20,983				20,983								32,544				32,544
Accrued interest expense – on unallocated stock							909				909								1,421				1,421
Accrued other							1,052				1,052								603				603
Total liabilities			—				26,544				26,544				—				38,168				38,168
NET ASSETS AVAILABLE FOR BENEFITS		$	1,120,058			$	510,799			$	1,630,857			$	915,125			$	406,429			$	1,321,554

     See notes to financial statements.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

		2006												2005
		Participant				Non-Participant								Participant				Non-Participant
		Directed				Directed				Plan Total				Directed				Directed				Plan Total
INVESTMENT INCOME:
Net appreciation in fair value of investments		$	106,303			$	156,742			$	263,045			$	45,572			$	89,887			$	135,459
Dividends and interest			32,589				3,284				35,873				16,563				3,172				19,735
Investment income			138,892				160,026				298,918				62,135				93,059				155,194
CONTRIBUTIONS:
Participants			96,508								96,508				74,290								74,290
Employer							14,261				14,261								23,899				23,899
ERISA litigation settlement proceeds			13,654								13,654												—
Total contributions			110,162				14,261				124,423				74,290				23,899				98,189
DEDUCTIONS:
Benefits paid to participants			83,254				26,923				110,177				69,784				20,530				90,314
Interest expense							2,850				2,850								4,896				4,896
Administrative fees			1,011								1,011				1,047								1,047
Total deductions			84,265				29,773				114,038				70,831				25,426				96,257
INCREASE IN NET ASSETS BEFORE INTERFUND TRANSFERS AND MERGERS			164,789				144,514				309,303				65,594				91,532				157,126
INTERFUND TRANSFERS			40,144				(40,144	)			—				24,318				(24,318	)			—
TRANSFER OF NET ASSETS FROM OTHER PLANS															10,583								10,583
INCREASE IN NET ASSETS			204,933				104,370				309,303				100,495				67,214				167,709
Net assets at beginning of year			915,125				406,429				1,321,554				814,630				339,215				1,153,845
Net assets at end of year		$	1,120,058				510,799				1,630,857			$	915,125			$	406,429			$	1,321,554

     See notes to financial statements.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

1. PLAN DESCRIPTION

     The following brief description of the McKesson Corporation Profit-Sharing Investment Plan (the “PSIP” or the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information. The PSIP is a defined contribution plan covering all persons who have completed two months of service and are regular or part-time employees, or are casual employees who have completed a year of service in which they worked at least 1,000 hours in a year, at McKesson Corporation (the “Company” or “McKesson”) or a participating subsidiary, except employees covered by a collectively bargained pension plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

     Fidelity Management Trust Company (“Fidelity”) is the trustee of the Plan.

     The Plan is comprised of Participant Directed and Non-Participant Directed Investments, as described below:

     A Participant Directed Investments

     Contributions – Certain Plan provisions were amended to enable the Plan to qualify as a safe harbor plan as described in Internal Revenue Code sections 401(k) (12) and 401(m) (11). Effective April 1, 2005, participants may make pretax contributions from 1% to 20% of eligible pay, limited to $15,000 for calendar year 2006 and $14,000 for calendar year 2005. Total contributions are limited to the lesser of $44,000 for calendar year 2006 ($42,000 for calendar year 2005) or 100% of taxable compensation per calendar year. Participants 50 years of age or older may also elect to make pretax catch-up contributions of up to 67% of pay, limited to $5,000 for calendar year 2006 and $4,000 for calendar year 2005. Participants may also contribute amounts representing distributions from other qualified plans.

     Prior to April 1, 2005, participants were allowed to make basic contributions ranging from 1%-4% of compensation for employees of McKesson Information Solutions LLC (“MIS”), a subsidiary of the Company and Medical Management Group employees, or 1%-6% for all other Company employees. Participants who made basic contributions of 6% (4% for MIS and Medical Management Group participants) could elect to make supplemental contributions of up to an additional 14% of compensation (16% for MIS and Medical Management Group participants). Additional limits applied to individuals classified as highly compensated employees.

     Participant Accounts – Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution and an allocation of earnings, and charged with withdrawals and an allocation of losses and administrative expenses. Allocations are based on participant earnings, or account balances, as defined in the Plan document. The participant is entitled to a benefit upon retirement or separation from employment based upon the vested portion of the participant’s account.

     Vesting – Participant contributions and earnings thereon are 100% vested at all times.

     Investment Options – Upon enrollment in the PSIP, a participant may direct contributions in 1% increments to any of the investments within the Plan. The following are descriptions from each fund’s prospectus or fund manager’s report:

•

Standish Mellon Stable Value Fund invests in fixed-income investments issued by life insurance companies and financial institutions. This is a separately managed account, not a mutual fund.

•

Dodge & Cox Large Cap Value Fund invests in the common stock of companies when the fund managers believe the long-term earnings prospects are not reflected in the current price. This is a separately managed account, not a mutual fund.

•

Fidelity Magellan Fund is a growth mutual fund that seeks capital appreciation and normally invests in common stocks.

•

Fidelity Diversified International Fund invests primarily in a diversified portfolio of equity securities of companies located outside of the United States.

•

MFS Institutional Large Cap Growth Fund invests primarily in common stocks, with a goal of long-term capital growth.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

•

SSgA Balanced Fund is a custom mix of commingled pools that invests 60% in SSgA S&P 500 Index Fund and 40% in SSgA Bond Index Fund.

•

SSgA Bond Index Fund is a commingled pool that seeks to provide investment results that correspond to the total return of the bonds in the Lehman Brothers Aggregate Bond Index.

•

SSgA S&P 500 Index Fund is a commingled pool that invests in stocks in the benchmark S&P 500 Index and attempts to duplicate the investment results of that index.

•

Wellington Management Small Cap Portfolio invests in stocks within the market capitalization range of the Russell 2000 Index. This is a separately managed account, not a mutual fund, which seeks long-term growth by investing in the stocks of small companies.

•

McKesson Corporation Employee Company Stock Fund (the “Employee Stock Fund”) represents shares invested in Company common stock.

•

Mutual Fund Window provides access to approximately 260 mutual fund options from more than 20 investment companies.

•

Brokerage Link provides access to a discount brokerage account which allows participants to develop a self-directed brokerage option. Commissions and transaction fees are charged to the participant’s account. Effective January 1, 2005, Fidelity waived the account maintenance fees.

     Loans – Participants may apply for a loan from the Plan. The total amount owed to the Plan by an individual participant cannot exceed the lowest of 50% of such participant’s vested account balance, $50,000 as adjusted for certain items specified in the Plan document, or the value of the participant’s account attributable to basic, supplemental, catch-up and rollover contributions. The loans bear interest at the then current prime rate of interest at the loan date plus 1%. Contractual interest rates ranged from 5% to 11% in fiscal 2006 and 2005. Loans may be repaid over a period not to exceed 5 years, except for residential loans, which must not exceed a term of 10 years. Principal repayments and interest are paid through payroll deductions. For participants who have been terminated or are on leave and are no longer receiving a paycheck, loan repayments may be made via monthly coupon payments. Participant loans totaled $19,786,000 and $18,268,000 on March 31, 2006 and 2005.

     Payment of Benefits – Participants have the right to receive a total distribution of the value of their vested accounts from the PSIP at the time of retirement, death, disability or termination of employment. In general, benefit payments are made in a lump sum cash amount. Former employees may remain participants in the Plan.

     Transfers from Other Qualified Plan – In fiscal 2005, the net assets of the Moore Medical 401(k) Plan totaling $10,583,000 were merged into the Plan .

     B Non-Participant Directed Investments

     General – The McKesson Corporation Employer Company Stock Funds (Allocated and Unallocated) (the “Employer Stock Funds”) consist of a leveraged Employee Stock Ownership Plan (“ESOP”). In fiscal year 2006, employer contributions were funded with 908,000 shares from the ESOP. In fiscal 2005, employer contributions were funded with 822,000 shares from the ESOP and $3,064,000 in cash.

     In January 1985, the Company amended the Plan to add a leveraged ESOP for the benefit of persons eligible to participate in the PSIP. In July 1986, the PSIP purchased from the Company 2,000,000 shares of Company common stock, par value $0.01, for $30,250,000, originally financed by a ten-year term loan from a bank, guaranteed by the Company. Additionally, in connection with a fiscal 1995 transaction involving a reorganization and a sale of a business unit of the Company (the “PCS Transaction”), the ESOP purchased 1,087,754 additional common shares in fiscal 1996. In fiscal 1997, the Company extended the existing term of the outstanding loan balance from its original maturity to fiscal 2005. The loan was paid in full on August 29, 2004.

     In June 1989, the Company amended the Plan to add an additional leveraged ESOP. In June 1989, the Plan purchased from the Company 2,849,003 shares of McKesson Corporation Series B ESOP Convertible Preferred Stock ($43.875 stated value) for $125,000,000, financed by a twenty-year term loan from the Company. During fiscal 1995, in connection with the PCS Transaction,

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

all shares of Series B ESOP Convertible Preferred Stock held by the Plan were converted into 5,440,914 shares of Company common stock. In fiscal 1996, in connection with the PCS Transaction, the ESOP purchased 6,259,080 additional shares of Company common stock.

     Employer Matching Contributions and Participants Accounts – Effective the last business day of each month throughout the fiscal year, participant accounts are credited with matching Company contributions, in the form of the Company’s common stock based on a percentage of the participants’ basic contributions. In fiscal 2005, employees were eligible for matching Company contributions of up to 3.6% of their eligible compensation. Effective April 1, 2005, the Plan provides for Company matching contributions to all participants who make elective deferrals in an amount equal to 100% of the employee’s deferral for the first 3% of pay deferred, and 50% of the employee’s deferral for the next 2% of pay deferred. An additional annual matching contribution may be granted at the discretion of the Company. For the plan year ended March 31, 2006, an additional match of $0.037 for every dollar contributed, up to the first 5% of pay contributed, was allocated to eligible plan participants.

     The Internal Revenue Code requires that shares be released for employer contributions according to a formula based on debt service payments. In fiscal 2007, the Company identified certain errors in calculating the number of shares to be released which resulted in an over release for fiscal 2006. To correct this error, the Company intends, subject to the board of directors’ approval, to contribute 26,000 additional shares to the Plan in fiscal 2007.

     Employer Contributions – Dividends on unallocated shares of Company common stock are used to pay the obligations under the ESOP loans. Under the terms of the loan agreements, the Company is required to make cash contributions to the extent that the dividends are not sufficient to service the debt. To pay down such debt obligations, cash contributions amounted to $14,261,000 and $20,834,000 in the years ended March 31, 2006 and 2005.

     Vesting – Employer contributions made on or after April 1, 2005, are 100% vested immediately. Employer contributions made before April 1, 2005 vest over five years of service (20% annually over five years). Generally, 100% vesting is provided upon retirement, disability, death, termination of the Plan, or a substantial reduction in work force initiated by the Company for affected participants. Dividends automatically reinvested in McKesson common stock on and after January 1, 2003 are also 100% vested at all times.

     Forfeitures – A rehired employee who has met certain levels of service prior to termination may be entitled to have forfeited interests in the PSIP reinstated. Each plan year, forfeited interests are used to reinstate previously forfeited amounts of rehired employees and to pay other Plan expenses as appropriate. Forfeitures for the years ended March 31, 2006 and 2005 were $1,272,000 and $1,289,000.

     Diversification of Stock Fund – Effective April 1, 2005, participants may transfer Company contributions to other investment funds as soon as they are made. In addition, participants may diversify past Company contributions without restrictions. Prior to April 1, 2005, participants who completed five years of service could elect to transfer 50% of the Company contribution that was invested in the McKesson Corporation Employer Company Stock Fund (Allocated) to one or more of the other investment funds offered. After ten years of service, participants could elect to transfer up to 75% of the portion of their account representing the Company contributions. Participants who reached age 50 and completed five years of service were allowed to transfer up to 100% of their balance related to the Company contributions, in one percent increments or in whole dollars.

     Payment of Benefits – Distributions are made only upon participant retirement, death (in which case, payment shall be made to the participant’s beneficiary), or other termination of employment with the Company. Distributions are made in cash or, if a participant elects, in the form of Company common shares plus cash for any fractional share.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     McKesson Corporation Employer Company Stock Funds (Allocated and Unallocated) – The following ESOP information regarding the shares of McKesson Corporation common stock held is as of March 31 (in thousands):

		2006												2005
		Number of								Fair Value of				Number of								Fair Value of
		Shares				Cost Basis				Shares				Shares				Cost Basis				Shares
Allocated			8,397			$	242,395			$	437,711				8,903			$	236,838			$	336,090
Unallocated			1,837				34,606				95,754				2,745				51,719				103,631
Total			10,234			$	277,001			$	533,465				11,648			$	288,557			$	439,721

     The per share fair market value of McKesson Corporation common stock at March 31, 2006 and 2005 was $52.13 and $37.75.

     The following is a reconciliation of the allocated and unallocated net assets of the Non-Participant Directed Investments at fair value for the years ended March 31 (in thousands):

		2006												2005
		Allocated				Unallocated				Total				Allocated				Unallocated				Total
Net Assets (beginning of year)		$	340,007			$	66,422			$	406,429			$	285,758			$	53,457			$	339,215
Net appreciation			122,410				34,332				156,742				70,292				19,595				89,887
Dividends and interest			2,737				547				3,284				2,359				813				3,172
Employer contributions							14,261				14,261								23,899				23,899
Benefits paid to participants			(26,923	)							(26,923	)			(20,530	)							(20,530	)
Interest expense							(2,850	)			(2,850	)							(4,896	)			(4,896	)
Allocation of 822 shares, at market															26,446				(26,446	)			—
Allocation of 908 shares, at market			42,213				(42,213	)			—
Transfers			(40,144	)							(40,144	)			(24,318	)							(24,318	)
Net Assets (end of year)		$	440,300			$	70,499			$	510,799			$	340,007			$	66,422			$	406,429

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Accounting – The financial statements of the Plan are prepared in accordance with accounting principles generally accepted in the United States of America.

     Cash Equivalents – The Plan considers all highly liquid debt instruments with remaining maturities of less than three months at the date of purchase to be cash equivalents.

     Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Plan management to make estimates and assumptions that affect the reported amount of net assets available for benefits and changes therein. Actual results could differ from those estimates.

     Risk and Uncertainties – The Plan utilizes various investment instruments, including mutual funds, common collective trusts, separately managed accounts and investment contracts. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.

     Investment Valuation and Income Recognition – Investments in mutual funds are stated at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. Investments in the brokerage link are stated at quoted market prices. Investments in common collective trusts are stated at quoted redemption values. Interests in separately managed funds are valued based on the underlying net assets. Funds held in insurance companies are stated at contract value (or cost) plus accrued interest. Contract value represents contributions made under the contracts, plus earnings, less participant

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

withdrawals and administrative expenses. Participant loans are valued at the outstanding loan balance. Shares of McKesson Corporation common stock are valued at quoted market prices on March 31, 2006 and 2005. Certain administrative expenses are allocated to the individual funds based upon daily balances invested in each fund and are reflected as a reduction of net appreciation in fair market value of investments and are not separately reflected. Consequently, these management fees and operating expenses are reflected as a reduction of investment return for such investments. All other activity is recorded in the Plan based on the elections of the individual participants in the Plan. Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses from security transactions are reported on the average cost method. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

     Administrative Fees – Administrative fees of the Plan are paid by either McKesson or the Plan, as provided by the Plan document.

     Benefits – Benefits are recorded when paid.

3. INVESTMENTS

     The recorded values of individual investments that represent 5% or more of the Plan’s net assets at March 31 were as follows (in thousands):

		2006				2005
McKesson Corporation Employer (Allocated and Unallocated) * and Employee Company Stock Funds		$	586,718			$	476,075
SSgA S&P 500 Index			159,392				155,948
Dodge & Cox Large Cap Value Fund			123,576				114,841
Standish Mellon StableValue Fund			113,602				111,371

     The Standish Mellon Stable Value Fund contains benefit-responsive guaranteed investment contracts with several insurance companies carried at contract value plus accrued interest totaling $10,210,000 at March 31, 2006. The guaranteed rates range from 3.63% to 5.66% and the contracts mature at various dates through April 2008. The Standish Mellon Stable Value Fund also includes synthetic investment contracts that are benefit-responsive and are carried at contract value plus accrued interest totaling $96,578,000 at March 31, 2006. There are no reserves against these contract values for credit risk of the contract issuer or otherwise. Certain of the contracts contain limitations on contract value guarantees for liquidation other than to pay benefits. The contracts mature at various dates through November 2011. The Plan’s investment guidelines require these contracts to be with companies rated AA- or better, with no more than 10% of the pool invested with one traditional Guaranteed Income Contract issuer and no more than 40% invested with any one synthetic wrap provider.

     During fiscal 2006 and 2005, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows (in thousands):

		2006				2005
Common collective trusts		$	20,862			$	11,774
Mutual funds			49,259				13,458
Separately Managed Accounts			21,999				12,423
McKesson Corporation Common Stock:
Employer Company Stock Fund (Allocated and Unallocated)*			156,742				89,887
Employee Company Stock Fund			14,183				7,917
Total		$	263,045			$	135,459

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. LINE OF CREDIT

     In fiscal 1998, the Plan obtained a $35 million line of credit with ABN AMRO Bank N.V. in order to refinance a portion of the principal payable under the ESOP loans and reduce the number of shares that would be released to fund the employee benefits. In fiscal 2006 and 2005, the Plan released only the shares required to fund the annual ESOP benefits. The line of credit bears interest at London Interbank Offered Rate (“LIBOR”) multiplied by the applicable LIBOR adjustment. The line of credit matures on June 1, 2009. On March 31, 2006 and 2005, interest rates were 4.28% and 2.50% on the outstanding balance totaling $3,600,000. At March 31, 2006 and 2005, the line of credit was collateralized by 225,874 unallocated shares of McKesson Corporation common stock.

5. ESOP PROMISSORY NOTES PAYABLE

     The ESOP promissory note supporting the July 1986 stock purchase was payable to a bank in increasing annual installments (ranging from 2% to 3% of original principal) over an 18-year term that ended in fiscal 2005 (see Note 1, B). The interest rate was LIBOR plus 0.4%, with an option to the Plan to fix the LIBOR rate for a period ranging from 1 month to 1 year. The note was paid in full in August 2004 and all shares of McKesson common stock were released for employer contributions.

     The ESOP promissory note supporting the June 1989 stock purchase is payable to the Company in annual installments plus interest at 8.6% over a twenty-year term ending in fiscal 2010. On March 31, 2006, the outstanding balance of the note was $20,983,000 ($32,544,000 at March 31, 2005). This note is collateralized by 1,610,955 unallocated shares of McKesson Corporation common stock (2,519,312 at March 31, 2005). In July 2005 and April 2004, additional principal payments of $6,000,000 and $9,000,000 were made to enable the release of additional shares for employer contributions, and each of the scheduled subsequent loan repayment installments was reduced. Future minimum principal payments required on this note (including a $5,000,000 additional payment in July 2006) are as follows (in thousands):

Fiscal year		Amount
2007		$	9,630
2008			4,257
2009			4,630
2010			2,466
Total		$	20,983

6. FEDERAL INCOME TAX STATUS

     The Internal Revenue Service (“IRS”) has determined and informed the Company by letter dated January 21, 2004, that the Plan is qualified and the trust established under the Plan is tax-exempt, in accordance with the applicable sections of the Internal Revenue Code. This was in response to the Plan’s sponsor’s request for an updated determination letter to incorporate certain regulatory changes to the Plan as required by the Uruguay Round Agreements Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the IRS Restructuring and Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000 (collectively referred to as “GUST”). The Company and the Plan administrator believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Internal Revenue Code and the Plan and related trust continue to be tax-exempt. Therefore no provision for income taxes has been included in the Plan’s financial statements.

     During fiscal year 2002, the Department of Labor (the “DOL”) initiated a review of the Plan’s operations. The DOL has not issued any report on its findings. The Plan’s Sponsor is cooperating with the DOL and will address matters, if any, requiring corrective action.

7. PLAN TERMINATION

     The Company’s Board of Directors reserves the right to terminate the Plan. If termination should occur, all participant accounts will immediately vest and each account would receive a distribution equal to the vested account balance. In addition, the unallocated common stock would be liquidated to repay the ESOP promissory notes payable. If the stock liquidation is insufficient to satisfy the notes payable, the Company is obligated to fund the difference.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. PENDING LITIGATION

     The Plan’s report on Form 11-K for the year ended March 31, 2005, included a description of an action in the United States District Court for the Northern District of California captioned In re McKesson HBOC, Inc. ERISA Litigation (N.D. Cal. C-00-20030 RMW) (the “ERISA Action”). The ERISA Action was brought on behalf of two putative classes: an “HBOC Sub-Class,” and a “McKesson Sub-Class.” The HBOC Sub-Class included “all participants in the former HBO & Company Profit-Sharing and Savings Plan (the “HBOC Plan”) and their beneficiaries in the period from March 31, 1996 to April 1, 1999 (the date of the merger of the HBOC Plan into the Plan), for whose benefit the HBOC Plan held and acquired HBO & Company (“HBOC”) stock (and, after January 12, 1999, McKesson stock).” The McKesson Sub-Class included “all participants in the Plan (excluding employees of HBOC who became participants in the Plan by virtue of the merger of the HBOC Plan into the Plan on or about April 1, 1999) whose accounts were invested in McKesson stock at any time, who maintained an account balance under the Plan as of April 27, 1999, which included McKesson stock, and who had not received a distribution from the Plan as of April 27, 1999.”

     Plaintiffs’ Consolidated Amended Complaint (the “CAC”), filed December 31, 2002, named as defendants HBOC, the HBOC Administrative Committee, certain members of the HBOC Administrative Committee, certain former officers, directors or employees of HBOC, the HBOC Board of Directors, the Company, certain current or former officers or directors of the Company and the Plan (as a nominal defendant only), and contained thirteen causes of action, referred to as “Counts.” Counts one through six were asserted on behalf of the HBOC Plan for the benefit of the HBOC Sub-Class and alleged that HBOC or alleged fiduciaries of the HBOC Plan breached their fiduciary duties and engaged in transactions prohibited by ERISA. Counts seven through thirteen were asserted on behalf of the Plan for the benefit of the McKesson Sub-Class and alleged that McKesson or alleged fiduciaries of the Plan breached their fiduciary duties by, among other things, (i) failing to adequately investigate the potential effects of the January 12, 1999, merger transaction with HBOC (the “Merger”) on the Plan, (ii) failing to adequately determine whether the Plan’s heavy concentration in McKesson stock was appropriate in light of the Merger, (iii) failing to diversify the Plan’s holding of McKesson stock in light of the Merger, (iv) placing themselves in a conflicted position which prevented them from acting with complete loyalty to the Plan, (v) failing to diversify the Plan’s McKesson stock in light of the Company’s announcement on April 28, 1999, that certain software sales transactions at its Information Technology Business Unit were improperly recorded as revenue because they were subject to contingencies and were reversed, and (vi) failing to contribute cash, as opposed to Company stock, to the Plan in the Company’s annual contribution for the Plan year ended March 31, 1999.

     On May 6, 2005, the Company reached an agreement to settle all claims for the benefit of the HBOC Sub-Class for approximately $18.2 million, in exchange for releases in favor of all defendants, including releases of claims the HBOC Sub-Class might have under ERISA, the federal securities laws, or which relate to the holding, voting or acquisition of McKesson or HBOC securities. The Court granted final approval to that settlement on September 9, 2005, holding that it was fair, adequate and reasonable to the HBOC Sub-Class. In November 2005, the Plan received the ERISA Action settlement for the HBOC Sub-Class, less attorneys’ fees, totaling $13,654,000.

     Also on September 9, 2005, the Court granted that portion of the Company’s previously-reported motion to dismiss, which related to the claims by the Plan for the benefit of the McKesson Sub-Class. The Court dismissed with prejudice all counts asserted for the benefit of the McKesson Sub-Class against the alleged fiduciaries of the Plan, including the Company, except the Court did not dismiss a portion of one of Plaintiffs’ counts that alleged the Company breached its fiduciary duties under ERISA to the Plan participants by contributing Company stock, as opposed to cash, to the Plan in the Company’s annual contribution for the Plan fiscal year ended March 31, 1999.

     In March of 2006, the Company reached an agreement to settle that portion of the ERISA Action that purports to assert claims on behalf of the McKesson Sub-Class for $18.5 million, plus certain accrued interest, minus certain costs and expenses such as plaintiffs’ attorneys fees. The Court granted final approval to that settlement on September 1, 2006, holding that it was fair, adequate and reasonable to the McKesson Sub-Class. That settlement accomplishes the release of all remaining claims against all defendants in the ERISA Action.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

9. RELATED-PARTY TRANSACTIONS

     At March 31, 2006 and 2005, the Plan held approximately 11,243,000 and 12,603,000 common shares of McKesson Corporation, the Plan’s sponsor. The shares are held within the McKesson Corporation Employer and Employee Stock Funds and the Leveraged ESOP. At March 31, 2006 and 2005, the Employer Stock Funds held approximately 8,397,000 and 8,903,000 common shares and the Leveraged ESOP held 1,837,000 and 2,745,000 common shares as collateral for the ESOP loans. At March 31, 2006 and 2005, the Employee Stock Fund held approximately 1,009,000 and 955,000 shares.

     McKesson Corporation declared dividends of $0.24 per share for both fiscal 2006 and 2005. During the years ended March 31, 2006 and 2005, the Employer Stock Funds recorded dividend income from McKesson Corporation common shares of approximately $3,156,000 and $3,172,000. During each of the years ended March 31, 2006 and 2005, the Employee Company Stock Fund recorded dividend income from McKesson Corporation common shares of approximately $238,000 and $246,000.

     Certain investment options are managed by Fidelity, which also serves as the Plan’s record-keeper and trustee. Therefore, these transactions qualify as party-in-interest transactions. Fees for investment management services are allocated to the participants with balances in those funds.

10. SUBSEQUENT EVENTS:

     In April 2006, changes to plan investment options were made. The Plan’s Mutual Fund Window offering was updated to mirror Fidelity’s Mutual Fund Window offering. Furthermore, Fidelity Magellan Fund was moved out of the core investment options group and into the Mutual Fund Window.

     In July 2006, the net assets from the D&K Healthcare Resources, Inc. Profit Sharing Plan and Trust totaling $14,242,000 were merged into the Plan.

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
BROKERAGELINK		$	10,008,665				16,473,739			$	11,339,981
SSGA BOND INDEX			12,532,666				1,003,114				16,350,755
SSGA BALANCED			37,744,489				3,792,888				44,604,365
WELLNGTON MGMT SMCAP			23,962,376				2,167,407				39,076,189
SSGA S&P 500 INDEX			106,978,131				8,153,057				159,392,265
DODGE & COX LARGE CAP VALUE FUND			77,005,521				6,827,415				123,576,219
PIMCO TOT RETURN ADM			5,760,616				539,925				5,577,428
TMPL FOREIGN SM CO A			387,449				20,712				464,353
ABF BALANCED PA			806,499				60,785				844,302
ABF LARGE CAP VAL PA			2,295,962				120,395				2,511,446
ABF INTL EQUITY PA			201,473				10,349				232,343
ABF SH TERM BOND PA			97,299				10,603				92,456
MUTUAL DISCOVERY A			1,069,932				47,098				1,347,008
BARON GROWTH			9,539,633				233,400				11,786,683
BARON ASSET FUND			794,704				14,374				884,588
MSI US LG CAP GRTH B			113,128				6,949				134,116
CALV NEWVIS SM CP A			38,989				2,206				39,523
CALVERT SIF BALNCD A			42,434				1,612				46,803
CALVERT SIF:EQUITY A			21				1				21
CALVERT CAP ACC A			36,578				1,653				43,051
CALVERT INTL EQTY A			24,358				1,308				30,012
FMA SMALL COMPANY IS			391,690				19,717				441,063
FPA CRESCENT			3,505,357				156,777				4,149,900
RHJ MICRO CAP			1,647,295				82,202				1,745,979
LOOMIS SM CAP VAL R			168,367				6,341				178,932
OLDMUT EMRG GROWTH Z			140,046				11,270				178,397
ARIEL FUND			5,762,070				122,793				6,646,786
ARIEL APPRECIATION			3,804,985				90,519				4,307,821
LB CORE BOND NB INV			308,917				29,967				290,378
ALGER CAP APPREC I			444,568				37,846				568,449
ALGER MIDCAP GRTH I			2,240,790				145,855				2,642,885
ALGER SMALL CAP I			456,642				25,827				612,874
FKLN SMMIDCAP GRTH A			525,761				17,458				707,752
DREY FNDRS BALNCED F			73,694				9,103				80,654
DREY FNDRS EQ GRTH F			75,293				16,165				87,779
DREY FNDRS GROWTH F			93,068				9,483				109,056
DREY FNDRS MC GRTH F			205,699				52,039				284,132
DREY FNDRS WW GRTH F			20,526				1,614				24,759
OLDMUT GROWTH Z			154,573				8,202				190,373
AIM DYNAMICS INV			166,423				11,696				236,139
AIM SM CO GRTH INV			156,627				12,597				188,068
TEMPLETON FOREIGN A			5,880,052				554,679				7,488,172
JANUS FLEXIBLE BOND			1,234,296				128,477				1,196,122
DREY FNDRS DISCVRY F			234,794				9,192				295,433
MSI INTL MAGNUM B			21,115				1,856				26,096
MUTUAL SHARES CL A			1,460,990				65,673				1,662,179
MANAGERS SPECIAL EQ			44,979				497				47,580
MSI GLOBAL VAL EQ B			36,482				2,321				43,004
MSIFT BALANCED ADV			36,086				3,284				40,656
MSIFT CP FX INC ADV			424,085				36,649				418,167
MSIFT HIGH YIELD ADV			18,182				3,433				18,196
MSIFT MIDCAP GTH ADV			416,513				21,721				574,085
MSIFT VALUE ADVISER			281,794				17,944				315,453
MSI SM CO GROWTH B			167,990				14,467				200,217

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
MSI ACTIVE INTL B			50,330				4,682				64,664
MSI EMERGING MKTS B			547,241				24,683				706,927
NB FOCUS TRUST			163,605				6,482				170,081
NB GENESIS — TR CL			6,838,434				166,535				8,609,839
NB MANHATTAN TRUST			61,654				6,312				85,021
NB PARTNERS TRUST			845,435				39,585				898,982
NB SOCIALLY RESP TR			318,137				21,916				355,704
OAKMARK FUND I			591,786				14,377				610,143
ALLNZ CCM CAP AP ADM			369,712				23,181				476,823
ALLNZ CCM MID CP ADM			451,030				20,224				583,454
PIM GLBBND AD UNHDGD			534,973				53,362				506,942
PIMCO HIGH YIELD ADM			1,366,184				140,808				1,375,693
PIMCO LOW DUR ADM			389,134				38,256				378,735
PIMCO LT US GOVT ADM			1,099,716				100,542				1,053,679
WFA ULTRA ST INC INV			111,497				12,080				110,168
WFA SHRTTERM BND INV			106,559				11,904				101,068
WFA DISCOVERY INV			402,953				20,192				455,536
WFA GROWTH INV			342,530				19,576				450,842
WFA COMMON STOCK Z			255,765				11,973				281,843
WFA OPPORTUNITY INV			558,165				14,110				664,581
WFA LG CAP GRTH INV			180,037				8,432				212,570
WFA GOVT SECURTY INV			726,666				67,056				688,670
TEMPLETON DEV MKTS A			1,255,251				63,876				1,655,024
TEMPLETON GROWTH A			2,049,378				96,363				2,332,957
TMPL GLOBAL BOND A			1,613,849				156,326				1,647,677
TEMPLETON WORLD A			1,225,799				72,657				1,359,414
USAA CORNERSTONE			172,546				6,708				180,171
USAA GNMA TRUST			197,373				19,898				188,235
USAA INCOME FUND			1,027,100				83,252				998,186
USAA INCOME STOCK			307,243				19,283				307,367
USAA INTERNATIONAL			152,170				7,250				185,819
USAA GROWTH FUND			104,708				8,093				125,679
USAA EMERGING MKTS			210,739				23,257				408,162
AIM CONSTELLATION A			21,716				945				24,796
CS CAP APPREC COM			92,400				5,472				96,695
CS MID CAP GRTH COM			89,984				3,727				131,380
RS EMERGING GROWTH			38,171				1,275				46,226
ARTISAN INTL			710,668				29,590				828,528
MSI INTL EQUITY B			43,374				2,070				44,812
NB GUARDIAN TRUST			28,837				2,409				35,004
DWS INTERNATIONAL S			51,521				1,079				60,311
DOMINI SOCIAL EQUITY			163,395				5,904				182,552
DWS GLOBAL OPPS S			71,776				1,884				82,127
AM CENT ULTRA INV			37,101				1,276				38,503
TCW SM CAP GRTH N			37,464				2,253				44,812
TCW AGGR GRTH EQ N			2,408				198				2,771
MSI LGCP REL VAL B			31,726				2,827				32,254
AIM GBL AGGR GRTH A			27,382				1,393				33,632
MANAGERS BOND FUND			380,588				15,630				373,255
MANAGERS CAP APPREC			84				3				92
MANAGERS VALUE			22,312				749				21,939
RS SMALLER CO GROWTH			74,048				3,399				79,169
TCW SELECT EQUITY N			240,783				12,869				250,815
CS LARGE CAP VALUE A			26,307				1,334				26,520
AIM BASIC VALUE A			12,245				376				13,508

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
GRTMORE MDCPGR LDR A			21,758				1,612				24,473
GARTMORE VAL OPPS A			3,535				240				3,735
LM VALUE TRUST FI CL			457,929				6,630				497,708
ARTISAN MID CAP INV			311,334				10,409				345,682
CS SMALL CAP VAL COM			831,875				38,992				935,806
OAKMARK EQ & INC I			1,087,292				44,894				1,143,900
ROYCE LOW PR STK SER			504,205				31,732				570,215
VK GROWTH & INCOME A			769,777				36,984				767,410
DWS/D HIGH RTN EQ A			613,399				13,908				646,708
AIM MIDCAP CORE EQ A			95,799				3,246				97,355
WEST ASSET CORE FI			27,764				2,444				27,011
MFS INST LG CAP GRTH			2,807,430				483,250				3,189,449
ALLNZ NFJ SMCPVAL AD			1,088,100				35,622				1,125,997
LD ABBETT MIDCPVAL P			469,227				21,320				469,458
COL/ACORN SELECT Z			858,867				38,916				955,381
COL CONS HIGH YLD Z			11,720				1,367				11,562
CRM MID CAP VAL INV			491,424				18,503				532,320
ABF SM CAP VAL PA			675,040				33,565				732,061
AM CEN LG CO VAL INV			20,662				3,198				21,490
STANDISH MELLON STABLEVALUE FUND			113,601,904				112,980,805				113,601,904
* MCKESSON EE STK FUND			34,896,711				1,496,233				53,253,828
* MCKESSON ER STK FUND (allocated)			242,395,167				8,396,522				437,710,708
* MCKESSON ER STK FUND (unallocated)			34,605,858				1,836,829				95,753,896
* FID FIDELITY			1,121,375				40,033				1,337,097
* FID PURITAN			2,250,548				123,647				2,393,797
* FID TREND			172,640				3,448				206,563
* FID SEL COMPUTERS			635				17				637
* FID SEL ELECTRONICS			50,364				1,076				49,838
* FID SEL FOOD & AG			34,006				667				35,440
* FID VALUE STRATEGIES			97,935				2,880				95,774
* FID GINNIE MAE			1,854,498				167,686				1,790,887
* FIDELITY MAGELLAN			57,365,145				531,687				59,974,295
* FID CONTRAFUND			5,302,537				86,249				5,738,999
* FID EQUITY INCOME			2,752,208				55,300				3,024,378
* FID GROWTH COMPANY			3,103,538				59,255				4,028,775
* FIDELITY INVST GR BD			907,382				121,536				883,565
* FID GROWTH & INCOME			49,821,385				1,281,881				45,865,718
* FID SEL SOFTWARE			38,754				758				42,884
* FID INTERMED BOND			6,594,116				639,271				6,494,992
* FID SEL AIR TRANSPRT			10,889				289				13,277
* FID CAPITAL & INCOME			2,642,678				321,873				2,748,797
* FID VALUE			8,127,083				121,078				9,795,184
* FID MORTGAGE SEC			162,759				14,609				159,535
* FID SEL GOLD			739,092				22,013				858,280
* FID SEL BIOTECH			396,386				6,460				429,597
* FID SEL ENERGY SVCS			2,566,266				38,132				2,817,179
* FID SEL INSURANCE			65,184				1,004				68,646
* FID SEL RETAILING			11,444				221				11,563
* FIDELITY US GOVT RES			1,896,807				1,896,807				1,896,807
* FIDELITY GOVT INCOME			1,098,402				107,121				1,065,854
* FIDELITY CASH RESRVE			6,521,516				6,521,516				6,521,516
* FID SEL ENERGY			3,958,631				91,261				4,766,545
* FID SEL LEISURE			31,062				409				35,272
* FID SEL HEALTHCARE			657,725				4,801				665,282
* FID SEL TECHNOLOGY			314,056				4,958				330,603

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
* FID SEL UTILITIES GR			76,288				1,785				83,448
* FID SEL FINANCIAL			119,041				1,019				123,057
* FID SEL DEFENSE			976,941				13,401				1,109,615
* FID SEL BROKERAGE			651,629				9,119				704,108
* FID SEL CHEMICAL			162,185				2,405				170,589
* FID INDEPENDENCE			270,366				16,009				339,390
* FID OTC PORTFOLIO			234,269				7,386				295,442
* FID OVERSEAS			570,158				15,975				714,544
* FID SEL TELECOMM			16,370				389				17,246
* FID SEL HOME FINANCE			17,819				325				16,924
* FID LEVERAGED CO STK			2,621,210				106,462				3,038,437
* FID EUROPE			826,808				25,885				1,033,599
* FID PACIFIC BASIN			517,561				22,735				633,621
* FID REAL ESTATE INVS			7,759,496				287,998				10,180,722
* FID BALANCED			8,740,599				511,586				10,027,086
* FID INTL DISCOVERY			4,013,134				154,573				5,371,424
* FID CAP APPRECIATION			3,629,446				146,099				3,991,416
* FID CONVERTIBLE SEC			885,892				43,293				1,039,034
* FID CANADA			5,381,859				148,394				6,827,628
* FIDELITY UTILITIES			429,655				33,396				523,315
* FID BLUE CHIP GROWTH			29,223,520				660,514				29,174,886
* FID ASSET MANAGER			8,121,983				503,429				8,306,571
* FID DISCIPLINED EQTY			424,851				16,426				476,179
* FIDELITY LOW PR STK			14,147,470				410,294				18,200,624
* FID WORLDWIDE			210,002				12,095				250,132
* FID EQUITY INCOME II			15,185,205				667,933				15,830,005
* FID STOCK SELECTOR			63,286				2,832				73,732
* FID ASSET MGR GRTH			580,062				40,874				640,092
* FIDELITY EMERG MRKTS			2,570,873				152,828				3,224,676
* FIDELITY AGGR GROWTH			1,693,075				106,879				2,023,217
* FID DIVERSIFIED INTL			30,273,240				1,111,757				39,667,497
* FID ASSET MGR INCOME			558,093				45,301				592,081
* FID DIVIDEND GROWTH			5,270,886				195,718				5,902,870
* FID NEW MARKETS INC			4,116,958				295,126				4,326,554
* FID EXP & MULTINATL			2,964,015				151,276				3,317,478
* FID FOCUSED STOCK			323,084				31,853				390,522
* FID GLOBAL BALANCED			344,153				17,209				379,972
* FID AGGRESSIVE INTL			454,565				29,430				526,499
* FID SM CAP INDEPEND			775,255				39,834				903,026
* FID MID CAP STOCK			5,505,808				244,322				7,361,409
* FID LARGE CAP STOCK			495,611				35,666				584,926
* FID DISCOVERY			473,404				46,729				571,497
* FID SMALL CAP STOCK			2,867,568				171,929				3,589,875
* FID EUROPE CAP APP			444,068				22,063				564,590
* FIDELITY NORDIC			390,618				13,929				481,257
* FID ASSET MGR AGGR			537,270				50,766				639,651
* FID LATIN AMERICA			4,845,916				171,447				6,454,985
* FID JAPAN			1,579,360				101,532				1,908,796
* FID SOUTHEAST ASIA			683,720				35,719				836,902
* FID CHINA REGION			1,070,925				63,028				1,312,870
* FID SEL BUS SV & OUT			11,401				767				13,606
* FID SEL MED EQ & SYS			423,791				17,317				423,397
* FID FOUR IN ONE IDX			492,339				20,431				565,334
* FID JAPAN SMALLER CO			1,757,180				125,259				2,037,970
* FID GROWTH & INC II			550,936				59,248				630,399

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
* FID STRATEGIC INCOME			1,805,592				172,528				1,799,464
* FID FREEDOM INCOME			249,525				23,035				264,677
* FID FREEDOM 2000			91,442				7,707				95,566
* FID FREEDOM 2010			2,963,816				223,303				3,231,197
* FID FREEDOM 2020			4,765,408				352,946				5,424,773
* FID FREEDOM 2030			2,315,043				169,050				2,674,372
* FID SM CAP RTMT			830,224				59,290				1,058,918
SPTN TOTAL MKT INDEX			2,830,657				89,358				3,266,038
SPTN EXTND MKT INDEX			632,093				20,682				787,166
SPARTAN INTL INDEX			911,849				27,949				1,090,006
* FID SHORT TERM BOND			946,762				106,134				936,101
* FID INTM GOVT INCOME			298,237				29,397				291,327
* FID HIGH INCOME			927,042				105,784				939,358
* FID FIFTY			1,349,326				68,792				1,671,650
* FID SEL AUTOMOTIVE			402				12				422
* FID SEL MULTIMEDIA			868				18				893
* FID SEL MEDICAL DEL			2,070,242				41,073				2,247,490
* FID SEL PAPER&FOREST			26,536				930				29,743
* FID SEL BANKING			105,951				2,885				106,436
* FID SEL INDUST MATER			12,261				276				13,397
* FID SEL INDUST EQUIP			32,080				1,135				34,479
* FID SEL CONSTR/HOUSE			346,013				7,566				380,942
* FID SEL TRANSPORT			79,292				1,689				88,243
* FID SEL NATURAL GAS			2,205,878				60,562				2,489,098
* FID SEL NATURAL RES			904,437				38,317				1,057,549
* FID SEL CYCLICAL IND			51,970				2,529				55,458
* FID SEL ENVIRONMENT			30,431				1,824				33,598
* FID SEL CONSUMER IND			5,208				200				5,242
* FID SEL DEVELOP COMM			57,552				2,640				61,218
* FID SEL PHARMACEUTCL			58,154				6,126				64,997
* FIDELITY RETIRE MMKT			11,140,632				11,140,632				11,140,632
* FIDELITY RET GOVT MM			5,532,925				5,532,925				5,532,925
SPARTAN US EQ INDEX			4,268,162				104,963				4,829,365
* FIDELITY US BD INDEX			2,152,404				194,478				2,084,807
* FID INST SH INT GOVT			143,404				15,015				141,743
* FID LARGE CAP VALUE			131,821				10,176				139,214
* FID FREEDOM 2040			1,140,419				136,434				1,272,933
* FID MID CAP VALUE			639,406				42,100				658,017
* FID LARGE CAP GROWTH			459,047				40,916				478,311
* FID MID CAP GROWTH			411,644				30,578				437,884
* FID INFLAT PROT BOND			349,106				31,049				332,530
* FID ULTRASHORT BOND			131,605				13,114				131,405
* FID FLOAT RT HI INC			219,942				22,056				220,119
* FID INTL SMALL CAP			2,259,066				84,821				2,592,129
* FID TOTAL BOND			57,872				5,488				56,471
* FID VALUE DISCOVERY			455,931				29,241				490,369
* FID REAL ESTATE INC			125,253				10,667				125,447
* FID SEL NET & INFSTR			45,692				18,805				52,277
* FID SEL WIRELESS			231,047				35,359				262,720
* FID BLUE CHIP VALUE			61,641				4,662				66,432
* FID NASDAQ COMP INDX			157,933				5,504				173,707
* FID FREEDOM 2005			31,481				2,877				32,911
* FID FREEDOM 2015			934,846				81,062				971,120
* FID FREEDOM 2025			492,550				42,901				537,125
* FID FREEDOM 2035			280,163				23,953				308,754

McKESSON CORPORATION PROFIT-SHARING INVESTMENT PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i — SCHEDULE OF ASSETS (HELD AT END OF YEAR)

Investment/Fund Name		Cost Basis				Shares/Units				Fair Value
* FID STRAT DIV & INC			78,377				6,763				87,104
* FID FOCUSED HIGH INC			2,244				224				2,243
* FID INTL REAL ESTATE			298,806				22,840				336,433
* OUTSTANDING LOAN BALANCE											19,785,551
Total		$	1,180,655,411							$	1,653,522,651